February 7, 2013 Comments Off on NEW PROTECTIONS TO HELP CONSUMERS PAYING FOR DEBT MANAGEMENT ADVICE
Consumers who pay for advice on managing their debts will now be protected by a new Debt Management Plan (DMP) Protocol, launched by Consumer Affairs Minister Jo Swinson today.
Under the Protocol, agreed with providers and creditors, consumers will not be charged any fees before signing a contract with a Protocol compliant debt management company. Providers have agreed to spread the recovery of their set up fees, over at least the first six months, making plans more affordable and sustainable.
Companies that sign up to the Protocol will be expected to provide clients with information about other appropriate debt management options.
Consumer Affairs Minister Jo Swinson said:
“This is good news for consumers faced with debt problems. I am pleased to see commercial providers making these changes, which will see them help consumers by spreading the costs of the plan.
“However, consumers should be aware that there is also free advice available. For example, anyone with debt worries can contact the National Debtline on 0808 8084000 for free and confidential advice. The Money Advice Service can also signpost people to appropriate and free debt advice services. Under this Protocol anybody in debt who seeks paid-for advice will be made aware that free debt advice options are available before signing any contract with a fee charging provider.
“This Protocol comes in the wake of the refusal by the Office of Fair Trading (OFT) last week to renew the credit licences of two debt management companies and the refusal of the application of a new business.
“The Government is determined to drive up standards in this industry and ensure that people seeking paid-for advice are not disadvantaged by debt management companies that do not offer value for money.”
The Protocol will help drive up standards in the fee charging debt management sector in the run up to the launch of the Financial Conduct Authority (FCA) which will take over responsibility for consumer credit from the OFT. The FCA will come into being on 1 April 2013 and will take over responsibility for consumer credit regulation from 1 April 2014.
The DMP Protocol, which is voluntary, will be independently monitored to ensure firms meet the standards and the spirit required of the protocol. Those companies that sign up will be able to advertise their compliance to consumers.
The Protocol will also be subject to a standing committee headed by The Insolvency Service which will oversee the protocol and report within the first 12 months of its operation.
The debt management industry and the public highlighted two key concerns in the charging structure, as part of the Government’s review into consumer credit and personal insolvency. Consumers said there was lack of awareness of where to go to get free debt advice while those willing to pay for the advice said they felt upfront fees by providers were driven more by profit for the providers than getting the best value for money.
Melanie Taylor from the Debt Managers Standards Association (DEMSA) said, “The Protocol is good news for consumers. Not only does it improve the operation of debt management plans and the auditing of providers, but it will also provide a clear way for consumers to differentiate between providers that are committed to the highest standards and those that are not. DEMSA has long campaigned to raise standards across the sector and we’ve worked hard with The Insolvency Service and other stakeholders to deliver this Protocol.”
November 8, 2012 Comments Off on New report on fee charging debt management underlines the need for an industry protocol for debt management plans
DEMSA, the principal trade body in the professional debt management sector, today responded to a report on debt management, commissioned by Lloyds Banking Group and the Money Advice Trust. The report states that there are serious concerns over the practices of some fee charging debt management companies.
Commenting on the report, Michael Land, Chairman of DEMSA, said:
“As an organisation that has long worked to improve standards in the sector DEMSA is naturally concerned by the conclusions of this report. It is our firm belief that customers should receive a consistently high level of service in the quality of advice they receive, regardless of who provides this.
“The concerns which this report points to are the precise reasons why we need to implement an industry wide Debt Management Plan Protocol, as demanded by the Government. The Department of Business wishes to have agreed a common standard of best practice across the debt advice landscape by the end of November 2012. This would undoubtedly tackle many of the problems this report focuses on and give consumers the confidence they deserve.
“DEMSA has been working closely with the Government and other stakeholders for some time to develop a Protocol to ensure strong consumer safeguards across the debt management sector.”
Michael Land continued:
“Customers have long been accustomed to having an open choice of providers in the services they receive, what is important is that there is a robust framework in place to ensure common standards across all providers.”
DEMSA has been committed to high and rising standards since its inception in 2000, and its members operate under an OFT – approved Code of Conduct.
For further queries please contact:
Melanie Taylor, Director of External Relations at the Debt Managers Standards Association – 0113 277 7610
Chris Bose, Lansons Communications – 020 7294 3619
November 6, 2012 Comments Off on Grant Thornton produces Independent Study into Fee Charging Debt Management Market
A leading accountancy firm, Grant Thornton, recently undertook a major assessment of the professional debt management market. DEMSA, the principal trade body in the sector, commissioned the report to provide consumers with a clear and evidence-based picture of the sector. The report examines the structure of the market and the customer journey through a debt management plan.
