Debt management rules to ‘better protect consumers’

The Central Bank has published new rules governing debt management firms which it says will offer greater protection to consumers in dealing with an industry that was completely unregulated up to a year ago.

Among the revisions to the Consumer Protection Code is a ban on debt management firms from arranging additional credit for consumers for the purpose of paying fees or charges arising from the use of debt management services.

Companies will also be prevented from paying third parties for client referrals or client leads which is aimed at reducing the likelihood of consumers not previously engaged by debt management firms from contacting them.

The Central Bank’s revisions, director of consumer protection Bernard Sheridan said: “Debt management firms have a responsibility to protect their consumers’ best interests and we expect firms to demonstrate that they can deliver on this. If a consumer finds themselves struggling with debt, the first positive step they can take is to engage with their lender immediately to try to resolve or manage their debt issues,” said Mr Sheridan.

The new code also places a requirement on firms not to obstruct their consumers from communicating directly with their creditors if they wish to do so.

A debt management firm can only charge after the consumer has signed an agreement which clearly specifies the charges payable.