National Debtline and Citizens Advice Scotland give free advice on whether a plan is the right answer, without administering one for you.

A commercial provider may charge, and there is no cap on what it may charge.

Fee-charging firms are regulated on the same basis as the free ones, and what differs is where the money to run your plan comes from. What a debt management plan is covers the arrangement itself.

The charities, and some firms that are not charities also run plans at no cost to the client. Christians Against Poverty says on its Scottish page that all its services are completely free.

The two models side by side

Both need authorisation. Any firm carrying on debt counselling or debt adjusting by way of business needs it, and CONC 8 applies to not-for-profit bodies holding those permissions as much as to anybody else.

One rule does not bind the charities

The Handbook defines a debt management firm so as to exclude a not-for-profit debt advice body. So the rule requiring a firm to state prominently that free debt advice is available binds everyone except a not-for-profit debt advice body.

Note what that does not mean. A commercial firm running plans at no cost to its clients is still a debt management firm and is still bound by the rule.

If you cannot find that statement on a commercial firm’s website, that is worth noticing. How to check a firm is authorised sets out the rest of the checks.

By the credit industry, in most cases. StepChange says it is funded almost entirely by voluntary donations, and that those donations come from creditors such as banks, building societies, high cost credit providers, utility companies and MoneyHelper.

What fair share means, and what it costs you

It is a percentage-based contribution creditors pay for the service, based on the payments they receive. StepChange’s Annual Report and Accounts 2024, published in May 2025, gives the average fair share rate as 10.33 per cent in 2024, down from 10.53 per cent the year before.

That percentage comes out of what the creditor receives rather than out of what you pay in. Your full monthly payment still goes towards your debts.

The charity model works differently again

Christians Against Poverty says it can provide free services because it is a charity receiving donations from churches and individuals who want to help people, and that it is authorised and regulated by the Financial Conduct Authority.

National Debtline gives free advice and publishes template letters for people arranging a plan themselves. None of this makes a free provider a soft option, because the same conduct rules apply.

There is no cap. CONC 8.7 sets no maximum and no maximum percentage, and that is a checked absence rather than an oversight.

What there is instead

A rule about the effect of the fees, and guidance about when that rule is likely to be broken. The two are different things and they are constantly reported as one.

The closing words of CONC 8.7.2R matter and are usually dropped: the ability to make significant repayments is measured starting with the first month of the plan. A firm may not load its whole fee into month one.

How to read the guidance properly

CONC 8.7.3G says the Financial Conduct Authority is likely to view an obligation as undermining your ability to repay where the firm may allocate more than half of your monthly payment to its own fees. That is guidance about a breach.

It is not permission to take half. There is no cap and no entitlement, and anybody presenting it as one has misread the status of the provision.

Two things a firm may not do at all

CONC 8.7.6R prohibits requiring or taking any payment before the firm has entered into a contract with you, and prohibits fees being paid by credit card or another form of credit.

And CONC 8.3.11R prohibits a firm accepting any commission, fee or other financial consideration from a debt solution provider. That is the referral conflict the rules are designed to prevent.

It changes how much of your payment reaches the balances, and therefore how long the plan runs. The length of a plan is your total debt divided by what actually gets paid off it.

The mechanism is simple arithmetic

Money kept as a fee is money not reducing a balance. Where interest is also still running, the two effects compound.

No reliable market average for what firms charge is published anywhere, so asking your own provider for its total cost in writing is the only reliable answer.

Interest is the other half of the sum

No creditor has to freeze interest because you are on a debt management plan. No statute requires it and no Financial Conduct Authority rule requires it.

Most creditors agree when asked and none has to. Whether a plan freezes interest sets out the rule and the guidance behind that.

The service itself is not what varies most

Fee-charging firms are subject to the same conduct standards, the same Consumer Duty and the same complaint rights. How a plan works applies either way.

Under the statutory scheme the fees come out of what your creditors receive. Regulation 17(1)(a) says a payments distributor must make no charge of any kind to a debtor for payments distribution.

Where each fee sits

Regulation 5(2) says the scheme administrator’s fee may not be charged to the debtor and is charged to all creditors taking part, and regulation 5(3) puts it at 2 per cent of the sum due to a creditor.

The distributor’s fee is fixed, not a ceiling

For an individual it is 20 per cent of the sum due to a creditor, including any VAT, since 4 November 2019. Regulation 12(2) also stops a money adviser charging an individual anything at all.

So the arithmetic is the opposite way round from a fee-charging plan. The difference between a plan and the Debt Arrangement Scheme compares them properly, and the scheme itself does more than change who pays the fee.

Ask, in writing, before you sign anything. The pre-contract information has to cover the total cost or the formula used to calculate fees, and it has to come in a durable medium.

The questions worth asking

Then check the firm on the register. The Financial Conduct Authority tells consumers to make sure the person or firm is authorised and has permission for the services it is offering.

Lead generators are the thing to watch for

The regulator warns that some firms should only take basic information about your debts and provide factual information about products, and are not authorised to provide debt advice.

They often rank well in search results. How to check a firm is authorised sets out what the register does and does not tell you.

You can move

Switching provider is a contractual matter, so check the notice terms and get full account details from the current provider before you cancel anything.

A complaint, then the ombudsman, and compensation cover for client money. The Financial Services Compensation Scheme covers a shortfall in client money up to £85,000 per eligible person per firm for failures on or after 1 April 2019.

What the cover does and does not reach

The lower limit of £50,000 applies to failures between 1 April 2018 and 31 March 2019. The scheme does not cover debt advice itself, and it does not cover money paid under an individual voluntary arrangement, which is not a Scottish solution anyway.

Complaints

Complain to the firm first, and then to the Financial Ombudsman Service. Being authorised is what makes that route available, which is a practical reason to check the register rather than a formality.

And there is a rule you can point to on fees. CONC 8.7.4R requires a refund or a credit where the advice given was incorrect or was not appropriate to you.

Where to get free advice on all of this

Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland all give it at no charge, and how a monthly payment is worked out is the figure worth testing before you commit to anybody.

It is also worth asking whether a plan is the right shape of solution at all. A plan against sequestration sets out the other end of the scale.