Using primary and secondary research Grant Thornton uncovered a number of significant findings on the sector, including:
- Throughout the lifecycle of an average debt management plan, professional debt management companies effectively help consumers reduce the initial balance of their debt by 30-35%. This benefit stems primarily from when a professional debt adviser freezes or lowers the interest rate on their clients’ debt
- The report also identified how debt advisers offer a range of practical solutions to help their clients regain control of their finances. For example, professional debt advisers help their clients increase their disposable income through getting the best deal on utility rates
- At the end of 2011, DEMSA members had 220,000 Debt Management Plans (DMPs) under their management, accounting for a 34-42% overall share of the market
- It takes DEMSA members on average 6 hours to set up a DMP at an average cost of £208
- Just 17% of DEMSA members’ annual revenue is sourced from set-up fees, highlighting debt management companies’ interest in the long term sustainability of DMPs
- Just under 1 in 4 consumers that sought advice from a DEMSA member entered into a DMP
- Creditors recognised that there is a place for both free to consumer and professional companies in debt advice
- Creditors reported that DEMSA members are seen as amongst the best in the market and make real efforts to ensure compliance with industry standards and to drive best practice
- Creditors recognised a number of benefits of using a debt management company including; ability to engage with customers, ability to act as an independent party to liaise and address the consumers’ debt issues with different creditors at one time
Commenting on the report, Michael Land, Chairman of DEMSA said: “This report provides an impartial and credible assessment of the professional debt advice market and the consumer journey through a debt management plan. One of the clear findings of the report is that the professional debt advice market makes a tangible improvement to a customer’s ability to deal with their debt. On average professional debt advisers are able to help consumers reduce the initial balance of their debt by 30-35%.
“A consumer who goes to a member of DEMSA can expect a range of practical solutions to help them regain control of their finances. Members of DEMSA invest heavily to ensure that the quality of advice their clients receive is consistently high. It is for that reason that DEMSA launched a professional qualification in partnership with the Institute of Money Advisers. I am pleased that the consumer benefits of this expert advice have been recognised in this report.
“Thus far there has been little independent and credible assessment of the professional debt management market. This lack of evidence has given rise to some misunderstanding, I hope this report will help to produce a more balanced view.”
Please click here to view the full report.
For further queries please contact:
Melanie Taylor, Director of External Relations at the Debt Managers Standards Association – 0113 277 7610
Chris Bose, Lansons Communications – 020 7294 3619
June 20, 2012 Comments Off on DEMSA comments on Government’s response to Debt Management report
Commenting on the Government’s response to the BIS committee’s Debt Management report, Melanie Taylor, Director of External Relations at the Debt Managers Standards Association (DEMSA) stated:
“We welcome the Government’s response published this morning, which references the on-going work of the sector in agreeing a Debt Management Plan Protocol. DEMSA is centrally involved in these discussions and will continue to work with the Government and other stakeholders to ensure we are improving consumer standards across the debt management sector. As the leading trade body in the commercial debt management sector, DEMSA has been committed to high and rising standards since its inception in 2000, and its members operate under an OFT-approved Code of Conduct.
“The Government also confirmed today that the future of this Code will sit with the Trading Standards Institute, which will operate a portal for the public to access details of businesses operating under a code-approved scheme. We welcome any measure that increases the public’s awareness of the businesses that are code-approved, which exists to allows consumers to choose organisations offering higher levels of customer service.”
Melanie Taylor added: “DEMSA is particularly encouraged by the Government’s recognition that considerable consumer detriment can occur in allowing firms to continue taking on new business, whilst appealing the revocation of their consumer credit licence. DEMSA has long campaigned for a faster appeals process and the prevention of firms taking on new business when placed under a Minded to Revoke (MTR) notice by the OFT. We hope that the Government will give serious consideration to these points in its announcement this summer.”
March 29, 2012 Comments Off on Business, Innovation and Skills Committee report on debt management: DEMSA launches implementation study of recommendations
The Debt Managers Standards Association (DEMSA) yesterday convened a special summit to consider the recommendations of the Business Innovation and Skills (BIS) committee report into debt management. The meeting brought together DEMSA’s entire membership, which represents approximately 80% of the commercial debt management sector. The summit was called to discuss how the sector can best address the recommendations of the committee in a way which is both effective for consumers and sustainable for firms.
Following discussions, DEMSA members agreed to launch a third party and independent impact assessment to consider the feasibility of implementing each of the committee’s recommendations. The BIS committee report suggested a number of improvements to the sector including; greater transparency over the cost and outcomes of debt advice, the phasing out of up front fees and effective auditing and protection for client accounts.
