What these firms offer, and the free route beside each
Moneysmart lists what a debt management firm may offer to do. Beside each, the table sets a free service that the official sources describe for the same job.
| A firm may offer to | A free route the sources describe |
|---|---|
| Negotiate with your lenders | A financial counsellor can negotiate with creditors on your behalf. |
| Set up debt repayment plans | A lender’s hardship team can set up a payment plan or alter repayments, and the lender must consider a hardship request. |
| Challenge credit report listings | Getting errors corrected is your right, costs nothing, and is something you can arrange yourself. |
| Lodge complaints on your behalf | AFCA says making a complaint is free, and a financial counsellor can lodge complaints with dispute schemes for you. |
| Help with budgeting or debt consolidation | A financial counsellor can develop a workable budget with you. Counsellors do not provide debt consolidation. |
| Arrange a formal debt agreement under the Bankruptcy Act | The National Debt Helpline says always to see a financial counsellor before considering a debt agreement. |
Moneysmart’s own advice is that before deciding to pay for a service, it helps to discuss what you need with a free financial counsellor or debt management service.
The pros and cons, as Moneysmart weighs them
Possible pros
- Help negotiating payment plans or hardship options with lenders.
- Support lodging disputes or being represented in a complaint.
- Budgeting tools and help putting a budget together.
- Consolidating several debts into one amount.
- Less stress, with someone else dealing with creditors.
Possible cons
- Fees, including fees charged before any service is delivered, and totals that are not always easy to work out.
- Low value for money, when free services are likely to be available for the same outcomes.
- High-pressure marketing and claims about what the firm can do.
Moneysmart says the benefits can be real for some people but come with important trade-offs, and that choosing whether to use a firm is a personal decision.
The licence, and when it began
- 29 April 2021
The regulations are made
The National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 prescribed certain debt management services as a “credit activity” under the National Credit Act.
- 1 July 2021
Licensing begins
Providers of debt management services, including debt negotiation and credit repair, must hold a credit licence with an authorisation covering those services, or act as a representative of a licensee who holds one. Transitional arrangements let providers that had applied by 30 June 2021, and joined AFCA, keep operating while ASIC decided their application.
- July 2025
ASIC reviews the sector
ASIC announced a review of debt management and credit repair, a sector it described as around 100 licensees. It said it would look at firms that may have failed consumers by not meeting the terms of their agreements, charging high fees for no or limited services, or not communicating adequately, and that it intended to publish insights in a public report in 2026.
ASIC defines a debt management service broadly: for a fee, and in relation to consumer credit contracts, suggesting that a consumer do, or helping them do, any of these: apply to vary a credit contract, apply to postpone enforcement proceedings, complain to a credit provider, AFCA, ASIC or the Information Commissioner, or change information a credit reporting body holds about a credit contract.
Checking a firm
Moneysmart says to deal only with a licensed credit repair or debt management company, and to check with ASIC’s Professional Registers Search, choosing “Credit Licensee” or “Credit Representative” when searching. A debt management firm regulated in this way must also be a member of AFCA, which means a problem with one can be taken to AFCA for free. ASIC’s advice for a complaint is to raise it with the firm first, then take it to AFCA if it is not resolved.
Credit repair in particular
Moneysmart is plain about credit repair companies: you do not need to pay one to clean up errors in a credit report. It says they may charge high fees for things you can do yourself for free, that in some cases they may cause a new default when their own fees go unpaid, and that paying one may not improve a credit score. Correct information cannot be removed, even when it is negative. The guide to your credit report sets out how to fix an error without paying anyone.
Offers that call themselves a scheme
The National Debt Helpline warns about consolidation offers that are really a Part IX debt agreement under the Bankruptcy Act, often described as one payment and a government backed scheme. It says these agreements have serious consequences and are usually expensive. Financial counsellors can explain the pros and cons of bankruptcy and other insolvency options, without charging a fee. How free financial counselling works.