Debt management firms must be regulated, says consumer agency
The warning came from National Consumer Agency chief executive Ann Fitzgerald, who said that only full regulation would protect consumers who dealt with such companies.
Her statement came as it was revealed the Central Bank has written to hund-reds of customers with Dunne and Maxwell, a Dublin-based debt management firm trading as yourmoney.ie. The letter recommended customers to suspend all payments tothe company and "consider contacting the Garda" if bills to be paid on their behalf were not up to date.
Dunne and Maxwell, which was unavailable for contact last night, has been acting as a debt management company for over seven years and on its website promises to reduce people’s debt by 50%.
In a letter dated Jan 20, the Central Bank wrote to about 500 Dunne and Maxwell customers advising them to stop making payments "with immediate effect".
The bank’s letter said that "in the public interest and as part of a general review of the debt management sector", it had inspected the company and had "reasons to be concerned about the nature of the company’s operations and its handling of customers’ money".
The Central Bank has no regulatory power over debt management companies, something the consumer agency said should be amended immediately.
The group also wants the Government to urgently legislate for the regulation of all firms that take money from consumers for debt management or payment and budget management.
Ms Fitzgerald said: "Events at Dunne and& Maxwell and, in 2011 at Homepayments Ltd, sadly highlight the urgent need for regulation of this area, particularly so that cons-umers’ funds are required to be ring-fenced and therefore protected in cases where a company ceases trading.
"Our view is that the many protections when dealing with regulated financial services firms, including the ability to make complaints to the Financial Services Ombudsman and the protection of the Central Bank’s consumer protection code, need to urgently be extended to firms in these categories.
"We would also strongly argue that any firms that take and hold consumers’ money should be brought into the deposit guarantee scheme, where appropriate, which covers a consumer’s deposits up to €100,000 per institution."
She said it was "crucial that consumers who use the services of these companies are protected".
* Any consumer dealing with an unregulated firm who is worried about the safety of their money should contact the Central Bank’s helpline on 1890 777 777.
