Financial advisers had been referring business to the debt management firm before its collapse.

The Somerset firm, which operated under the trading name Hermes Financial Solutions, was liquidated in July this year.

The company offered to hold client money and arrange with creditors to pay off clients’ debts in exchange for a fee.

However, when the company went bust, no money was returned to clients and it has still not been accounted for.

The private debt management industry makes £250m in fees every year and serves 375,000 clients.

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In May, the Office of Fair Trading condemned the practice of not protecting client money when debt management firms collapse.