Important Changes to UK Debt Services
Jun 02, 2023 ● 3 min
Today, the Financial Conduct Authority (FCA) has banned referral fees from debt advisory firms in the UK – a move that has been widely welcomed by many, including Money Advice.
What are referral fees?
Before today, companies in the UK were entitled to referral fees from debt advisory firms if they referred a consumer for debt services. These referral fees were at the discretion of the companies involved and often, were used as incentives to receive more referrals – at an average of £9401.
This meant that in lots of cases, companies were putting profit over consumer needs, and many people were referred for services that didn’t they didn’t benefit from or qualify for.
What do the changes mean?
Across the UK, more and more people are struggling financially due to constant rising living costs. As a result, many debt companies have appeared, claiming to be able to help consumers and offer advice around solutions. Many young companies lack the expertise, experience and authorisation to be able to offer these services, but have been enticed by the offer of referral fees from other advisory firms. The change in the law to ban referral fees means that many companies can no longer capitalise on people’s debt and consumers can search safely for solutions.
If you’d like to know more about these changes, you can do you via the FCA website.
What about Money Advice?
Here at Money Advice, we are grateful for these new changes, believing that this step from the FCA puts consumers first.
This will not affect how Money Advice supports our customers. Through our joint ventures with licensed Insolvency Practitioners, we ensure we are accountable for all of our clients and the help they receive.
Are there any other fees?
In some circumstances, there are costs or fees involved in debt solutions – these are not referral fees that the regulator has now banned. You can find out more about other costs and fees involved in cases such as an IVA here.
What if I’m Struggling With Debt?
The impact that these changes will have are only going to benefit consumers. Many companies may not be able to continue to offer their services in the same capacity, but this means those that do remain are companies such as ourselves, who do not rely on referrals and incentives to offer you the best debt help we can and talk you through all your available debt solutions.
If you’re struggling with debts, support is still here when you’re ready.
Get in touch
1 BBC News: Debt advisor referral fees banned by regulator: https://www.bbc.co.uk/news/business-65779455