Debt management firms under scrutiny - Financial Counsellors ...
MEDIA RELEASE 21 January 2016
Debt management firms under scrutiny Financial counsellors have welcomed the result of an ASIC investigation into debt management firms which was released today. The report, ‘Paying to get out of debt or clear your record: the promise of debt management firms’ found: the fees and costs charged by debt management firms are often high and must be paid ‘before delivery’ explanations of the fees, costs and risks involved are so poor or complicated as to be indecipherable relevant laws and consequences of particular strategies are poorly understood by some firms firms rarely referred consumers in financial hardship to free sources of help such as financial counsellors, consumer law services or ombudsman schemes. Executive Officer of the Financial Counsellors’ Association of WA Charlie Brown said the report confirms what financial counsellors have experienced. “Financial counsellors find debt management firms very frustrating because they charge for something you could do yourself, or that financial counsellors could help you with for free. “The large upfront fees that many firms charge and the reluctance to move clients in financial hardship onto free services usually makes bad situations worse.” Mr Brown said debt management firms were not currently under the same scrutiny as other financial and credit service providers. “These firms have never been obligated to actually help anybody,” he said. “They exist to make a profit at your expense. “If you’re already struggling to manage your finances, paying someone else to deal with it is not going to leave you better off. You will have less money and no strategies for avoiding similar problems in the future.” Mr Brown called for debt management firms to be subject to proper licensing, restrictions on advertising, a ban on upfront fees and charges, and a legal obligation to act in their client’s best interests. The Financial Counsellors’ Association of WA (FCAWA) is the peak body representing financial counselling in Western Australia. Financial counsellors: trained professionals providing information, support and advocacy to people in financial difficulty. For more information, telephone Charles Brown, FCAWA Executive Officer Mobile: 0427 467 115. www.financialcounsellors.org
1st Floor, Claisebrook Lotteries House, 33 Moore Street, EAST PERTH WA 6004
TEL: 08 9325 1617 FAX: 08 9221 6344
[email protected] www.financialcounsellors.org
Debt management firms under scrutiny Financial counsellors have welcomed the result of an ASIC investigation into debt management firms which was released today. The report, ‘Paying to get out of debt or clear your record: the promise of debt management firms’ found: the fees and costs charged by debt management firms are often high and must be paid ‘before delivery’ explanations of the fees, costs and risks involved are so poor or complicated as to be indecipherable relevant laws and consequences of particular strategies are poorly understood by some firms firms rarely referred consumers in financial hardship to free sources of help such as financial counsellors, consumer law services or ombudsman schemes. Executive Officer of the Financial Counsellors’ Association of WA Charlie Brown said the report confirms what financial counsellors have experienced. “Financial counsellors find debt management firms very frustrating because they charge for something you could do yourself, or that financial counsellors could help you with for free. “The large upfront fees that many firms charge and the reluctance to move clients in financial hardship onto free services usually makes bad situations worse.” Mr Brown said debt management firms were not currently under the same scrutiny as other financial and credit service providers. “These firms have never been obligated to actually help anybody,” he said. “They exist to make a profit at your expense. “If you’re already struggling to manage your finances, paying someone else to deal with it is not going to leave you better off. You will have less money and no strategies for avoiding similar problems in the future.” Mr Brown called for debt management firms to be subject to proper licensing, restrictions on advertising, a ban on upfront fees and charges, and a legal obligation to act in their client’s best interests. The Financial Counsellors’ Association of WA (FCAWA) is the peak body representing financial counselling in Western Australia. Financial counsellors: trained professionals providing information, support and advocacy to people in financial difficulty. For more information, telephone Charles Brown, FCAWA Executive Officer Mobile: 0427 467 115. www.financialcounsellors.org
1st Floor, Claisebrook Lotteries House, 33 Moore Street, EAST PERTH WA 6004
TEL: 08 9325 1617 FAX: 08 9221 6344
[email protected] www.financialcounsellors.org
