The problem of rogue debt advisers is putting the government under pressure to conduct a formal review of financial counselling services as the number of consumers using unlicensed practitioners rises by 10,000 each month.
Link: R3 lends a hand to business
According to R3, the association of business recovery professionals, the rise in consumer debt, combined with the drop in house prices and the newly relaxed bankruptcy laws, will generate an even sharper rise in the number of consumers being conned by unlicensed debt advisers.
David Buchler, president of R3, told Accountancy Age: ‘The government should undertake a formal public review of the marketplace to see exactly what is happening so it can take the necessary measures.
‘We have expressed our views very strongly. We think the government should be more proactive and make sure consumers are treated by professionals. Statistics show 300,000 to 400,000 people have their finances in the hands of unlicensed debt advisers.’
The association said its members constantly handle cases where people have relied on rogue advisers and wound up in a worse situation.
The rise in bankruptcies and losses to credit providers in early 2004, when the new ‘more forgiving’ insolvency regime comes into play, could stun financiers, Buchler added. ‘Consumers themselves may be surprised at just how unforgiving financial institutions will continue to be, once their period of bankruptcy is over.’
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