Debt Advice Advertising Faces Tougher Regulation

The Committee of Advertising Practice recently revealed new rules to safeguard consumers against claims of ‘free debt management’ where monthly administration fees are charged. Unavoidable costs such as delivery and response expenses are exempt from the claim, however, any organisation charging an administration fee to manage a debt will not in future be able to claim the plan is free.

Whereas 100% of the available monthly surplus goes towards paying back the debt in a free debt management plan, a typical commercial debt management administration rate is between 10% to 15% of the monthly payment. This equates to a fee of between £111 and £118 for every £1,000 of debt that’s repaid and also means that the debt will be paid back over a much longer period, between 11% and 17%.

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