Are debt management companies worth their commission?
The UK government has recently confirmed that the debt management companies, currently outside of the regulatory loop, will soon be regulated by the FSA (Financial Services Authority). These are the parties who act on behalf of their customers in organising loan consolidations and other debt arrangements for which they receive an upfront payment and potential payments further down the line. So are these debt management companies worth the money?
While debt management companies have for some time received a very difficult press in the UK they do serve a purpose for some people who are unable to understand the options available to them and need assistance. However, a number of people have complained that after being tied down to arrangements which include debt management schemes, they have eventually had to succumb to bankruptcy or IVAs. This then begs the question as to whether debt management companies on the whole are worth their fees?
There is no doubt that the vast majority of debt management companies do act in the best interests of their customers but there are also a number who are possibly blinded by potential commission payments available from certain debt management schemes. As a consequence, it will be very interesting to see how the UK government and the debt management companies handle the forthcoming regulatory changes and whether in fact we will see any significant impact upon customer satisfaction figures.
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