The FCA is banning fees that debt advisors receive for referring people to debt solution companies.
Debt advisors will no longer be allowed to receive a fee for referring people to debt solution companies.
A homeless client was recommended an IVA costing £6,000, but could have been debt-free for £90, the FCA found. For some people, there is little or no chance of paying off debts, and so they may have to consider some form of personal insolvency.The individual agrees to make regular affordable payments to an insolvency practitioner, who will divide this money between creditors. At the end of an IVA any unsecured debt left is written off.
The FCA said it had seen evidence of debt packagers appearing to manipulate customers' details so that they meet the criteria for IVAs and using persuasive language to promote products without explaining the risks involved.
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