Bank outlines debt failures

The Central Bank has written to a number of debt management companies outlining a litany of failures to comply with consumer protection requirements.

The bank recently inspected 35 of the 48 companies authorised to carry out the business to find out how they were complying with the conditions of their authorisations.

It said it was important that consumers were fully aware of the cost of the services of a debt management firm.

“All firms are required to make their fees and charges publicly available including placing a schedule of them on the firms’ websites,” it said.

“Only one of the 26 websites reviewed contained information on fees and charges for consumers. Transparency is of particular importance in light of the significant variations in the fees charged by debt management firms.”

It said initial consultation fees varied from free to €615; hourly fees varied from €125 to €246; some firms charged retainers of between €35 and €50 per month; and some firms required upfront payments.

Furthermore, it pointed out regulated firms must provide information to consumers that is clear and not misleading.

However, it found a small number of cases where there was:

• Out-of-date information on websites;
• An absence of warning statements and regulatory disclosure;
• A regulatory disclosure being used in a manner which could be deemed to be an endorsement of the firm by the Central Bank.

The Central Bank said debt management firms are required to gather and record sufficient information in order to be able to assess the needs, objectives, personal circumstances and financial situation of a consumer, so that they can provide the appropriate advice. Despite that, it said six out of 10 firms reviewed did not, in all cases, gather and record sufficient information as required by the Consumer Protection Code.

Since June 1, 2014, people providing debt management services have been required to meet minimum competency standards. Yet the bank found in eight of the 10 firms inspected, staff members had not registered for the first available sitting of the examinations requi- red by the minimum competency code.