Debt advisors will no longer be allowed to receive a fee for referring people to debt solution companies.
The Financial Conduct Authority (FCA) banned the fees after finding some companies were putting them ahead of customers’ best interests.
The average fee advisors received for an individual voluntary arrangement (IVAs) referral in 2019-2020 was 940.
A homeless client was recommended an IVA costing 6,000, but could have been debt-free for 90, the FCA found.
Citizens Advice said banning referral fees was “a big step towards tackling the way some firms prey on and profit from people struggling with debt”.
The FCA said the ban applied to “debt packagers” which are regulated providers of debt …
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