Financial advisers
should think twice before suggesting consolidation to indebted clients, a debt
mangement advisor has warned. TCF Debt Solutions says that unless advisors
include alternatives to consolidation in their advice to clients with debt
problems, such as individual voluntary arrangements or wider debt management
solutions, they may fall foul of the Financial Services Authority's Treating
Customers Fairly regulations.
Andy Moody, chairman
of TCF Debt Solutions, says: “We need to move beyond a consolidation mentality
as advisers.
“Consolidation has
helped many customers but for a lot of clients it can be argued that taking on
more debt is just forestalling an inevitable move into greater problems that can
lead to bankruptcy."
He adds: "The
question will then be whether the intermediary assessed the client correctly at
the outset, and the FSA will expect to see that in keeping with treating
customers fairly the client was fully aware of all the
options.”
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