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Annual Report 2011




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 they 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 2011, the membership of DEMSA grew to 21, all of whom passed the audit requirements, and on this number represent a substantial portion of the industry accounting for over 220,000 active plans. There are a number 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 2012, which will then account for over 80% 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 demand for debt solution services continues to be strong. 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 situation.

The growth of Payday Lending through the year has resulted in us seeing a growing trend of consumers coming to debt managers with several expired payday loans in their portfolio and 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 agreement and of companies offering hybrid full and final settlements where monies are retained rather than being passed on to the creditors. DEMSA members do not participate in any of these activities.

DEMSA continues to work closely with the Office of Fair Trading (OFT) and in view of the recent announcement regarding the future of the OFT, DEMSA will continue to work closely with the successor organization. We contributed fully to the consultation on the OFT’s revised Debt Management Guidance Since the end of the year, the revised Guidance has been issued and consequently we are in the process of revising our Code of Conduct to reflect the revised Guidance.

In addition, we have been involved in giving evidence to the BIS Select Committee on Debt Management and their report has now been published. DEMSA is working closely with other stakeholders to assist in the formulation of a consistent strategy for the debt management sector.

DEMSA has commissioned a substantial research project to be undertaken by Grant Thornton which will not only scope and size the market but will provide a detailed report on the fee charging debt management sector.

DEMSA has been obliged to expand it’s resource to accommodate the increased demand for monitoring the activities of it’s members under the Code and will continue to expand where necessary in the future to meet the change requirements placed upon it.

DEMSA and its’ members remain committed to raising standards within the debt management industry and to this end, have now put in place a training package for staff of members, in conjunction with the Institute of Money Advisers and the University of Staffordshire. We have now partnered with the ICAEW who will undertake the annual and new member audits and we have re-formed our independent Compliance & Disciplinary Panel under the chairmanship of retired high court judge Sir Harry Ognall.

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


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 organization are at a vulnerable stage and who need careful counseling 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. In the light of the revised Debt Management Guidance the Code of Conduct is being fully reviewed and revised to reflect the changing landscape.


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 built 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

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 is used which is designed to give priority to fundamental issues covered by the Code of Conduct and this gives ratings from “Excellent” to “Poor”.


2008 2009 2010 2011
CSS Surveys Issued 2505 3001 7162 9710
Responses Received 562 632 1326 1819
Response %age 22 21 19 19


2008 2009 2010 2011
Number %age Number %age Number %age Number %age
Excellent 332 59 368 58 704 53 944 52
Good 117 21 132 21 284 21 350 19
Satisfactory 45 8 58 9 162 12 246 14
Below Satisfactory 29 5 20 3 63 5 117 6
Poor 39 7 50 8 113 9 162 9
Totals 562 100 632 100 1326 100 1819 100


In 2011 85% of all respondents were awarded a weighted score of satisfactory or better which is slightly down from 86% the previous year.

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

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 also incorporates results from both customer 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.

At the start of 2011 the undertaking of the audits was contracted out to Compliancy Services LLP who conducted the audits through the year. Later in the year we agreed with the Institute of Chartered Accountants in England and Wales (ICAEW) that they would take over responsibility for the audits with effect from I January 2012.

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.

Complaints Handling


Complaints handled by DEMSA


In total 116 complaints were received and dealt with by DEMSA during 2011. This is an increase on the previous year but the membership of DEMSA during 2011 was 21 members compared to 14 the previous year, with theses 21 members accounting for approximately 220,000 active plans.

A summary of the complaints handled is set out below:

2008 2009 2010 2011
Number of Complaints Handled 4 7 44 116
Complaints re Service Issues 2 1 17 77
Complaints re plan Formulation Issues 1 3 8 14
Complaints re Withdrawal from a Plan 1 3 8 5
Complaints re Adequacy of Information Provided 11 20
Refunds made (£) 470 400 8557 7709
Ex Gratia Payments Made (£) 50 125 2917 1500
No of DEMSA members 4 4 14 21

Of the 116 complaints received 77 were deemed as justified and 39 not justified. 82 of the complaints were satisfactorily resolved by the individual member concerned after referral to DEMSA and in 34 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 without involving DEMSA. Of the complaints handled by DEMSA 4 were also referred to FOS of which 3 were rejected and I still the subject of review

In total DEMSA members had 168 complaints referred to the FOS scheme of which 34 were upheld and 134 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. In 2011 the panel was re-formed under the chairmanship of Sir Harry Ognall, retired High Court Judge and the procedures were revised.

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 2011 the panel was convened on one occasion to consider a disciplinary issue relating to a member.

After a full examination of the circumstances the panel ruled that breaches of the Code of Conduct had taken place and the member involved was censured and required to give undertakings regarding its future activities. A fine of £15,000 plus costs was imposed.