Debt advice: check who you're talking to before you pay a fee

Anyone looking for help with debt should check who is giving the advice before agreeing to anything. According to the Financial Conduct Authority, some people are being steered towards fee-paying debt solutions that do not suit them, sometimes through pressure tactics or misleading information.

Free, impartial debt advice is available to everyone. It comes through the MoneyHelper website. Nobody needs to pay a company to get help with debt, so the first check is simple: has a free option been offered and explained before any fee-charging solution is mentioned.

What to check first

Before agreeing to any debt solution, use the FCA Firm Checker. It confirms whether a firm is authorised and whether its contact details match what it claims. This one step closes off most of the tactics the FCA describes, because an unauthorised firm, or one using details that do not match, fails the check immediately.

The signs to watch for

Pressure to decide quickly, especially over the phone or WhatsApp, without time to think it through, is a red flag. So is being asked or encouraged to change the income or outgoings on an application form, or being coached to say certain things. Both push a person towards qualifying for a particular product rather than describing their actual situation.

Being steered towards a fee-charging Individual Voluntary Arrangement, or a debt management plan, without free alternatives being properly explained first, is another. So is a caller who will not clearly say who they work for, or whose details do not match the firm's official record.

Each of these tactics works because they remove the moment where someone would otherwise stop and check. Speed replaces time to think. A coached answer replaces an honest one. A missing explanation of the free alternative removes the comparison that would show a fee is not necessary. The Firm Checker restores that missing moment, because it forces a pause before payment rather than after.

What this means now

The FCA has already acted against one debt advice firm, Curtis Faraday, after finding it led customers to give answers that made them appear to qualify for a fee-charging IVA rather than getting impartial advice. The firm has been stopped from taking new customers. Howard Duckett, a senior manager at debt advice firm Beauforce Corporation Limited, has been banned for a lack of honesty and integrity. Anyone with a debt management plan through Beauforce Corporation Limited is being told to stop payments and seek alternative support.

Anyone who thinks they received poor debt advice, or were pressured into an unsuitable solution, can contact the FCA directly. Complaints about an authorised firm's treatment can also go to the Financial Ombudsman Service if the firm's own response is not satisfactory.