The debt advice that adds to the problem

Julian Knight asks if lenders make things worse by charging hard-pressed borrowers for help

Figures from the Council of Mortgage Lenders show that about 130,000 people in the UK are three months or more behind with their mortgage repayments.

Spooked that a US-style debt crisis is playing itself out here, lenders are busy urging homeowners to contact them as soon as they find they can no longer cope with the bills. But even if they act responsibly and seek help with their debts, overstretched borrowers could still find themselves in for a shock, through the imposition of fees for a debt or arrears counselling service.

These fees, which can top £100, are levied for speaking to or receiving a home visit from an external debt counsellor appointed by the lender, usually after the mortgage has been unpaid for at least three months. The fees are often added to the mortgage debt, heaping on the agony by attracting extra interest charges.

Some of the biggest lenders, including the Halifax, Lloyds TSB, Abbey and the beleaguered Northern Rock, employ debt counsellors and charge their customers a fee. Yorkshire Building Society will soon join them. But industry observers and debt charities have doubts over the quality of advice given and the necessity of imposing a charge.

"This is a disturbing practice," says David Kuo from price-comparison website fool.co.uk. "The last thing people need in this situation is to have fees piled on them, particularly when they can probably get a better service from one of the debt charities. I worry that these advisers could simply recommend that people take out new borrowing to paper over the cracks."

Citizens Advice adds that lenders' debt counselling services can be an unwelcome intrusion. Moira Haynes from the charity says: "We have seen cases where people in arrears have received a knock at the door from a supposed debt counsellor but they are not qualified to give advice and clearly work for the lender. The borrower is often unaware that the advice being offered can cost them £100."

A spokeswoman for the Halifax, which levies a £100 fee when referring customers to an external debt counselling service, says: "We are open about our charges. The approach of our debt counsellors is to gain a full understanding of the customer's personal circumstances with the aim of arranging a mutually agreeable arrangement."

Not all big lenders find it necessary to adopt this policy. Royal Bank of Scotland, for example, refers people in arrears direct to the debt charities instead.

But Louise Cumming from comparison service Moneysupermarket.com says lenders, generally, are "failing in their duty of care" to borrowers in arrears: "Twenty years ago the branch manager acted as debt counsellor. That's no longer the case. Surely lenders, from their huge profits, could pay for access to a free independent counselling service?"