The Office Fair Trading (OFT) have warned 129 debt management companies that their Consumer Credit Licences will be revoked unless they take immediate action to ‘improve their standards substantially’.

The OFT carried out a series of undercover investigations that involved visits to many debt management companies. They found evidence that firms were failing to reveal the fees they charge and sometimes falsely presented their services as free.

Debt management companies target people who have money troubles and promise to negotiate a way to avoid going bankrupt by making regular monthly payments on their debts. In addition to failing to disclose fees, some of these debt management companies have no experience in personal finance and are not qualified to help.

Britain can be said to be in personal debt crisis, with more than £1 trillion owed by ordinary families. This situation has led to the current boom in the debt management industry.

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Excellent article by Nick Caulfield, Account Director at buy.at, on the finance sector of affiliate marketing

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My Home Finance, set up by the National Housing Federation, is designed to give manageable loans to people with bad credit histories. The scheme is being piloted in the West Midlands, and the aim is to provide an alternative to loan sharks in the area.

Customers on the scheme will have to go through a 45 minute interview process – if it is deemed they have a realistic chance of paying the money back, they will be able to borrow around £500 to be paid back weekly.

The APR of the loans is 29.9%, rising to 49.9% in April. Interestingly, this interest rate is higher than the maximum that credit unions can charge by law. However these rates are lower than the legitimate doorstep lending companies such as Provident.

As part of the scheme customers will also be offered debt help, and advice on how to open a bank account.

There is an estimated 4 million people in the UK without access to mainstream affordable credit. The NHF is planning to open up branches across the country and write up to 150,000 loans for people on lower incomes in the next 10 years.

What are your thoughts on this scheme? Have your say below:

The Bank of England’s Monetary Policy Committee today voted to keep the base rate of interest at 0.5%.