It was interesting to see the BBC dedicating a large percentage of the Rip off Britain show on BBC 1 this evening, to how debt management companies can harm a consumers’ financial position rather than benefit their financial future.
As with any commercial profit making industry, there will be rogue traders operating and taking advantage of any vulnerable consumers. These rogue traders do not follow not only sometimes the spirit of an industry if unregulated but also the regulations or guidance if there are any in place.
- What was particularly interesting this evening was the way the show seemed to tar the fee charging debt management sector.
There are a few points that we would like to cover regarding a fee charging companies attitude to the free fee sector, this is in addition to what was broadcast.
- Lewis Alexander is a compliant industry member celebrating 8 years of compliant trading.
1) The first thing we have to accept is that the Office of fair Trading put in place something called Debt Management Guidance in September 2001. This Guidance sets out what is expected of and what must be adhered to by any consumer credit license holder should they wish to offer fee charging or free sector debt management plans or services. Without being offensive or finding fault in any authoritative organisation, the guidance to our knowledge was not heavily policed unless complaints were made about a particular individual company.
Therefore, a great number of rogue traders felt “free” to operate without much concern of being found or traced as long as they pacified any consumer, who complained for whatever reason, thus stone walling any escalation of the complaint to an authority. We were only aware of such companies and subsequent practices when certain clients would tell us of their personal experience when explaining how they wished they had found us first based on our honest responses. This guidance is still in place and was updated in 2008 prior to the recent investigations over the last 12 months or so by the OFT and local Trading Standards offices.
2) The first lady featured on the BBC show had a genuine complaint and was obviously not made aware of the free sector or charitable debt management services available when she was being advised by the particular fee charging debt management company. However, her attitude was that of surprise that she had chosen a fee charging company when she could have got something for free. The show then later changed topics and discussed being aware of something that is free, is that not a contradiction?
The free sector is funded. The Citizens Advice Bureau is absolutely free and government funded. Other operations such as Payplan, CCCS and National Debtline are all funded and we believe operate on a not for profit basis, however they are funded to enable them to say the service is free.
You can check who funds these free debt services, in some cases it can be the creditor who the consumer actually owes money to hence the fee charging sector selling against these operations, on the basis of who is actually working for the client? an independent source or an extension of the people whom the consumer owes the monies to?
3) The second gentleman seemed to be a victim of IVA direct selling, something we reported on way back in 2006/7 when certain large Insolvency operations were floating their businesses on the London AIM stock exchange. In certain cases an IVA may be the best debt solution to clear personal debts but insolvency became the quicker fix direct sell against the already badly publicised debt management plan. Say no more!
4) The 3rd lady was genuinely miss sold to and mislead from what we could gather but again, the free sector is there and funded apart from CAB citizens advice bureau which is governmental. This particular lady had suffered a bereavement and was very vulnerable, another reason why the free sector should have been offered at the point of advice.
We often ask why people have this attitude that they can go out and spend what they like or commit to loans and expenditure for certain changes in circumstance and then find a free service to get them out of the mess. It is a strange attitude and we hope that this changes as the pressure and load coming to these FREE services will always create an overflow of cases that require immediate attention and private paid help. If this was not the case, BUPA and NHS would not exist alongside each other in such harmony, one compliments the other.
All personal debt cases should be considered individually, at Lewis Alexander we have offered free debt advice on our free from a landline debt helpline (free from landlines, mobile costs may vary) for 8 years now and only when a consumer decides to take our debt management help does our service become chargeable.
- We are proud to charge for what we believe is an excellent unrivalled service within a most competitive arena. We also refer cases to the free sector when we believe the client would not benefit from our fee charging assistance.
DEMSA got a final interview and they are a trade body that set themselves up to offer a “stamp of approval” to certain member companies that comply with their expected standards. We approve of Demsa but there are other debt management trade bodies such as the DRF or Debt Resolution Forum. Our only concern is that the fees that these trade bodies require for us to join are not (when last checked) offered on a pro rata basis to the member companies turnover, if it was we would join as we believe we operate in line with what they require from a DEMSA member. It is just the fees we cannot justify or afford. It is less of a cost for the larger companies as they have a greater turnover than Lewis Alexander. Our clients would only end up footing an extra cost for these associated fees.
Whilst remaining politically unbiased we would like to clarify that we are well behind the Coalition Government with Mr Camerons plans for the Big Society. We welcome the effort shown by the new government and credit where credit is due, people may knock the Prime Ministers attempts but at least he is trying when we all accept that broken Britain is a real and current dilemma. We feel that our initial free debt advice (ongoing services are chargeable) and our commitment to retaining our free phone number from landlines can be our donation to the big society and long may we continue in our quest to do our bit for broken Britain.
Whilst wishing ourselves at Lewis Alexander a happy 8th birthday we dedicate this blog post to our celebrated event.
- Should you wish to discuss your personal financial problems with a trained advisor please call our personal debt helpline in confidence using 0800 018 6868.
