One bad case can tell us a lot about the debt advice market

By Caroline Darnbrook, Acting Chief Client Officer

The Financial Conduct Authority (FCA) is very clear about Consumer Duty and delivering the best outcomes for clients; it’s something we at StepChange take incredibly seriously. As the largest provider of not-for-profit advice, supporting around 170,000 people a year, we strive to deliver for those who come to us for support, but more widely strive to lead the sector, setting the best example possible.

That’s why when the news broke recently, we were horrified to read the full details of a £300,000 fine issued by the Information Commissioner’s Office (ICO) relating to more than 5.5 million text messages sent without consent to people in debt by an unauthorised, unregulated firm acting illegally. The firm was trying to pressure people into responding by falsely claiming that bailiffs would shortly be arriving at their homes. What’s more, they specifically targeted people who they knew had been rejected for a loan, and directly pushed debt solutions onto them, solutions which may well not have been suitable for those in question.

It is truly frustrating, as an organisation that takes the delivery of good client outcomes very seriously, to see organisations like the one in this case acting with seeming impunity for long periods outside the rules before any intervention occurs. To think there were over 60,000 complaints made about the texts, which were sent between 2022 and 2025, shows that even in the most egregious of cases it takes a huge amount of consumer and regulatory effort, and time, to address the kind of predatory behaviour that should never be happening in the first place.

In the past, misleading claims such as “Government-backed debt write-off”, “Write off 90% of your debts”, or “Quick and easy debt write-off” were the lure that drew people into firms who then harvested their personal data. This time, though, the tactics used were more threatening, and particularly chilling. The firm suggested that bailiff visits are imminent, and implying emerging recovery action. In essence, according to the ICO’s investigations, the aim appears to have been to scare people into responding. So, not only was the firm acting outside the law as it did not have permission to offer or introduce to debt advice or solutions, but it was also using intimidatory communications to seek to elicit a response.

The sad truth is we are no strangers to this kind of predatory activity, as we’ve seen it many times before, and in various guises. As long ago as 2013, we campaigned to raise awareness around unsolicited marketing communications on high cost credit, finding that a third of clients had received calls about payday loans — at an average of ten a week. And more recently, in 2018, we began campaigning on the issue of IVA lead generators. At that time, it was common to see entries appearing at the top of paid Google and Bing search engine results, deliberately impersonating StepChange and other legitimate debt charities.

In recent times, we have seen a worrying trend in the rise in ‘finfluencers,’ social media accounts and advertisers offering help with bailiffs, council tax debt, and other debt related issues. These ‘bait and switch’ marketing tactics are an of example of debt solutions being aggressively promoted as a means to tackle such issues. Such tactics can be confusing to consumers, putting them at a higher risk of their personal data falling into the hands of scammers and being pushed into a route where, when they need full debt advice and budgeting, they instead receive a ‘quick fix’ that may not fix anything at all.

Specifically, in the past two years we have seen a sharp rise in clients reporting to us that they have fallen prey to ‘3-way’ scams after receiving scam texts from seemingly legitimate debt collection agencies or creditors threatening enforcement action. On calling the number in the scam text, clients are put on a ‘3-way call’ to ‘StepChange’ or ‘National Debtline’, who they are told can advise them on a ‘debt solution’. In some instances, clients are encouraged to lie to increase the likelihood of suitability for an IVA. It is only when contact us to follow-up or become suspicious or pressured do they realise they have talking to StepChange impersonator.

What we don’t know is how many other firms or individuals may be doing similar things. Overall, whilst the landscape may seem more hazardous than it used to be, with increased regulation and bad practice exposed, this specific case along with our own experiences provide constant reminders that the issues haven’t gone away, and that we can never be complacent as tactics change. The reality is there are still opportunists out there who are more than willing to exploit financial fears and debt situation for their own profit.

The truth is, unless you have a good understanding of what debt advice is, where to get it, and the debt solutions available, you may not assume that bad actors can make money out of people in problem debt. But how wrong you would be. Selling someone an IVA, whether or not it is the most suitable solution for them or selling them a fee-charging debt management plan (unlike the ones that charities like StepChange provide for free), can be income-generating activities for commercial firms. And opportunists were quick to exploit the regulatory grey area that meant regulators were sluggish to deal with the exploitation.

It’s vital that we make our case to Government and the regulator to ensure the debt advice market is properly regulated, as without action, and consumer awareness, people will continue to face opportunists like those of KRA Consultancy, the IVA lead generators, and finfluencers, all of whom aren’t bound by the standards they should be and do not necessarily strive to provide the best outcomes for individuals but instead seek to feather their own nest. Thus, we need to ensure:

1. Anyone making referrals to debt solution providers on a commercial basis should be regulated by the FCA.
2. Debt solution providers must be required to fully investigate the origins of any leads they use back to the start of the chain when consumers were first ‘acquired.’
3. There is root and branch review and reform of debt advice and solution promotions to make it easier for consumers to know who they are dealing with and evaluate what promotions are saying.
4. A joined up approach to investigation and enforcement from Government and regulators to ensure that those exploiting financially vulnerable consumers for gain feel the full force of the law.

For consumers, it is just as vital to know just who you’re dealing with before parting with any personal or financial information. Even in the world of debt advice, where legitimate organisations really want to help, it still pays to be wary. Double check that you are dealing with a legitimate organisation. Search the Financial Services Register (which includes a warning list of firms who may be scammers). And ultimately, make sure you’re dealing with the debt advice organisation you think you are.