COMPANIES which claim to offer a helping hand to people who are heavily in debt are facing a clampdown by of the Office of Fair Trading.

Thousands of clients who sign up with debt management firms end up worse off, either because of excessive charges or because they are advised to take out further loans.

Director General of Fair Trading John Vickers said: ‘‘People with debt problems are vulnerable and we must ensure that they are treated fairly.

Companies found to be using ‘‘disreputable’’ tactics could lose their consumer credit licences, which would prevent them from taking on new clients.

The OFT is determined to confront the problems caused by debt. Nowadays, it’s not unusual for people to end up owing 30 times their annual salary, according to the Credit Services Association (CSA) — the official body representing the UK debt collection industry.

The Citizens Advice Bureau(CAB) Service revealed recently they are dealing with new cases of problem debt worth a staggering £1.2 billion a year.

Growing problem

In Manchester alone, case workers dealt with more than 12,000 people seeking help to sort out their debts in 2000-01, and in the north west region, the number of people seeking help is now 35 per cent higher than it was in 1998.

The most recent figures show that the average British household now owes more than £5,300 on top of their mortgage.

Problems with loans, overdrafts and credit cards, store cards, mail order and HP repayments have increased by 39 per cent over the last four years, indicating that the credit boom has turned into problem debt for many Britons.

The CAB research, backed by the Office of Fair Trading, found that more than half of those surveyed had borrowed more to try and get on top of their debt problems. Nearly 40 per cent felt unable to cope and in crisis.

NACAB urges people to think twice before borrowing and check they can afford the repayments on top of their existing commitments.

NACAB Chief Executive David Harker said: ‘‘The CAB network is the biggest provider of free, independent, expert advice on debt in the UK, but we are still shocked to find our advisers are dealing with personal debt on such a huge scale.

The Leeds-based Consumer Credit Counselling Service (CCCS) is a charity which also offers free advice and last year helped over 90,000 people with debt problems.

‘‘There is no need for people to pay debt management companies for advice when they can get it free from us,’’ said spokeswoman Frances Walker. The CCCS helpline is on 0800 138 1111.

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