Commenting on the meeting, Michael Land, Chairman of DEMSA, said;
“There was clear agreement today that the sector must come together and positively respond to the concerns made by the committee. Commercial debt management has a valuable role to play in helping consumers regain control of their finances – a point recognised by Government and consumers alike”.
He continued; “To ensure that consumers can have confidence in the sector, it is vital that we look at how the sector can improve in a way which delivers a fair outcome for consumers and a sustainable commercial environment for firms”.
He concluded; “I hope that this rigorous study will allow the sector to contribute to the Government’s response to the BIS committee with a clear and informed view on the implementation of the recommendations”.
March 7, 2012 Comments Off on DEMSA responds to BIS committee report on Debt Management
Commenting on the publication of the Debt Management report, Melanie Taylor, Director of External Relations at the Debt Managers Standards Association (DEMSA) stated:
“This report from the Business, Innovation and Skills committee is the culmination of an extensive inquiry within which DEMSA has been an active participant.
“It is constructive and builds upon the work that the DBIS, the OFT and the Insolvency Service are already doing. DEMSA will continue to work closely with the industry and other stakeholders to help drive standards higher and improve service to clients.”
Melanie added: “As the leading trade body in the sector, we are fully supportive of any action that will give greater enforcement powers, increases transparency for the consumer – particularly on fees and charges – and helps to remove rogue operators within the debt management sector. We hope that this report – and the Government’s subsequent response – will help in this regard.”
October 21, 2011 Comments Off on Compliance and Discipline Panel Meeting – 6 October 2011
The Compliance and Discipline Panel met on 6 October 2011, under the Chairmanship of Sir Harry Ognall, to consider complaints regarding misleading statements, as set out in the notice below.
- A written undertaking to be given by Member X not to advertise, market or otherwise promote whether by bidding on line or in any other media form words that may be misleading to a consumer by conveying that Member X is a free-to-client organization. In particular and without derogation from any of the foregoing, not to use any of the following words or phrases:
- Citizens Advice
- Citizens Debt Advice
- Government Debt Help
or any combination of the above.
- A warning that any further violation of the DEMSA Code of Conduct in these respects will place the company at serious risk either of suspension or of expulsion from DEMSA.
- A fine in the sum of £15,000 (Fifteen thousand pounds)
- A direction that the effect of the decision and the sanctions imposed be reported to the OFT
- An order that Member X pay the costs of the Panel hearing, not exceeding the sum of £5,000.
October 20, 2011 Comments Off on DEMSA APPOINTS ICAEW TO MONITOR DEBT ADVICE STANDARDS
The Debt Managers Standards Association (DEMSA) today announces a new agreement in principle which will see the Institute of Chartered Accountants in England & Wales (ICAEW) undertaking the monitoring of new and existing DEMSA members.
As part of the agreement, ICAEW will carry out initial assessment reviews and ongoing annual reviews to confirm prospective and existing members of DEMSA are adhering to and are compliant with the DEMSA Code of Conduct.
The Code of Conduct, which is approved by the OFT, sets guidelines for DEMSA members in areas such as compliance, customer service, marketing and communications, training and complaints handling. Members are expected to provide services of the highest standards in which the public and the credit industry can have confidence, and to provide a high level of protection to the consumer.
DEMSA has long been committed to raising standards across the fee charging debt advice sector. As well as working closely with the OFT to lead the drive towards higher standards, DEMSA recently introduced a more robust complaints mechanism for clients by appointing ex High Court judge, The Hon Sir Harry Ognall, DL to chair its Disciplinary Panel. DEMSA has also worked with the Institute of Money Advisers (IMA) on a new professional qualification in debt advice for advisers working in member firms.
Michael Land, Chairman of DEMSA commented: “All our new and existing members are already subject to a rigorous audit process however, we believe that by appointing the premier accountancy body in the UK we are further increasing consumer and industry trust in our members. As the principal trade body in the sector, DEMSA members are at all times required to provide informed, clear and appropriate advice and to manage their client affairs with which they are entrusted to the highest standards.”
David Blocksidge, Deputy Director in the OFT’s Consumer Credit Group said: “DEMSA has an OFT approved Code of Practice for its members to abide by and we welcome DEMSA’s approach to work with the ICAEW to help improve and maintain standards in the fee charging debt management sector.”
Vernon Soare, Executive Director, Professional Standards at ICAEW said: “ICAEW is widely recognised for its monitoring expertise across a number of important sectors. We are already actively involved in the personal debt solutions sector through our existing monitoring of our own members, a number of whom are also members of DEMSA. We are pleased to be working with DEMSA to support its strategy of ensuring its members operate to the highest standards.”
