By Jonathan Davies
Some debt management firms are providing "unacceptably" poor advice, the Financial Conduct Authority (FCA) has said.
The City regulator said some examples of debt plans would take 125 years to pay off.
Debt firms take responsibility of businesses debts and make repayments themselves for a monthly fee.
A trade body for debt management firms said the industry was facing "a tough examination" and many could face closure.
As part of the initial investigation, the FCA said "far too many are not meeting the standards we expect".
"People who turn to debt management firms do so as a last resort," said Linda Woodall, of the FCA.
"When they find themselves in this position it is vital that they are able to access suitable advice that allows them to make informed decisions about their future."
Lesley Robinson, UK debt advice director for the Money Advice Service, said: "This review's findings are clearly disturbing and present a challenge to the debt management sector.
"However, we would urge those who are experiencing problem debt not to be put off from seeking debt advice as soon as possible."