The British Bankers' Association (BBA) has called on debt management companies to attend a forum on how the financial services industry can collectively counter debt difficulties.
The BBA is concerned by advertising practice among some debt management companies, as well as the quality of advice given to customers, claiming that eight out of ten firms do not provide adequate information about the costs and consequences of different arrangements.
Nine out of ten firms failed to explain alternative options, according to the BBA, and emphasised the advantages of the IVA (individual voluntary arrangement), which allows customers to cancel a reduced debt at the end of a period of monthly repayments agreed with creditors.
BBA chief executive Ian Mullen is concerned that "young, inexperienced and vulnerable people are being targeted by adverts and mail shots which lead them to believe they will be able to walk away from their responsibilities".
Last week Philip Beck, insolvency practitioner at freeadvice.co.uk, warned that IVAs were not "a quick way out", adding that almost a quarter of people who enter into IVAs go bankrupt while making repayments.To read more about the best savings accounts, click here.
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