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Posted on March 16, 2016

16th March 2016 – According to the Financial Times, the Chancellor will announce changes to the Money Advice Service in today’s Budget. Kevin Still, CEO of the Debt Managers Standards Association (DEMSA) provides the following comment:

“The Chancellor’s decision to replace the Money Advice Service with a much smaller body that focuses on providing frontline services to those in financial difficulty comes at a critical time in applications by DEMSA’s members for full authorisations with the Financial Conduct Authority (FCA).

“Since the FCA took over regulation of consumer credit from the Office of Fair Trading in April 2014, the new Consumer Credit Sourcebook has been very clear on the requirement for commercial debt management firms to signpost indebted consumers to the Money Advice Service at the initial point of advice. This is also true for those firms leaving the market, which the Money Advice Service report on.

“There needs to be clarity and this needs to be communicated quickly, as 16,000 consumers have recently had their debt management plans terminated following the decision to not grant permissions to debt management firm PDHL. The primary guidance offered to these indebted consumers was for them to contact the Money Advice Service.

“The Money Advice Service acts as a gateway to a range of debt advice providers, including face-to-face advice and advice over the telephone. If the brand is removed, has all the investment in building public awareness around helping people in financial hardship been wasted?

“The Money Advice Service has literally just published research into a ‘picture of over-indebtedness’ in the UK. This confirms that 8.2m consumers across the UK are over-indebted, which varies by geographical regions.

“DEMSA and its members are committed to offering people with unmanageable debt problems better access to debt advice and to assist the drive for better engagement, working with free-to-consumer debt advice providers and specialist agencies around key issues like vulnerability. These are key themes at our conference in June 2016.”

For further comment from Kevin Still please contact Wendy Harrison at HSL on 0208 977 9132.