Debt management companies – hired by borrowers to renegotiate terms with their creditors – should be more transparent about their charges, a charity has said.
A report due out tomorrow from the Money Advice Trust found many debt management firms guilty of poor practice.
The report, based on research by the Personal Finance Research Centre at Bristol University, says customers are often not told about the fees they will incur until late in the process. Some borrowers even felt they were worse off than before they contacted the debt management company.
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The report also concludes that some companies do not make clear that in addition to an initial set-up charge, ongoing fees eat into the monthly repayments of those borrowers unable to meet former terms.
Joanna Elson, chief executive of the trust, says: ‘Consumers have the choice to pay for debt advice, but this must be an informed decision.
‘We want regul…