Debt management firms which charge fat fees for advising people about how to deal with debt woes were warned about some of their dodgy activities this week.
The Office of Fair Trading has demanded that they stop sending annoying unsolicited text messages, designed to trick hard-up people into paying for advice they can get free from debt charities.
The firms must also stop rewarding staff with cash bonuses "which may encourage them to promote unsuitable debt management products for personal gain".
Finally, the OFT said it would crack down hard on firms which operated websites designed to look like they were a charity or government body. The latter is, perhaps, the most pernicious as rogue firms are effectively passing themselves off as trusted official or charitable sites.
By doing so they fool people into thinking they are getting decent help, rather than being stung for expensive fees and charges with, often, there being no actual help offered at all. The net result can be that desperate people who need financial help find themselves even deeper in debt after contacting the dodgy firms.
For that reason, debt managers are also expected to refer people to not-for-profit advice organisations for help in certain circumstances and to identify vulnerable clients, such as those with mental capacity issues.
The OFT has been cracking down on debt management firms in the past two years. Following a 2010 review of the sector, 129 firms were issued with warnings. Some 87 have since shut down and a further 67 warning letters have been issued.
David Fisher, the director of the OFT's consumer credit group, said: "All too often it is particularly vulnerable consumers who fall victim to poor quality debt advice, and we will continue to take action against businesses that fail to follow our guidance."
But Gillian Guy, the chief executive at Citizens Advice, said the OFT's powers to act were not strong enough. She called for swifter action against rogue debt managers. "It's not good enough that firms found unfit to hold a credit licence remain free to continue trading while they appeal decisions by the OFT. We want to see the OFT urgently empowered to stop this," she said.
There is plenty of free advice available to struggling families, not least at Citizens Advice Bureaux. There is also free debt advice available over the phone from charities such as Debt Advice Foundation (0800 043 4050), National Debtline (0808 808 4000) and the Consumer Credit Counselling Service (0800 138 1111).
Attempts to clean up the debt management industry have been led from the inside by the Debt Resolution Forum, which represents what it says are more reputable firms. Its chairman, David Mond, said: "We welcome the OFT's new guidance, which formalises current good practice and provides clearer and more specific guidance for debt management companies."
His view – as you might expect – is that decent debt advisers earn their money by helping struggling people to manage their debt problems and going further than the free advice offered by debt charities.
"There are hundreds of thousands of people who need debt advice and can afford the fees our members charge," Mr Mond said. "We're keen for consumers to go to a fee-charging debt resolution company in confidence that they will not be misled or their money mishandled."