Fair Trading clampdown on debt management companies
Much-criticised private debt management companies have been warned to raise their standards or face sanctions.
The companies advertise widely and often cold-call heavily indebted people, promising to help manage their borrowings and deal with lenders.
The Office of Fair Trading has unveiled new guidelines designed to eliminate suspect practices, including the tactic of retaining clients' money rather than passing it on to creditors.
Debt management firms will have to have ring-fenced accounts to safeguard clients' money and draw up clear contracts on how it will be passed on.
There are measures to prevent firms taking fees from client funds without warning.
And the rules prohibiting cold-calling have been reshaped. Unsolicited calls, texts and emails are banned unless people have given prior consent.
Since last autumn 43 debt management firms have surrendered their licences and the OFT has taken action to stop another 11 from operating.