The Government has just concluded a consultation on debt management plans, particularly considering whether DMPs should be subject to tighter regulation.
Under a DMP, the operator, which may be fee-charging or free to client, assesses a debtor’s income and expenditure with a view to calculating the amount of surplus income. That sum is then paid to the operator, who negotiates repayment terms with creditors, often agreeing to freeze or reduce interest and other charges.
This allows the debtor to repay his debts in full over an extended period whilst making a single monthly payment to the operator.
Other than the requirement to hold a consumer credit licence, the DMP industry is completely unregulated. There are some very good providers, but we have also seen some examples of highly suspect advice. Whilst we have no wish to see unnecessary regulation, and the industry has taken some steps to put its own house in order, there is a long way to go.
Out of about 150 operators in the market, only about 40 are members of the two trade associations with codes of practice. May be it is now time for more structured regulation.
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