Debt management firms 'can leave people in a worse financial situation'

Australia’s financial services regulator has warned consumers to be wary of companies that claim they can fix poor credit ratings.

ASIC is running a campaign to help Australians understand that credit repair and debt management firms can charge high fees – and sometimes give nothing in return.

These companies “often fail to fix credit and debt issues, which can leave people in a worse financial situation”, according to ASIC.

ASIC deputy chair Peter Kell said there are free services, such as the National Debt Helpline, which can help Australians fix credit reports or resolve their debt problems.

“Consumers experiencing money or debt problems don’t need to put themselves under further financial stress by paying high fees to firms providing credit repair and debt solution services,” he said.

“If people are having difficulty obtaining loans because of an incorrect default listing on their credit report, there are actions they can take that are free of charge to have it corrected.

“If you think you have had a credit default wrongly listed against you, contact the creditor and ask for it to be removed. If you aren’t satisfied with the response, you receive you can contact the relevant dispute resolution service for help.”

Mr Kell said consumers should consider alternative services, like financial counselling, before engaging a debt solutions firm.

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