An estimated 70,000 commercial debt management plans (DMPs) may have been ‘orphaned’ since the Financial Conduct Authority (FCA) full authorisation process began.
Nick Pearson, chief executive of debt charity The Debt Counsellors, gave Credit Strategy magazine his estimate for the number of DMPs that now have no company managing them – as a result of firms that have been refused authorisation or left the sector.
He believes there are around 200,000 thousand plans in operation but worries what will happen to them if more firms leave the market.
While a large number of consumers with these plans will now head to the free advice sector, or an-other debt management firm, there is concern that some will find themselves dealing with collection agencies once again.
The number of debt management companies has plummeted by nearly 50 percent since the FCA took over regulation of the sector.
Chief executive of the Debt Managers Standards Association (DEMSA), Kevin Still, has hit out at the regulation process which has seen some firms awaiting authorisation for two years.
Still said: “We are supposed to have ‘authorised’ lifeboats available for the fallout from the authorisation process. They are not in place. Firms were meant to have been determined by no later than January 2016. They weren’t.”
Pearson added: “There are some very good firms operating in the commercial debt management sector and it would be disappointing if the FCA couldn’t work with those firms to get them authorised.”
Amongst the most recently approved firms Manchester-based firm Baines & Ernst.