The Citizens Advice Bureau has called on the Government to get tough with fee charging debt management firms.
The charity says that many vulnerable people are being exploited by companies that charge people for services that can often be had for free.
A number of poor practices have been cited as common, including: excessive fees, offering inappropriate debt solutions and forcing people further into debt.
Citizens Advice helped out 3,000 people who approached them after running into trouble relating to rogue debt management service and credit repair last year (2010-11).
Last week, the Office of Fair Trading (OFT) said that companies collecting consumer credit debts must ensure they communicate clearly and fairly and do not mislead consumers.
The warning came after the regulator revoked a licence from Carltons Business Limited, a debt collection business, after it was found to have acted unfairly.
Amongst the charges leveled at Carltons based in Dartford, Kent , it was found that Carltons did not have practices or procedures to deal fairly and properly with consumers and the payment demand letter was designed to look like an official or legal document, against OFT guidance.
Citizens Advice welcomed the stance taken by the watchdog, but has said that tough sanctions must be imposed on debt management businesses that flout the existing laws.
"Guidelines alone are not enough," commented Gillian Guy, Citizens Advice chief executive.
"In the past debt management companies have routinely flouted the OFT's guidelines, so these will need robust enforcement. The regulator must not be afraid to impose tough sanctions where the guidelines are ignored and to revoke the credit licenses of repeat offenders.
"As the Government reviews the future of consumer credit regulation, Ed Davey (consumer minister) needs to make sure that consumers can count on a regulator with the right powers and political clout to deter bad practice and aggressively tackle firms, which treat customers unfairly."
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