brendan coulton (Guest) Monday, 07 June 2010

I would like to comment as a Debt caseworker and Authorised Intermediary for a not for profit debt agency.

Firstly there is no payment to the non profit agency the £10 is paid to its regulatory body for training and development.

A client will be refereed to an Authorised Intermediary who will assess the case meets the relevant criteria, please bear in mind the intermediary guidelines are two inches thick which would suggest there are lots of reasons for not authorising a DRO.

DROs are not designed as a easy remedy for Debt solutions,they are designed for the poorest and the vulnerable hence an impartial and highly trained Authorised Intermediary to review the case as per suitability of the clients prior to submitting.

There are lots of reasons why they are declined for example client forgets to tell you his actual debt exceeds the limit,his car is valued a few thousand pound more, he/she forgot that there 15 years in the Health Service Civil service was pensionable. So the original question are they impartial? Yes they are they don't make a profit, they are regulated and as already mentioned debt management plans are not in the interest of the agency.

Debt Relief Orders are less work, final,and less cost to funders, believe me I have submitted 65 cases referred and had 65 approved.

Get it wrong rush misuse the guidelines and your client is going to lose his/her £90 and 6 years to wait before another Insolvency procedure can be used.

Clair (Guest) Tuesday, 18 May 2010

I approached payplan, they claimed I had more disposable income that what I actually did (as per the story above) and wanted me to have a debt management plan. Then I tried the consumer credit counselling service who said that I had no disposable income but yet would not put me forward for a DRO. I noticed the 2 organisations both had different criteria regarding necessary expenditure. I have finally found another organisation who will put me forward for a DRO but it was very hard work and I could sense the reluctance on every level in all the phone calls I made. Having read this article, now I know why.

Paul H (Guest) Thursday, 15 April 2010

I approached PayPlan in 2008 and was referred to a broker for a remortgage - ended up with a First Plus secured loan at 11.5% - compounded my problems no end. Should have been pushed down IVA route - now my unsecured debt is secured......nightmare......

Chris Gregory (Guest) Sunday, 11 April 2010

I'm a debt adviser at Paddock Wood CAB and I can assure you that Citizens Advice IS entirely impartial (according to your definition above) regarding money advice and we are NOT funded by creditors in any way at all - there is NO pressure from anyone for us to push our clients into any particular debt remedy EXCEPT the one the client (with help) decides is best for him/her. With DROs, this is a good outcome for us because it is likely there will be no future maintenance - with DMP the maintenance can last for ever, meaning that our resources become more and more depleted with it over time, however this does not affect us giving advice which we believe is best for our clients. Also with DRO we are aware that £90 can be lot for a client to lose if there are 'hidden' factors that will surface later and render the client ineligible. And sometimes a client is under so much pressure from creditors that we may set up a DMP as a 'holding' strategy while the client gets their £90 together. So I'm very proud of the advice our bureau has given over the years and I have an entirely clear conscience that our bureau (and I am sure, virtually all other CABs) is giving advice which is absolute best for our clients.

Joe Thursday, 08 April 2010

If the first comment I read (Steve's Thursday 08 April) had not been a glowing endorsement of your company and a little mention of your past employers as an aside had not been present I suspect I may have given slightly more credibility to your argument. I have listened to you on the radio before and I don't think you are as impartial regarding charities as you are trying to make out. I thought that when I listened to you and I still think it.

I wonder how Steve's "realistic plan" was paid for was it free?

steve (Guest) Thursday, 08 April 2010

I totally agree with your concerns Mike, we too signed up with CAb on a DMA then moved to CCCS who constantly had us adjusting our plan to ensure the creditors were getting a larger share of our income. we contacted one of your advisers who put us in contact with a company who have been brilliant and no concerns so far with a realistic plan to boot well done Debt Wizard (miss you on talk sport)

Mark McFadyen Wednesday, 07 April 2010

I think this is a very valid point. In Scotland the CAB, Money Advice Scotland, CCCS etc etc are all funded, some by local authorities, others by creditors, however each of the aforementioned have employees who need to be paid.

In a hypothetical situation the CAB or any of the others have 1000 cases through the door in the year and each of these cases fall as a bankruptcy. If they were to refer all outside and have no ongoing dealings, then the fundng would stop. So where do we draw the line between good advice and survival?

I have always used the basic rule to advise of all the options available whether suitable or not (In Scotland there are 4) and let them decide which best suits. I have never had occasion where someone was not able to immediately strip away at least 2 of the options and focus on the one or two remaining.

I think there is a survival issue, however I also think that there is a training/skills issue. In an ideal world the charities should work hand in hand with professional organisations and provide a service which is best for the individual at the centre of it and not what is best for the charity or more commonly provide information and advice on what they think may be correct.

That's my tuppence worth!!

Mark

James Wednesday, 07 April 2010

This has opened up an interesting debate. The paradox at the core of the problem is as Jayne puts it;

"As successful debt advice organisations grow and grow, they develop processes that aim to deliver to larger and larger volumes and thus are doomed to fail to deliver client driven best advice."

Stricter central regulation is one option, though that in itself is subject to political (with a small 'p') pressure from the movers and shakers within the industry. The real power is latent in the hands of the consumer, who ironically is the group currently in the weakest position.

