Debt Management: Have you been mis-sold?

Debt Management: Have you been mis-sold?

Hot on the heels of mis-sold PPI and bank accounts, comes mis-sold Debt Management Plans.

The Financial Conduct Authority (FCA) have identified that many Debt Management Programmes (DMP) could have been mis-sold to consumers.

There are many different reasons a Debt Management Plan may have been mis-sold to you, it is impossible to list them all as the reasons are so vast, but here are the most common reasons: The Debt Management Plan was not the best solution to your situation You were not made aware of the setup fees charged You were not made aware of the monthly fees charged You were not made aware that a similar service could have been provided free of charge You were not made aware of the impact such a solution would have on your credit rating You were not made aware that collection activity could continue You were not made aware that interest and charges would continue to be applied by creditors The DMP was not reviewed regularly to assess the appropriateness of the product Regular distributions were not made to your creditors

What is a Debt Management Plan?

A Debt Management Plan is an informal debt solution which is primarily aimed at consumers who are struggling to maintain their monthly commitments.

It usually involves making a payment to a debt solutions company who then distribute the money to your creditors, making sure your debts are being paid.

Payment, in most cases, is less than your contractual agreement.

It will seriously affect your credit rating, and, as you’re paying less than contracted it can result in your debt being repaid over a significantly longer period.

Why are claims being made against Debt Management companies?

There are a variety of reasons as to why claims are being made against Debt Management companies for mis-selling DMPs.

They may not have been transparent about the fees charged or the damage to your credit rating.

Others may simply not carried out the administration of the plan in a diligent and professional manner.

DMPs are just one of many different solutions available to consumers. If alternative solutions were available, but not discussed with you, you have been mis-sold.

They may have got you out of debt quicker and may have been considerably cheaper.

Reasons why your Debt Management Plan could have been mis-sold

There are many different reasons a Debt Management Plan may have been mis-sold to you, it is impossible to list them all as the reasons are so vast, but here are the most common reasons:

  • The Debt Management Plan was not the best solution to your situation
  • You were not made aware of the setup fees charged
  • You were not made aware of the monthly fees charged
  • You were not made aware that a similar service could have been provided free of charge
  • You were not made aware of the impact such a solution would have on your credit rating
  • You were not made aware that collection activity could continue
  • You were not made aware that interest and charges would continue to be applied by creditors
  • The DMP was not reviewed regularly to assess the appropriateness of the product
  • Regular distributions were not made to your creditors

I’ve been mis-sold a Debt Management Plan; what can I do?

If you have realised that you have been mis-sold a debt management plan before signing the final contract with a provider, then you should simply find a different firm and launch a complaint against the firm.

If you have already set up your debt management plan with a provider who you believe has mis-sold their service to you, then you should simply cancel your agreement and make a formal complaint to the Financial Ombudsman Service.

Alternatively there are reputable claims firms who can also look in to claiming your money back for you. If you require more information about finding a reputable claims firm, contact us and we will point you in the right direction.

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Thinking Thrifty

David Jack Taylor is the founder and editor of the Thinking Thrifty blog. After a striking realisation about the direction his life was heading he set himself a 15 year plan to achieve total financial freedom. Join the journey!

He is also a contributor to Clear Debt, ICOUNT Money and M1 Debt Advice blogs discussing all things personal finance.
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