StepChange Debt Charity strongly supports the Financial Conduct Authority’s (FCA) announcement today that it is banning debt packaging firms from receiving referral fees.
The ban will help to prevent financially vulnerable consumers in need of debt advice from being preyed upon by unscrupulous firms driven by financial incentives rather than the best interests of the client. Too often, people are routed towards an IVA due to the high referral fees paid by the provider, when in many instances this is inappropriate and potentially harmful to the individual.
Richard Lane, Director of External Affairs at StepChange Debt Charity, said:
"After campaigning for several years to raise the alarm about these poor debt advice practices, we’re pleased to see the FCA take firm action in this area. With more people falling into financial difficulty amidst high inflation and interest rates, it’s essential that consumers receive free and independent debt advice to determine the most appropriate solution for their needs. We expect this move to benefit thousands of consumers and reduce much of the misleading advertising for debt services online."