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Annual Report 2010




Since the final approval of the DEMSA Code of Conduct in November 2008 we have continued promoting the Code to the Debt Management industry and have concentrated our efforts on maintaining the discipline of monitoring our member’s activities to ensure that the fully meet the requirements of the Code, and by encouraging other debt managers to join the organization by submitting themselves to the stringent audit requirements.

During the year to 31 December 2010 the membership grew to 14 and on these numbers represents a substantial portion of the industry, accounting tor over 250,000 active plans. There is a pipeline of new members wishing to join and subject to all audit requirements being met we anticipate the membership to be in excess of 25 Debt managers by the end of 2011, which will then account for over 85% of the commercial sector.

The economic situation in the UK remains in a position that is resulting in job and income losses for a large number of consumers and the demand for debt solutions services continues to grow. It is clear that the private sector debt managers represented by DEMSA provide a valuable resource to the consumer in helping them manage their financial situations.

We are still seeing the activity of claims management companies who offer, for a large upfront fee, to have debts written off by challenging the validity of the original agreements and companies offering hybrid full and final settlements where monies are retained by the company rather than being passed on to the creditors. DEMSA members do not adopt any of these practices and we are pleased to see that the OFT and MoJ are taking actions against some of these operators.

During the year the Office of Fair Trading conducted a website compliance review of debt managers and issued warnings to 129 companies that certain action had to be taken to comply with requirements or action would be taken against them. Only one DEMSA member received such a notification due to some minor non-compliances and this was quickly corrected.

DEMSA continues to work closely with the Office of Fair Trading with, amongst other things, holding quarterly meeting with the OFT to exchange views, information and intelligence.

OFT are currently revising the Debt Management Guidance during the early part of 2011, and DEMSA will play it’s part in the consultation process, and following the issue of the revised guidance DEMSA will review and revise it’s Code of Conduct.

DEMSA, and it’s members remain committed to raising standard within the debt management industry and to this end, we are working towards providing a training package for staff of members.

We firmly believe that our Code, and the importance attached to it by the achievement of the OFT approval is of strong benefit to vulnerable consumers in the UK.

Michael Land



The DEMSA Code of Conduct was launched in 2002 and received formal approval by the Office of Fair Trading under the Consumer Codes Approval Scheme on 5th November 2008.

The Code is intended to cover key areas of concern to the consumer, who at the time of approaching such an organisation are at a vulnerable stage and who need careful counselling and who need to be given the best advice.

The key areas covered are:

  • Clear, accurate and truthful advertising of debt management services
  • The provision of clear, transparent and accurate information to enable a consumer to make an informed judgement, including written estimates and cancellation rights
  • Fair, clear and transparent terms and conditions
  • Proper handling and disbursement of clients monies
  • Best advice and acting in the clients interests at all times
  • Fair and easy to access complaints procedures

The Code is a dynamic document and reflects fully up to date legislation, practices and consumer concerns and will continue to be subject to review to ensure that it fully covers the relevant issues in the market place.


The Code is an important asset for the accredited members of DEMSA and both DEMSA and the members continue to promote the Code by ensuring that all consumers are aware of the Code and by including the DEMSA and OFT logos on all marketing and promotional material an websites.

The DEMSA website has been fully rebuilt to emphasise the importance of the Code, since gaining full approval, and within the debt management industry DEMSA continues to promote the existence and value of the Code and the OFT approval.


Monitoring of the adherence of members to the Code, is an important aspect of ensuring that the effectiveness of the Code is properly tested and shown to be sufficiently robust to ensure the required level of consumer protection.

The effectiveness of the Code of Conduct in maintaining standards is assessed by:

  • Web Sweeps and Desk Top Analysis
  • Customer Satisfaction Surveys
  • Compliance Audits
  • Mystery Shopping
  • Complaints Handling
  • General Information Received

Web Sweeps and Desk Top Analysis

The intention of the quarterly web sweeps and checks of advertising material is to ensure that the marketing of debt management plans and other financial solutions provided by members of DEMSA is closely monitored to ensure that consumers are not being misled and are provided with transparent, clear and truthful information regarding these products and services.

Customer Satisfaction Surveys

The Customer Satisfaction Monitoring has continued during the year by means of the established Customer Satisfaction Survey, expanded to include new members on joining.

