Debt firms slated for poor advice

The Office of Fair Trading (OFT) has uncovered a catalogue of poor practices among firms offering advice to people struggling with debts, with companies often more focused on boosting their profits than helping their customers.

THe OFT says misleading advertising is one of the main problems in the sector, with many firms claiming their service was free when it was not. Advisers also often lacked competence.

Ray Watson, director of the OFT's consumer credit group, said: "People who are heavily indebted, desperate and vulnerable need advice which makes their problems better not worse and should not be exploited."

"Debt management firms must be clear about their charges and the options available. The level of non-compliance we found is unacceptable."

Consumers are expected to have paid 250 million in fees to debt management companies by the end of this year.

Andrew Smith, spokesman for the Debt Resolution Forum, said: "We have been working with the OFT to raise standards in the industry for several years."