8. Information to be provided to Consumers

Members must provide clients with sufficient, clearly written information to enable them to make an informed decision about whether or not they would benefit from the services the DMC’s offer.

In particular the following must be covered:

• It must be made clear that administration and/or management fees will be payable, and details of such costs must be provided.
  
  
• If a first payment goes to the DMC and not to the creditors, consumers must be warned that they will go further into arrears with their creditors.
  
  
• The consumer must be advised that he will be given the opportunity to withdraw from the contract, the procedures for withdrawal from a debt management programme, and the circumstances in which costs will and will not be incurred and, if they are, what they are likely to be.
  
  
• The nature of the service to be provided by the Member: the total cost to the consumer of the service including any initial or fixed charge fee or deposit, the periodic management fee to be paid to the member multiplied by the estimated length of the contract; the amount to be repaid; and the likely duration of the contract. Where it is not possible to establish the cost or duration of a contract a best estimate of the total cost to the consumer of the service must be given. Estimates must be realistic and must be accompanied by a clear warning that it is an estimate and the assumptions it is based on.
  
  
• If the proposal is covered by the Financial Services(Distant Marketing) Regulations 2004 then the relevant information prescribed by that act, including cancellation rights must be advised  to the consumer.
  
  
• Creditors are not obliged to accept reduced payments or to freeze interest and/or charges and fees and that, unless they do so, repaying the same debt over a longer period of time will increase the total amount to be repaid.
  
  
• Collection actions, including default notices and litigation, can ensue and that there is no guarantee that any existing or threatened proceedings will be suspended or withdrawn.
  
  
• The likely impact of the debt management programme on the consumer’s credit rating, that they might not be able to obtain credit in the short term, and that there is some likelihood that they will not be able to do so in the medium to long term.
  
  
• The importance of prioritising debts such as mortgage, rent, council tax and utility payments and any arrears, and ensuring that an appropriate allowance is made for these payments within any debt management programme.
  
  
• The nature of those commitments that will, and those that will not be included within the repayment plan must be made clear to potential clients.
  
  
• The likelihood that existing bankers may not wish to continue banking facilities and information and advice on basic bank accounts.
  
  
• The terms and conditions of any managed or other bank account or other service offered
  
  
• Where a member of staff from a Debt Management Company recommends that, in the consumer’s best interests, one of their options is a remortgage, or further advance, or consolidation loan, the DMC must disclose to the customer in writing the level of fee, commission or any other remuneration they will receive from the third party who arranges this service, if not already disclosed by the third party. Any such advice will be given with the requisite degree of care and if it is in the consumer’s best interests (notwithstanding that the consumer does not take up a debt management programme with the member and does not therefore become a client).

9. Vulnerable Consumers

DEMSA members must offer equality of service to any person, regardless of their race, creed, sex, disability or nationality.

Members must have in place satisfactory provisions for dealing with vulnerable consumers who may include those who are disabled and/or disadvantaged in some way, for instance consumers with poor literacy skills, including difficulty with reading/writing or understanding basic mathematics, or lack of knowledge about a complex product or service, or whose first language may not be English.

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10. Contract Terms

Contract terms and conditions should be fair, written in plain, intelligible language and easily legible, and must provide for the following:-

• Detail the nature of services being provided, ie the debts which are included, and those that will not be included in the programme.
  
  
• Where it is not possible to state firmly the cost or duration of a contract a best estimate of the total cost and duration of the service, based on the amount of payment being made, the management fees charged and the amount of debt outstanding. The assumptions on which this is based should be set out.
  
  
• Contract terms must specify a period within which payments received from clients will normally be passed on. As specified under “Client Account” below payments must be made within 5 working days of clearance.
  
  
• Procedures for withdrawal from a programme.
  
  
• Compliance with the Financial Services (Distant Marketing) Regulations 2004 regulations 9 & 10 regarding the cancellation rights enjoyed by consumers, which include the right to cancel, in certain circumstances, even if written information has been received by the consumer..
  
  
• Any contract must not include any term which says or implies that there are no circumstances in which a client is entitled to a refund. For example a refund may be due to a dissatisfied client if:
  
  
1. The member has promised more than it can deliver.
   
2. The member has failed to conduct negotiations with the reasonable care and skill required by section 13 of the Supply of Goods and Services Act; or
   
3. There has been a total failure of consideration
   
   
• Clients on debt management programmes must not be prohibited from corresponding with, or responding to creditors or their agents. It is reasonable for members to request that all contact/correspondence with creditors be copied to them. Members must deal with all correspondence promptly, and must keep the client informed of relevant communications.
  
  
• The contract should allow the client to withdraw from the contract where, following signing of the contract the total fee differs significantly from the estimate given prior to the contract (for example, because a full investigation of the client’s circumstances reveal that the monthly payment must be larger than first thought).

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