The Survey asks the consumer to give their views on a number of different areas:

  • Initial Contact
  • Information Provided Before Contract
  • Written Information Provided
  • Operation of Debt Management Programme
  • Overall Satisfaction

A weighted scoring system has been designed to give priority to fundamental issues covered by the Code of Conduct and this gives ratings from “Excellent” to “Poor”.


2008 2009 2010
CSS Surveys Issued 2505 3001 7162
Responses Received 562 632 1326
Response %age 22 21 19


2008 2009 2010
Number %age Number %age Number %age
Excellent 332 59 368 58 704 53
Good 117 21 132 21 284 21
Satisfactory 45 8 58 9 162 12
Below Satisfactory 29 5 20 3 63 5
Poor 39 7 50 8 113 9
Spoiled 0 0 0 0 0 0
Totals 562 100 632 100 1326 100

In 2010 86% of all respondents were awarded a weighted score of satisfactory or better which is slightly down from 88% the previous year.

However as will be seen from the statistics below only 2% of consumers surveyed actually gave a rating of poor when answering the questionnaire.

The statistics outlined above are based on the weighted scoring system but the following points were highlighted by the individual answers to the survey. Comparisons with the 2009 figures appear in brackets

Initial Contact

  • 2% (2009 1%) of respondents thought that their debt manager was not helpful and courteous at all times (Q2a).
  • 3% (2009 1%) did not think their debt manager fully explained all the options available and offered useful advice (Q2b).
  • 4% (2009 2%) did not fully understand the nature and extent of the service offered (Q2c).
  • 5% (2009 2%) were not made aware of the cost of the service (Q2d).

Information provided before contract

  • 3% (2009 5%) were not made aware of their debt manager’s membership of DEMSA (Q3a).
  • 4% (2009 6%) were not made aware of the Code of Conduct (Q3b).
  • 5% (2009 2%) were not made aware that fees would be charged (Q3c).
  • 7% (2009 4%) were not made aware that creditors were not bound by any proposals (Q3d).
  • 5% (2009 2%) were not made aware of the importance of prioritising debts (Q3e).
  • 6% (2009 3%) were not made aware of the possible implications of entering into a debt management plan (Q3f).
  • 5% (2009 3%) were not made aware of what would happen to the first payment under the plan (Q3g).

Written Information Provided

  • 7% (2009 4%) did not receive a written best estimate of the total cost (Q4a).
  • 4% (2009 3%) believed that contracts were not clear and easy to read (Q4b).
  • 2% (2009 2%) did not have details of DEMSA and the Code of Conduct included with their documentation (Q4c).
  • 11% (2009 9%) were not made aware of how withdrawal from a plan could be effected (Q4d).

Operation of Debt Management Programme

  • 5% (2009 3%) felt that they had not been kept up to date with progress (Q5a).
  • 5% (2009 3%) felt that it was not easy to make contact (Q5b).
  • 3% (2009 2%) felt that calls had not been dealt with properly (Q5c).
  • 4% (2009 2%) felt that correspondence had not been dealt with promptly (Q5d).
  • 4% (2009 2%) did not feel that the programme had provided support and financial advice/education throughout (Q5e).
  • 2% (2009 1%) did not feel that the programme was relevant to their needs (Q5f).
  • 2% (2009 2%) did not feel that any complaints or queries were handled promptly and properly (Q5g).
  • 3% (2009 3%) were not aware that the debt manager reviewed and reassessed the plan on a regular basis (Q5h).
  • 2% (2009 0%) did not feel that payments had been passed to creditors as arranged. (Q5i).

Overall Verdict on DMP’s

  • 2% (2009 2%) felt that the debt management programme had not met their expectations (Q6a).
  • 2% (2009 1%) felt that the debt management programme had no effect on making their financial commitments more manageable (Q6b).
  • 4% (2009 2%) felt that the debt management did not represent value for money (Q6c).
  • 2% (2009 2%) felt that the debt manager had not handled the programme to their entire satisfaction (Q7a).
  • 2% (2009 1%) gave an overall rating of poor (Q7b).
  • 6% (2009 3% were not experiencing more financial peace of mind as a result of entering into a programme (Q8a).
  • 7% (2009 8%) were not experiencing less creditor pressure (Q8b).
  • 3% (2009 2%) thought that overall the programme had not improved their ability to cope with their financial affairs more easily. (Q8c).

