Some debt management firms have been found to be taking advantage of their customers by holding on to their customers' cash rather than passing it…
Some debt management firms have been found to be taking advantage of their customers by holding on to their customers’ cash rather than passing it on to creditors.
Speaking to the BBC, Andrew Smith, manager of ClearDebt, said that many people have been harmed by these sorts of practices when they have enlisted the help of companies that – unlike ClearDebt – are less than fastidious about keeping in line with industry regulations on five-day payment deadlines.
Mr Smith’s comments follows one case involving Global Debt Solutions – which later traded under 3 Step Finance – which was shut down by the Insolvency Service after discovering the firm has not been monitoring its payments properly.
Read the full account with video of the DCM Apex story on the ClearDebt blog.
Since, it has emerged that other such businesses have taken on board this same tactic of not passing on the appropriate sums to creditors and Mr Smith claimed as many as four other organisations are putting as many as 10,000 customers in danger as a result.
And the impact of such activity has worse knock-on effects than simply adding to arrears as Mr Smith said: “We’ve had letters from people who are feeling suicidal. We’ve had people in our office who have paid in £30,000 or more and seen their debt hardly reduced.”
The Office of Fair Trading has lambasted this practice as “totally unacceptable” and has initiated a crackdown on holding these payments back from the organisations they have been intended for.
This follows news that a third of Britons have seen their personal debt rise in the last 12 months, while seven per cent of consumers stated they believe they will owe money for the rest of their lives.
By James Francis