Ex OFT Senior Staff Ray Watson to Join DEMSA

On December 16, 2013, in News, by Lewis Alexander

credit report UK from ExperianIt was reported by DEMSA (Debt Managers Standards Association) on 19th September 2013 that Mr Ray Watson will be joining Demsa as non-executive Chairman.

Lewis Alexander Limited was involved with many dealings with the OFT dating approximately between 2007 and 2012; this was also around the time that Mr Watson was head of UK Credit at the Office of Fair Trading.

Lewis Alexander was originally contacted by the OFT around the time that the OFT had launched their 2nd investigation into the Debt Management Industry in approx 2008. The first guidance was set out by the OFT for the debt management industry in 2001. When we were contacted it was with reference to audits required for which we complied with explicitly in a speedy fashion, without question.

Our attitude here at Lewis Alexander was that if the OFT could get a fair playing field for all and disclaimers were being given to vulnerable consumers regarding potential downsides involved by entering into any personal debt consolidation solution, then the industry would possibly get a better reputation than it had enjoyed and the vulnerable consumer would get consistent advice regarding personal debt issues.

Lewis Alexander was subject to some requests by the OFT and we agreed to comply in good faith and to assist their cause.  The problem is that since the OFT placed such requirements some 5 years ago, there are still a number of recognised operations that are failing to comply.  This is not limited to the fee charging sector and a charity is also responsible.  This could be seen as the OFT failing to enforce requests on others due to our competitors having deeper pockets and being able to afford great legal defenses, it may simply be down to ignorance on behalf of some traders.  We at Lewis Alexander then ask ourselves, why would an authority with such power in this land; concentrate its efforts and resources on such a small operator as Lewis Alexander?  Based on the limited reach Lewis Alexander has when compared to its larger competitors, our large charitable and fee charging competition could potentially do more damage financially to vulnerable consumers in one afternoon to what would most probably take Lewis Alexander one year to effect. The use and spend of government resources regarding the personal debt management industry seems to be misplaced and misdirected which in turn could be leading to a waste of tax payer monies.

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Please note that Lewis Alexander believes firmly in what the OFT was set up to do and has taken from dealings with them, many guarantees that the operation is not corrupt or without good and fair intent, however, when it comes to the dealings between Lewis Alexander and the OFT over the last 5 years, questions are starting to be asked.

The problem you have as a business in the UK when dealing with a government authority is that if you wished to take legal action, it would normally be carried out by means of a Judicial Review, these can be very costly and we have been advised a starting cost could be around £50,000.

This is not possible for Lewis Alexander Limited and we do not believe that it will be entirely necessary. The digital age is allowing us to get our message out there and we are getting contact from other debt management operators and financial journalists who have related concerns.

  • Demsa are actually just a trade association set up by founder members of the debt management industry!
  • On 28th September 2010, it was published that the OFT wrote to 129 debt management companies advising that they face losing their consumer credit licenses unless immediate action was taken to comply with its Debt Management Guidance.

Lewis Alexander is proud not to be associated with either of the two debt management industry trade associations; this is based on a number of different factors but originally was due to fees for memberships not being pro rata to individual company turnover levels. We did not see why we should pay the same registration fee if turning over under £200,000 to that of a competitor turning over more than £15 million per annum.

We are now aware that the trade associations may have changed their respective membership fee structures but cannot confirm this. There are other reasons why we have not applied for membership but will omit these from this blog post to avoid any legal or defamatory claims.  The guidance set out by the OFT is good enough for Lewis Alexander and we adhere to it tirelessly.

The new debt management protocol is being dealt with by the Insolvency Service and the selection of auditors for this protocol may be worth Lewis Alexander investigating further! You now have the OFT with their debt management guidance and the Insolvency Service with their protocol, neither of which seem to be effective. Self regulation will not and has not worked; one will always ruin it for another!

In fact, one of the largest (FREE TO CLIENT & NOT FREE!) debt charities had a complaint raised against it for lack of compliance on a national TV advert this year. Is this lack of compliance actually possible for such a bona fide, compliant, long standing consumer facing charity? Or is it blatant disregard for standard compliance? Are they above the compliance? Does the vulnerable consumer deserve as much information as possible from the time at which the marketing call to action provokes their initial enquiry?

Debt Management Company

Paragraph 1.10 of the debt management guidance sets out that ‘the guidance applies to persons who provide debt advice, debt management and/or credit information services. It applies to standard licence holders and applicants (and their employees) providing advice and assistance to consumers on how to deal with their debts and the range of debt management options available to them.  For the avoidance of doubt, this includes all debt management businesses (whether profit-seeking or free-to-client service providers), insolvency practitioners (IPs), approved intermediaries for Debt Relief Orders (DROs), Debt Arrangement Scheme (DAS) approved money advisers mortgage arrears counsellors, independent financial advisers, introducers and other intermediaries, lead generation and claims management businesses, which are engaged in the licensable activities of debt counselling, debt adjusting or the provision of credit information services (including credit repair).‘

The OFT expects all such businesses to adhere fully to the guidance, where applicable

Does the above paragraph mean that a father or mother of an 18+ year old child cannot give them personal debt counselling or adjustment advice as it is a licenseable activity? Or is the parent covered by parental advice laws even though their child is no longer classed by the state technically as a child?

Let’s get back to the title of this post now we have some background, why would Lewis Alexander have such pressure inflicted upon it and furthermore its ability to market reduced massively when there were differences internally at the OFT based on what they felt reasonable to require from Lewis Alexander without internal standardisation to decide such?

Why is an upstanding member of society that was involved in the running of an authoritative UK public body going to work for a particularly unknown private trade association? Could this in turn be perceived as a conflict of interest with his past role and the dealings continuing from matters effected under his reign at the OFT?

What is going on in the good old United Kingdom? Who is doing what at the highest level to make sure that these public offices are acting in line with the law? Who is regulating the regulators?

We have posted this today as we were called by Jenny from DEMSA this morning offering us an invite to their open day in February 2014, we rang DEMSA to explain thanks but no thanks and Angela the “office manager” dealt with us just as she did when we rang 8 weeks ago to ask for Mr Land who has not taken our calls.  She was told by a male in the background to put the phone down after we asked to speak to the new CEO there.

For the record Angela, there are no “sour grapes” just a requirement for your operation to act as it would be expected to! We were not aware that the new DEMSA spokesperson is the Office Manager! When asked for her confirmation in writing that none of her DEMSA members were non-compliant this was objected to!

We also told Angela that we have heard Mr Watson is a lovely man so this is not against him, we are not concerned about personalities we are just bothered about a level compliant playing field for all regardless of the banner they fall under re trade associations.

DEMSA requested the information on their non-compliant members, we advised that if we have this information, it would only be disclosed to the Debt Management Enforcement team at the OFT which is the correct procedure should we find anything so serious to report.

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  • 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.

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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.


Homebase Pet InsuranceLewis 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 Debt5 Things You Should Know
  1. 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).
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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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
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