It’s a sad reality that many, many people in Hampshire and nationwide find themselves with unmanageable levels of debt. Dealing with this can be one of the most stressful things a person can endure. It brings huge strain on families and can leave people desperate for options.
When people ask for help, they need advice they can have faith in. But often they become the target of aggressive and sometimes unscrupulous practices.
Debt management companies start cold-calling and can pressure people into signing up for a debt management plan which may not be right for them at all.
A debt management company will collect a single monthly payment from its clients and administers the repayments on their behalf to creditors.
Some of these debt management companies behave responsibly, but some have real risks. There can be high up-front fees and administration charges each month, leaving people with less money to actually tackle their debts.
Some estimates say that using a commercial debt management plan means it will actually take people up to two years longer to repay their debts.
The issue is not party political. I’m co-Vice Chair of the all-party group on debt and personal finance with Labour MP Nic Dakin and last month we met Ed Davey, the Consumer Affairs Minister, to talk to him about the situation.
I am no great fan of new regulation, but I told the minister that this is one area where it is needed. While some markets are grappling with unreasonable regulation, regulation of debt management has not been effective enough.
We could make a big difference by banning cold-calling for new business and up-front fees.