Central Bank cracking down on debt advisors
Published 01/04/2016 | 02:30
Some firms advising struggling borrowers are failing to properly collect all of the information needed to give the best help and guidance, while others may not be fully communicating the potential consequences of debt deals to vulnerable clients, according to the Central Bank.
Nine firms looking to become authorised debt management agencies have had their applications refused, the Regulator said.
The Central Bank yesterday announced the results of its inspection of the debt management sector.
It found deficiencies in how some firms are assessing consumers' circumstances prior to giving advice and also in how they are explaining the impact for consumers if they take the advice. "As most consumers who pay for the services of these firms are already in financial difficulty, the Central Bank expects firms to gather all the consumer's financial details in order to take a complete view of consumers' circumstances prior to giving them advice on their debts," the director of consumer protection, Bernard Sheridan, said.
The Central Bank has put a strong regulatory framework in place and has ensured that firms seeking to enter this sector are thoroughly challenged during the authorisation process, he said.
However, brokers' representatives said some good operators are being turned off by what they called a "needlessly onerous" application process.
PIBA, which represents 900 member firms, said the application process has proven to be a barrier to entry to the sector.
PIBA's Rachel Doyle said that with just 55 firms authorised to work in the sector many people are left without essential advice at a point in their lives when they most need it.
"The current regime and authorisation process is excessive for non-cash handling debt management firms and does not serve to protect the consumer," she said.