Cuts in CAB debt advice come at worst time for consumers

EuroDebt Financial Services is warning that Government funding cuts causing the decision to axe 900 CAB debt advice staff could not come at a worse time for consumers. The news came as the Money Advice Trust warned of consumers facing unmanageable debt problems with an increased demand for debt advice. Citizens Advice had previously secured Department of Business, Innovation and Skills (BIS) funding to increase the availability of face-to-face debt advice to financially excluded clients. The second phase, which ends on 31 March 2011, enabled the employment of 332 extra advisors and was intended to help 70,000 indebted clients per year.

Vance Parsons, EuroDebt Director said: “With dramatic cuts in the number of CAB debt advisers, it is likely to fall on the commercial sector to plug the gap, especially in terms of the provision of face-to-face debt advice. The former Labour government estimated early in 2010 that approximately two thirds of the debt solution market was provided by the private sector.

“The good news for consumers is that the Office of Fair Trading (OFT) is now taking enforcement action against those it identified as non-compliant with their Debt Management Guidance in 2010. We should therefore see an improvement in the quality of debt advice provided by fewer, but more reputable and compliant, service providers.

“EuroDebt is a founder member of the newly established Association of Professional Debt Solution Intermediaries (APDSI), which aims to help UK consumers gain more confidence in the specialists or advisors they seek debt help from.“

Alasdair Warwood, Secretary General of the APDSI (www.apdsi.org.uk) added: “The association was created to help intermediaries and brokers offer a range of debt solutions to financially disadvantaged clients, whilst complying with regulations on consumer credit and debt advice. Our members are all OFT licensed intermediaries wanting to refer clients in financial hardship to licensed and competent debt solution providers.

Mr. Parsons concluded; “We firmly believe that face-to-face debt advice enables our licensed debt advisers to gain a full picture of a client’s circumstances and to advise on the best debt solutions available. We offer all-round debt advice and a full range of debt solutions, including Debt Management Plans (DMPs), IVAs and Bankruptcy Assistance.

“With the sharp reduction in access to free advice combined with an increased need, we would strongly urge consumers to check the credentials of their debt advisor before engaging their services.”

Source: creditman.co.uk