Debt and Debt Management

Debt Management Plans are much in the news these days. Some negative aspects of the industry made the biggest headlines. Like any industry a few bad apples can give the barrel a bad name. In the UK the Office of Fair Trading (OFT) has already taken steps to deal with the bad apples. The most serious offences it has identified occurred in the areas of marketing and charging practices. In September 2010 it issued a warning to 129 debt management companies and followed that up with high profile enforcement action against the worst offenders. The OFT intends to publish revised debt management guidance in June 2011. It is not clear at this point whether the government plans to introduce any legislation to regulate Debt Management Plans. However The Ministry of Justice has issued a consultation document on the future of Debt Management Plans. Three options for regulation are being suggested. These are to marginally enhance regulation by the OFT, to introduce industry self regulation with voluntary codes of practice and/or to create a new solution i.e. a statutory Debt Management Plan. Since the Debt Management Plan is the dominant personal insolvency solution in the UK at present, it is puzzling that the government seems to shrink from the responsibility of legislating in this area. So what is the current status of national debt management and how does it bring relief to debtors?