- Will a Government approved debt management protocol assist consumers in the search for compliant debt consolidation help and advice services?
- Does a Government protocol that is not compulsory to sign up to, offer enough protection to a vulnerable consumer in need of personal debt advice and help?
- Can an industry that has had such bad press for over a decade, self regulate itself to a point that it automatically identifies and excludes companies that employ bad or non-compliant business practices / models?
At Lewis Alexander Financial Management, we strongly believe that the one answer to the above questions is YES!
The recent launch of the Governments Debt Management Plan Protocol on February 7th 2013 has been widely accepted by compliant DMC’s or Debt Management Companies throughout the UK.
The new debt management protocol is basically a set of rules set out by Government for debt management companies to follow when offering and servicing, fee charged, consumer debt management plans in the UK.
A document named “Debt Management Guidance” has been in place for over a decade now. This guidance is created, updated and policed by the Office of Fair Trading. The guidance and debt management industry itself is not regulated but the OFT debt management guidance is a concise set of guidelines for any consumer credit license holder to follow if they wish to carry on the activity of debt adjusting and counselling on a commercial basis. The new debt management protocol set out by the Government will run alongside and add to the debt management guidance for the time being. There is also a sister document named “Debt Collection Guidance” that is also set out by the OFT for creditors and debt collection agents to follow for the opposite industry practices they carry out.
- The new government debt management plan protocol is welcomed and embraced by the team here at Lewis Alexander Financial Management.
Some of the new debt management protocol compliance requirements have been strictly adhered to by Lewis Alexander and in place for some time prior to the protocol being released, such as the requirement to inform consumers about free to client debt services available, we have been doing this verbally for some 5-6 years! Operators who wish to mislead and feed off vulnerable consumers may laugh at this but maybe this honesty is what makes our clients select and continue to utilise the debt consolidation services of Lewis Alexander Financial Management.
There are certain parts of the new protocol that will put a stop to the bad practices of some debt management companies or lead generators. These companies will no longer be able to afford to advertise for clients that get churned within the first 3 months and never seem to obtain a back end debt management service.
The new debt management protocol requires 1st payments / set up fees for a debt management plan to be taken over no less than a 6 month period. This will have a detrimental negative cash flow effect on any company attempting to operate a “churn model”! A long overdue and welcomed move by the Government!
It is expected that with the general roll out of the protocol and the uptake in companies adhering and signing up to it, that potentially non compliant debt management operators will have to find other ways of extorting vulnerable consumers suffering with personal debt problems.
- Consumers will be able to identify a protocol compliant debt management company. This is likely to be as simple as a “protocol approved” logo on the respective debt management companies’ website.
One debt management consultant / company has been reported to say that “The failure of a consumer to establish if a fee charging debt management provider that they may be about to select is a member of one the two trade associations such as the DRF or DEMSA will mean that the provider is most likely to be a non compliant debt management provider / operator.
- THIS STATEMENT IS NOT 100% CORRECT!
Lewis Alexander is NOT a member of any of the above debt management trade associations. The main reason for this is due to membership fees being the same for companies who have massively varying turnovers and subsequent varying profitability! We have stated before that when the membership fees are in line or pro rata to a companies’ turnover, Lewis Alexander will acknowledge and join the mentioned association/s.
With the wide acceptance of the new protocol and the already well established debt management guidance, the only requirement for the industry now should surely be a policing structure placed within an authoritative body! This could potentially be funded by replacing association membership fees with an annual charge as a percentage of turnover that mirrors the great or small potential damage / risk that a respective company presents to the industry.
As previously reported, Lewis Alexander Financial Management is due to launch a revolutionary online debt consolidation software solution / platform, that will enable consumers to self manage debts, self diagnose and subsequently go on to clear personal debt problems. The new debt management protocol is an integral part of the new Lewis Alexander, online debt management software soon to be available.
(The following information is published by the Insolvency website from the UK Government as a guide to dealing with debt. It will be required as part of the protocol that each debt management consultant / provider will have to inform a potential client about the existence of the free to client debt services / charities).
- Dealing With Debt – 5 Things You Should Know
- There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0300 500 5000 (8-8 Monday to Friday, 9-1 on Saturday).
- You should have been advised on all the options for dealing with your debt. Protocol compliant providers will explain all the options that are open to you (e.g bankruptcy, debt relief order, individual voluntary arrangement, trust deed in Scotland, debt management plan). The advantages and disadvantages of each will be discussed with you so that you can make an informed choice.
- You will know the estimated total cost to you of the arrangement and the time it will take for your debts to be paid. Protocol compliant providers always give you this information. If your provider does not, you must ask to find out. Any money you pay to your provider to cover their fees will not be used to repay your debts. Think carefully if more money is being used to pay your provider than your creditors.
- Your provider will go through a full and accurate budgeting process with you. This is vital to make sure that the payments you are asked to make are affordable for yourself and fair to your creditors.
- If you are not happy with the service you receive, you can complain. You should refer such complaints to the provider first to give them a chance to put things right. They should tell you clearly how to do this. If they are a member of the DRF or DEMSA they will also tell you how to use their own conciliation and complaints scheme as a second step. You can be repaid any fees charged and may be awarded compensation by these schemes. If you are still not happy with the outcome, you can complain to the Financial Ombudsman Service which is an independent service who will look into your complaint and can award you compensation if they decide in your favour.
If you require the help and assistance of a compliant, licensed debt consolidation service when dealing with debt, then please call our personal debt helpline today in absolute confidence, your call is usually free from a UK land line but mobile call costs may vary.
- Call 0800 018 6868
- Lines are open 24 hours / 7 days
