Customers of three debt management firms have been told by the Financial Conduct Authority to review their debt owed, with the regulator warning they may currently owe more than they initially did due to the firms’ lending practices.
The firms are Sterling Financial Security Limited, Haydon Associates Debt Management Consultants Limited and Clear View Finance Limited - all based in Lichfield.
Most customers with debt reduction plans with these firms have been paying 90 per cent of their monthly payments in fees, leaving 10p in the pound to pay down the debts for an unlimited period of time.
The trio failed to comply with the requirements the FCA put in place to provide written statements to customers setting out their debt position and are therefore no longer permitted to offer debt management services to customers.
As a result, they will no longer be able to negotiate with creditors on their customers’ behalf or set up new debt management or reduction agreements.
The regulator is warning that customers of the three firms may be left with a debt larger than they expect, even if they have been paying into a plan for some time.
That is why, “as a matter of urgency”, customers should check their debts and seek advice - preferably from the Money Advice Service - on what to do next.
This follows on from last year’s warning by the regulator that debt management firms needed to raise their game.
peter.walker@ft.com
