Debt firm defends soaring profits

20-11-2006

Debt firm defends soaring profits
Debt solutions company Debt Free Direct has announced that its profits increased by 128 per cent during its first-half period.

In the six months to October 31st the company achieved profits before tax of £4.26 million, a dramatic growth on the £1.85 million made in 2005.

As a result of the "very impressive set of results", a share dividend of three pence has been issued, double the initial dividend of 1.5 pence, the group said.

Derek Oakley, director of insolvency at Debt Free Direct, appeared on this morning's Today programme to defend allegations that the group was benefiting from other people's debt problems.

"What companies like Debt Free Direct are doing is increasing our resources so that we can make good quality advice accessible to them," he explained.

Mr Oakley admitted that individual voluntary arrangements (IVAs), in which an insolvency practitioner supervises repayments of a percentage of a person's debt over a fixed period, were being advertised misleadingly by other members of the industry, however.

"It's a frustration to an ethical company like Debt Free Direct, which will always do the right thing, that these concerns exist, because of course it damages the entire industry," he said, adding that his company had introduced proposals to enforce accreditation systems to a conference on the issue.

He did not agree that all indebted people would be better off entering into an informal arrangement with their bank, rather than an IVA, however.

"An IVA is a good solution for a certain proportion of people; roughly between four and five per cent of the people who contact us can do an IVA," he said.

Despite today's increase in profits, shares in Debt Free Direct fell by 1.2 per cent during early morning trading.


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