Are Companies Providing Good Debt Advice?

The Office of Fair Trading recently stated that, “standards of knowledge amongst front line staff at debt advisory operations of all types throughout the UK, is often very poor”. This can lead to incorrect or misleading advice being provided.

Professional qualifications do exist for providing good debt advice. Some major debt solutions companies have effective internal training procedures. Smaller (perhaps owner-managed) better-quality operations have excellent experience in providing good advice.

However 50% of respondents in a recent survey conducted by Trust Deed.co.uk have said that they had received what they now believe to be misleading or incorrect advice. How and why is this the case? What can you do to identify which companies are trustworthy to ensure that you get good debt advice?

How to identify poor Debt Advice

Before you decide which debt management company you will use you need to try and establish if they are advising you correctly. The first thing to look for is whether they offer you information on all the possible debt solutions or just one.

A common practice of poor debt organisations is to focus on the solution which will be financially most beneficial for them rather than you. If all they seem interested in is talking to you about a debt management plan then it is likely this is the solution where they make their money. If it seems like they are trying to convince you to start an Individual Voluntary Arrangement the same may be true.

A good debt advisor will provide you with information about all the different solutions which are available to you. They will give you both the advantages and disadvantages of each so that you can make an informed decision.

How to get good Debt Advice

In order to make sure you get good debt advice here are some suggestions:

Suggestion 1: Having discussed your circumstances with an adviser, simply ask: “please tell me all of the options available to me based upon my financial circumstances”. Take a note of the answer. Then contact another debt adviser and ask the same question (and another if you want to be even more certain). Compare the lists. You will be able to make a judgement about which adviser knows what they are talking about, which is honest, and which is trying to see the situation from your perspective rather than their own.

Suggestion 2: If a debt adviser insists on telling you everything about a particular solution before they fully understand your circumstances, end the call or appointment immediately. They may well be trying to push you towards a solution which suits them without trying to find out if it suits you.

Suggestion 3: If you live in Scotland and are considering a Scottish trust deed do not sign the document until all the major points have been confirmed to you, in writing, by the trust deed company itself. This should include information about how your house or car will be affected. If you ever receive work bonus payments, or overtime, you should have written confirmation on how much you can keep and how much has to be paid into the protected trust deed. Think about everything that is important to you, based upon your circumstances, and get all the details in writing before you sign.