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Dublin: 12 °C Tuesday 7 July, 2020

Debt management firms criticised for giving people poor information

The Central Bank became responsible for regulating these firms in 2013.

Image: Shutterstock/KieferPix

THE CENTRAL BANK has criticised a number of debt management firms for giving unclear information about their charges and failing to ensure their employees have the appropriate qualifications to advise consumers.

In 2013, the Central Bank became responsible for regulating these firms.

It introduced standards in order to protect consumers who use the services.

Debt management firms are tasked with giving advice about the discharge of debts and budgeting. The companies can also negotiate with a person’s creditors.

Poor information

In the Central Bank’s first review of the industry, it found that there was poor information on fees and charges for their service.

Only one of the 26 websites reviewed contained information on fees and charges for consumers. Some other information provided was found to be out of date.

“Transparency is of particular importance in light of the significant variations in the fees charged by debt management firms,” said the Central Bank.

It found that there are huge variances in costs.

For the initial consultation fee, some firms offered it for free, while others went up to €615.


Some hourly fees varied from €125 to €246, while some firms charged retainers of between €35 and €50 per month.

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Under new rules, a person working in a debt management firm must meet minimum competency standards.

In eight of the 10 firms inspected, staff members providing debt management services had not registered for the first available sitting of the examinations required by the Minimum Competency Code.

In total, 35 firms were inspected. This represents 73% of the 48 firms authorised at the time of the inspection.

The Central Bank said it is  following up with each firm on the issues identified and is taking appropriate supervisory action, including instructing firms to take down websites that cannot be amended immediately.

The Director of Consumer Protection, Bernard Sheridan additional rules were introduced in January 2015 which give further protections for customers in relation to disclosure of fees and charges.

Debt management firms have a responsibility to act in consumers’ best interests and we expect firms to be upfront and fully transparent about their fees and charges, including details on refundable costs – especially as there are significant variations in fees and charges.

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