There is a very interesting concept that has been floated for a number of years called VRM or Vendor Relationship Management. This concept highlights the fact that the coordinated power of the consumer is sufficient to create market change within the organisations providing them with services. We all know that an organisation is not going to change in a direction contrary to its objectives, i.e if profit or income is generated by presenting one type of service then policy will not change willingly or easily. Any intermediary that builds itself into a corporate giant is ultimately more concerned about its own growth and standing than in the interests of the people it originally set out to help.

We have been working on something that has generated a lot of interest within the Money Advice Sector and subsequently been rejected because it has the potential to remove them as an intermediary between the consumer and the creditor.

Over the last 18months we (see the blog link for more details on who 'we' are) have built an electronic bridge that enables indebted consumers and their creditors to negotiate affordable reduced payment plans directly and without the need for intervention by a 3rd party.

By empowering the consumer with free software that enables them to assess, organise, and present their finances in the industry accepted manner, directly and electronically to their creditors, and in the process, providing sufficient information to enable them to make clear decision on their situation, a lot of power (as well as dignity) is transferred back to them.

Interestingly creditors are taking a lot of interest in the concept because it reduces the time their customers take to address a debt problem, and maintains a direct link with their customers. We've secured pilot trials with a couple of major utility companies.

Our vision is that this system becomes the consumer's de-facto approach to liaising and negotiating directly with their creditors. Only if a negotiated solution to the problem cannot be found, does the consumer need to go to a third party. Because the system is entirely automated, and revenue is not generated as a result of presenting a debt 'solution', we can build in economies of scale without sacrificing the impartiality to the consumer.

It's still early days, and we're looking to work with people that can share the vision. Either people struggling with finance, to give us feedback on the software and work with us as it evolves, and people in the industry who are willing to do the same and evangelise if they feel able.

Debtwizard Wednesday, 07 April 2010

Hello Jayne

I take it from your comments that you possibly work in the debt management industry?

I fully agree with and accept your comment; I am also pleased to note that you wish to see 'stricter central regulation'.

My concern is that certain media 'personalities' insist on referring consumers to debt advice charities not knowing how they work or are funded and the issues that go with them as you have so eloquently described.

On the debt regulation side, we were due to hear on the 31st March 2010 whether this is to take place, this has now been delayed because of ‘non clear’ and ‘different views’ and ‘comments’ plus the election may have something to do with it.

Thanks for posting.

Best wishes

Mike

Jayne (Guest) Wednesday, 07 April 2010

In my opinion, the examples quoted here are symptoms of a 'flawed' debt advice system in the UK and the DMP as a generic debt solution per se. Many advice organisations, free or fee charging could be accused of bias in favour of the demands of their 'funders', even some of our hallowed Citizens Advice Bureaux are at the mercy of the demands of their funders like LSC, dictating which clients they can or can't give advice to, having to turn some away. It is a fact that we have no centrally funded totally impartial system for provision of advice in the UK, this means the number of organisations that are able to deliver advice that is truly impartial are sadly few and far between.
The debt advice industry we have, has evolved in response to our 'debt mountain' over the last 10 years and thus is complicated, disparate and impossible for those in need to navigate for best advice. Until we see stricter central regulation of the actual advice process itself, with external auditing and case reviews this is set to continue. As successful debt advice organisations grow and grow, they develop processes that aim to deliver to larger and larger volumes and thus are doomed to fail to deliver client driven best advice.

David (Guest) Tuesday, 06 April 2010

I went to CCCS for a debt plan as my lender said they would help me, now i know why the bank sent me there, they are still adding interest and my debt is increasing each month.

I went with this firm as well because that Money Saving expert Lewis says to use them, what a joke, they could not deal with my debt issue for seven, yes (7) weeks and when they finally got my plan going the lenders still added interest.

I have been in my plan now for nearly two years and looking at forums I feel I should have done an IVA, my debts would have gone much quicker and by law the interest would have been frozen. Thats what you get when CCCS are paid by the banks and credit cards. They are working for the lenders and not you!

Martin (Guest) Tuesday, 06 April 2010

I was told to go to this particular firm to help with my debts and all they have done is got me in worse debt! When i ring them i never get an answer for days and the banks still add the interest. I stated with 20K of debt and after nearly a year i owe nearly 21k because the interest is till being charged. I see them as debt collectors for the banks as i have just found out they are paid by the banks!

James Saturday, 03 April 2010

Very interesting point. I have been helping people through debt problems for a number of years. When the CCCS launched their Debt Remedy online solution I went through a hypothetical scenario for someone with no assets, a job that would not be affected by bankruptcy and a disposable income of £250 per month.

The system advised an IVA. The reality would have been that a bankruptcy would have been more appropriate for the person. Even if they had ended up with an Income Payment Agreement, the repayment amount would have been a fraction of an IVA payment and if their circumstances had changed during the 3 year payment period, the payments would have changed accordingly.

With an IVA, if circumstances change during the 5 year term and payments cannot be maintained the IVA is nullified, IVA fees are then removed and only the remainder of the amount paid is taken off the outstanding debt, leaving the person to the mercy of the collections system yet again.

Perhaps this may have had something to do with the CCCS's adoption of an IVA service just prior to the launch, or maybe I'm just being cynical.

(I don't know if they've changed the algorithms perhaps it's worth checking...)