How to Tell If a Debt Adviser Is Legitimate

Genuine debt advice in the UK is free. The charities that give it, including StepChange Debt Charity, National Debtline and the Debt Advice Foundation, do not charge for the advice itself, and the Scottish Government funds organisations to give free debt advice in Scotland¹. If a company is asking you to pay for the advice, or for a plan you could have had free, that is the first thing to look at.

The second is authorisation. Debt advice given by fee-charging debt management companies and by charities is regulated by the Financial Conduct Authority, and you can check any firm on the FCA register³. Lenders must be authorised by the FCA or they are lending money illegally, and the same logic applies to anyone arranging how you repay⁵.

The third is what happens to your money. If a debt management firm fails, the Financial Services Compensation Scheme can only step in where the firm was authorised by the FCA and held your money as client money, and debt advice itself is not covered⁶. Free charity plans, where your payments go to creditors rather than sitting with a company, avoid that question altogether.

Genuine debt advice is free: what the charities charge

The single clearest marker of a legitimate adviser is that the advice costs you nothing. StepChange Debt Charity describes its service as free and impartial debt advice, and as free and confidential advice¹¹. The Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt, including bankruptcy¹³. National Debtline provides free, impartial debt advice as a registered charity¹⁵.

Advice NI, which covers Northern Ireland, is named in official guidance as a source of free and independent advice about informal arrangements and debt management plans¹⁶. The Money and Pensions Service runs a Debt Advice Locator for finding free debt advice services across the UK¹⁸.

The warning is blunt in the guidance itself. One specialist debt charity puts it as: "Never pay for debt advice. There are a number of great specialist debt charities who can help with your debts for free."¹ Another states that people should never pay for debt advice because there are lots of free advice services¹⁹.

That does not mean every paid service is illegitimate. Some financial advisers charge a fee, and official guidance in Northern Ireland notes that alongside the free and independent organisations²⁰. The point is that paying is a choice, not a requirement, and a firm that presents payment as the only route to help is misrepresenting what is available.

FCA authorisation: the check every debt adviser should pass

Debt advice is a regulated activity when it is given by fee-charging debt management companies and by charities, and the Financial Conduct Authority is the regulator³. You can check whether a provider or adviser is authorised on the FCA register, which is public and free to search⁴.

The same rule sits behind lending. Lenders must be authorised by the FCA or they are lending money illegally⁵. Anyone offering to arrange credit, or to renegotiate what you owe, is operating in the same regulated space, and the absence of an entry on the register is a reason to stop.

Two practical checks take a minute each:

1. Ask the firm for its full legal name, not just the trading name on the advert.
2. Search that name on the FCA register and read what the entry says the firm is permitted to do.

If a firm cannot or will not give you a name to check, that is the answer. Charity advisers will give you their details without hesitation, because they have nothing to hide.

What a legitimate adviser does for you

A real adviser starts with your whole situation, not with a product. Shelter Scotland's guidance describes an adviser checking whether you can claim any benefits and helping you apply, as well as looking at crisis grants and charity funds, budgeting, negotiating with creditors, and recommending formal solutions such as a debt management plan where one fits¹.

Negotiation is a large part of it. Debt advisers can help you contact the organisation you owe money to and help you agree a payment plan with them²¹. That matters because creditors deal differently with an adviser than with an individual under pressure.

Where a formal solution is being considered, the adviser has duties too. Insolvency practitioners must ensure creditors are treated fairly, repay as much as possible to creditors, help rescue businesses and jobs, help individuals find relief from problem debt, and help investigate fraud²². Independent financial advisers must by law give up to date and appropriate advice tailored to your situation and goals in life²³.

Debt management plan providers have a duty to give debt advice that is in your best interest, for example letting you know if something other than a DMP would suit you better²⁴. If an adviser only ever recommends the one product their firm sells, that is worth noticing.

In court cases, a duty adviser can give you last-minute advice, try to negotiate an agreement with your lender's representative, and speak for you in court²⁵. That is free advice doing real work at the point where it matters most.

Debt management plans and IVAs: which fees are normal

Fees are where legitimate and illegitimate services diverge most clearly, so it is worth knowing what is normal.

A debt management plan is managed by companies known as debt management plan operators or providers, who negotiate with your creditors and manage your payments¹⁷. Some of those charge a fee; some do not. StepChange Debt Charity offers free debt management plans²⁶, and PayPlan can set up a free debt management plan, handling payments and negotiating with the people you owe money to²⁷. Official guidance names StepChange as an example of a charity offering free plans²⁶.

For IVAs, the picture is different because fees are built into the arrangement rather than charged on top. Insolvency practitioners charge fees for setting up and supervising an IVA, agreed by creditors at the creditors meeting and taken from the funds you propose to pay into the IVA²⁸. IVA fees are based on a standard fee structure that all insolvency practitioners must adhere to⁸. Any fees have to be approved by creditors⁹.

What is not normal is paying a debt management company on top. A debt management company is likely to be more expensive because they charge a fee on top of the insolvency practitioner's fees, and getting an IVA without one is usually cheaper²⁹. Before an IVA is even considered, an adviser would already have considered debt restructuring solutions such as remortgage³⁰. And the advice itself comes first: free independent advice before selecting an IVA matters, because companies can sell IVAs that are more expensive than they need to be³¹.

Where to get free debt advice across the UK

Free advice is available in every nation, though the organisations and the solutions differ.

In England and Wales, National Debtline provides free, impartial debt advice as a registered charity and has been giving free professional debt advice for over 30 years¹⁵. Its free debt advice line is 0808 808 4000¹⁰. StepChange Debt Charity offers free, flexible debt advice based on a comprehensive assessment of your situation, with practical help and support for however long it is needed³³, and free online debt advice is available now³⁴.

In Northern Ireland, Advice NI is named in official guidance as a source of free and independent advice on informal arrangements and on debt management plans¹⁶. The Debt Advice Foundation offers free, confidential support and advice on any aspect of debt, including IVAs and bankruptcy³⁵.

In Scotland, the Scottish Government supports organisations to give free debt advice², and the advice itself is different because Scotland has its own solutions and procedures³⁶. Shelter Scotland's service covers benefits checks, crisis grants and charity funds alongside debt advice¹.

If you owe money to HMRC, official guidance points to free, confidential and independent advice from a debt adviser³⁸. The Money and Pensions Service Debt Advice Locator finds free debt advice services across the UK¹⁸, and the Money Advice Service's persistent debt guidance sets out how to access free debt advice³⁹.

Will getting advice affect your credit score?

No. Debt advice does not affect your credit score, though some debt solutions will⁴⁰. Getting advice will not affect your credit file or impact your credit score⁴¹, and debt advice has no impact on your credit score⁴².

That distinction matters because it is a common reason people delay. The conversation is not reported; the solution you choose may be. A debt management plan, an IVA or bankruptcy each leave a mark that lenders can see, and that is a decision to take with advice, not a reason to avoid advice.

What protects you, and where that protection stops

The protections around debt advice are real but narrower than people assume.

The Financial Services Compensation Scheme can help if a debt management firm has gone out of business, but only where the firm was authorised by the FCA and held client money⁶. Debt advice itself is excluded from that cover⁷. The adviser must also have gone out of business for the scheme to be able to help, and it must have been regulated by the FCA at the time it gave the advice⁴³.

If a firm has followed the rules badly, Citizens Advice sets out how to check whether a financial service has followed the rules and what to do next²⁴. Where a debt management plan provider has closed, there is specific guidance on what happens to the plan²⁷.