August 26, 2011 Comments Off on DEMSA AND IMA PARTNERSHIP TO HELP RAISE DEBT ADVICE STANDARDS
The Institute of Money Advisers (IMA) and the Debt Managers Standards Association (DEMSA) today announce a new partnership that will continue to raise standards in the fee payable debt advice sector. The initiative will include the introduction of a new professional qualification in debt advice for advisers working in DEMSA member firms.
The qualification will have its first intake of students in November 2011 and will be studied over 16 weeks covering key areas of debt advice including; budgeting, income maximisation, priority debts, insolvency, managing caseloads, and relevant legislation such as the Consumer Credit Act. It will be accredited by Staffordshire University and will provide an independent and rigorous assessment of the knowledge and skills of individual advisers in the DEMSA member firms.
The IMA launched a similar professional qualification for advisers in the free advice sector in 2010 and has so far seen almost 300 advisers achieve this qualification.
The DEMSA and IMA partnership will also include Continuous Professional Development for individual advisers requiring them to undertake ongoing training and development.
DEMSA has long been committed to raising standards across the fee charging debt advice sector. As well as working closely with the OFT to lead the drive towards higher standards, DEMSA recently introduced a more robust complaints mechanism for clients who receive advice from their member firms and has appointed Caroline Siarkiewicz, the Executive Director of the IMA, to sit on its Compliance and Disciplinary Panel.
David Blocksidge, Head of Debt Management Team, Consumer Credit Group at the OFT comments: “We are highly supportive of the proposal for the IMA to work with DEMSA to improve standards in the fee charging debt management sector. DEMSA has an OFT approved Code of Practice which its members abide by and we welcome DEMSA’s approach to seek to improve the training and competences of the staff working for its members.”
Steve Meakin, Chair of the IMA said: “The agreement with DEMSA represents a significant step in continuing to improve standards of advice in the fee charging sector. The IMA’s ‘Certificate in Money Advice Practice’ was introduced in 2010 for advisers in the free advice sector and has played a key role in establishing a benchmark for high quality advice. I believe that our work with DEMSA in introducing a new qualification and CPD scheme will mirror what has already been achieved in the free advice sector.”
Michael Land, Chairman of DEMSA adds: “As the principal trade body in the sector, DEMSA members are at all times required to provide informed, clear and appropriate advice which is always in the best interest of their clients. DEMSA members do already make significant investments in training and development however, introducing a formal qualification will act as an important vehicle for raising debt advice standards across the sector.”
August 18, 2011 Comments Off on DEMSA appoints retired High Court judge as Chairman of Compliance and Discipline panel
The Debt Managers Standards Association (DEMSA) has appointed The Hon Sir Harry Ognall, DL as Chairman of its Compliance and Discipline panel. Sir Harry is a retired High Court Judge. Before his appointment to the Queens Bench division of the Court, his practice involved a wide variety of criminal and civil cases, including corporate fraud. He has also previously acted as an arbitrator in the motor insurance industry.
Sir Harry will join Richard Wharton, Director & General Secretary of DEMSA and Caroline Siarkiewicz, Executive Director of the Institute of Money Advisers on DEMSA’s Compliance and Discipline panel, as well as Patricia Harter of West Yorkshire Trading Standards Service and Michael Fox, a Deputy Lieutenant of West Yorkshire.
The OFT is consulting on revised guidance for the debt management industry in order to ensure stricter compliance in the sector. DEMSA has also embarked on a revision of its own Code of Conduct in order to give every assurance to consumers of the high level of service they can expect. This revision will include changes to the disciplinary structure governing the conduct of its members.
DEMSA’s Compliance and Discipline panel meets to consider a complaint about one of the members from either creditors or clients, which has not otherwise been resolved in a complete and satisfactory manner. The panel is empowered to award redress, and to impose a variety of stringent sanctions such as fines, restitution and requiring changes in operational practices. The panel may also report complaints to regulators who would review suitability for holding a Consumer Credit or other license. In his new role, Sir Harry will lead the process of revising the DEMSA Code’s disciplinary provisions involving the panel and will monitor the application of these provisions so as to ensure their ongoing fairness and efficacy.
Commenting on his role, Sir Harry said: “I believe that the panel will prove to be of real advantage, not only to the present and future members of DEMSA but also to creditors and, crucially, the consumer. It will instil further confidence amongst clients and creditors that there are proper measures of redress open to them in the event of dissatisfaction.”
Michael Land, chairman of DEMSA, said: “We work closely with the OFT to help set and promote high standards in the industry and we hope that the revisions to both the OFT Guidance and the DEMSA Code will ensure these standards continue to rise. We are grateful to Sir Harry who accepted this role only after careful consideration and discussions with the OFT, who are themselves supportive of this move to strengthen the compliance procedure. His great legal experience will help DEMSA’s members continue to provide the best possible service to their clients.”