The Financial Conduct Authority said the measure could potentially save some struggling customers thousands of pounds, while also improving the quality of advice.
There have been concerns that companies are incentivised to recommend debt management options which make them money - rather than what is in an indebted customer's best interests.
The FCA highlighted the case of a homeless person who could have had their debt frozen and then discharged after 12 months by paying a one-off £90 fee.The ban comes into effect on Friday for new entrants to the market, while existing firms have been given a deadline of 2 October to"develop new ways of doing business", the FCA said.
Debt packager firms earn money from fees paid when individuals are referred to solution providers, such as an insolvency practitioner for an individual voluntary arrangement . They can end up costing £3,650 or more over a lifetime.
Ireland Latest News, Ireland Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Greater Manchester council facing 'record number of complaints' over conductRochdale Councillor, Andy Kelly, claims those that step out of line face 'no consequences' for their actions
Read more »
The roots of, and routes out of, Africa’s mounting debt crisesToday on “The Intelligence”: the mounting debt crises facing Africa, Ukraine’s front-line city of love stories, and the links between drugs and productivity
Read more »
Can the debt-ceiling deal hold?The trickiest moment is expected today, when Kevin McCarthy, the Republican speaker of the House, brings the deal up for a vote
Read more »
Martin Lewis urgent warning to anyone with credit card debt - can you save cash?MARTIN Lewis’ MSE has issued an urgent warning to anyone with credit card debt. The consumer experts have revealed how a balance transfer credit card could help people in debt save thousands …
Read more »
McCarthy predicts debt ceiling bill will clear crucial vote ‘overwhelmingly’\n\t\t\tKeep abreast of significant corporate, financial and political developments around the world.\n\t\t\tStay informed and spot emerging risks and opportunities with independent global reporting, expert\n\t\t\tcommentary and analysis you can trust.\n\t\t
Read more »
Debt Ceiling Deal Under a Weak House Speaker Breeds ChaosThis chaotic week in Washington could become more routine, as a weak House Speaker tries to hold on to his job while managing a raucous caucus, writes Philip_Elliott for The D.C. Brief
Read more »