Compliance Audits

All members are subjected to a full compliance audit on an annual basis and any new members accepted are fully audited before joining. The audit incorporates results from both consumer satisfaction surveys and mystery shopping.

The audit covers various areas:

  • Marketing promotions and Advertising
  • Pre-Contract activity
  • Contract terms
  • Payments and Money Handling
  • Contact with Consumers and advice
  • Business Status, Practices and Procedures
  • Skills, Knowledge and Experience
  • CCAS Core Criteria Checks
  • Provision of IVA’s

Any member not achieving the required standard is subject to strictly determined action planning to correct any issues raised and in the event of failing to achieve the required outcomes disciplinary action, including suspension or termination of DEMSA membership can be invoked.

No such action was taken in 2010.

Mystery Shopping

All members are subject to an independent mystery shopping exercise, carried out by a fully independent organization specializing in the financial services area. The purpose of the exercise is to monitor the interface between debt managers and their clients, particularly at the point of sale, and to confirm that full and transparent information and best advice is given to consumers at all times. Cloise monitoring takes place in the following areas:

  1. Understanding of Debt Management Programme
  2. Adequacy of Information Provided
  3. Costs and Estimates
  4. High Pressure Selling
  5. Cancellation and Withdrawal Rights
  6. Awareness of DEMSA and the Code of Conduct
  7. Provision of IVA’s

Individual calls can last up to 90 minutes and consist of a great deal of fact finding and the sheer length of the call can, on some occasions, lead to minor omissions.

However, in the key areas outlined below performance ranked generally higher than the 75% aimed for:

Category 2010 2009
a. Understanding of Debt Management Programme 91% 89%
b. Adequacy of information Provided 77% 74%
c. Costs & Estimates 89% 81%
d. High Pressure Selling 83% 80%
e. Cancellation and Withdrawal Rights 71% 43%
f. Awareness of DEMSA and the Code of Conduct 91% 59%
g. IVA’s – issues covered 94% 62%
Overall Score 83% 71%

As will be seen from the table above in all categories improvement was seen to the figures.

Complaints Handling

Complaints handled by DEMSA

In total 44 complaints were received and dealt with by DEMSA during 2010. This is an increase on the previous year but  the membership of DEMSA during 2010 was 14 members compared to 4 the previous year, with theses 14 members accounting for approximately 250,000 active plans.

A summary of the complaints handled is set out below:

2008 2009 2010
Number of Complaints Handled 4 7 44
Complaints re Service Issues 2 1 17
Complaints re plan Formulation Issues 1 3 8
Complaints re Withdrawal from a Plan 1 3 8
Complaints re Adequacy of Information Provided 11
Refunds made (£) 470 400 8557
Ex Gratia Payments Made (£) 50 125 2917

Of the 44 complaints received 17 were deemed as justified and 27 not justified. 40 of the complaints were satisfactorily resolved by the individual member concerned after referral  to DEMSA and in 4 cases DEMSA adjudicated in resolving the issue.

Financial Ombudsman Referrals

All DEMSA members have complaints policies and procedures which are fully compliant with the Financial Ombudsman Scheme and in all cases the consumer has the option to refer to FOS. None of the complaints referred and dealt with via DEMSA were subject to consideration by FOS.

In total DEMSA members had 68 complaints referred to the FOS scheme of which 12 were upheld and 56 rejected by the Ombudsman

Compliance and Disciplinary Procedures are in place, which give strength to the Code by their structured, binding and independent approach.

An Independent Panel is in place to consider any actual or potential breaches of the Code and to decide on any disciplinary action, which may need to be taken.

The panel is convened on notices of a potential breach of the Code from any of the following sources:

  1. A Consumer Complaint
  2. As a result of a Compliance Audit
  3. As a result of information received from any other form of monitoring of the Code undertaken by DEMSA which will include Mystery Shopping and Customer satisfaction Surveys.
  4. A complaint from another member
  5. A complaint from another source, including lenders and other consumer bodies.

During the year under review it was not necessary to take action against any member.