The Citizens’ Advice Bureaux (CAB) movement is a bit of a sacred cow. And to be fair it, at least in part, deserves to be. I’ve used it myself in the dim and distant (pre-internet, actually) and got a good start to dealing with a dispute. But, just a start.
In my area (debt advice) CAB are huge. Enormous. They genuinely help many thousands of people (and, thanks to a government grant, will now be able to help thousands more). But their offering has two big downsides. First (and I’ll come back to this) they don’t make distributions to creditors. Secondly, their advice (and support) is only as good as their advisors.
Yesterday was a case in point. A CAB advisor was on the phone. He had a citizen who was a former client of ours but who had terminated her plan because her income had dropped severely and she could no longer afford the payments we had proposed to her creditors. If she’d not gone to CAB of her own accord, we’d probably have advised it.
Anyway, there was this CAB advisor on the phone, giving our ops manager a hard time because we could not provide some information he required to help his new client – instantly. “We’ll, I need it t the latest by tomorrow” – bang, down went the phone.
We pride ourselves on our client service (justifiably – check out our reviews on IVA.com) and we duly got everything together and rang him back early the following day. He wasn’t in. He wasn’t going to be in for the next few days. Was there anyone else who could help. Errr, no. Did anyone else know when he would be in? “We are just volunteers you know”. We await his call. I hope he is better than some of the other CAB advisors we have come across in the past, who tend to forget about any client other than the one who is sat in front of them right now – or has just been on the telephone.
I guess this is just one of the differences between a paid and an unpaid service: We have someone here to give advice and support between 8.00am and 9.00pm, five days a week (and a skeleton team at weekends), we have specialists who can deal with stuff like preventing home repossessions, once or twice on the day of the court hearing itself.
But, for me the biggest difference between them (CAB) and us (the fee-charging debt advice sector) is the fact that we have the people, systems and processes to make distributions to creditors. Someone who goes to CAB will, in most cases, wind up with a great debt management plan, dealing with all their debts – but the client will then have to go away and cope with making the payments themselves. Given the stress and worry that has led to a client being in debt, I believe many just won’t. So, I believe a service where the debtor is reminded to provide the planned, affordable payment each month and then the distributions are made for him is, for many, something worth paying for.
I’d really welcome comments, maybe a debate on this.
3 comments ↓
The CAB do a great job given their level of (under) resourcing but they are swamped. The reality is that for a proportion of creditors, using the CAB may be the right tactic. The CAB cannot offer the same level of service and ongoing support that the commercial debt management sector offers. The majority of consumers in need of debt management advice and support do actually require relatively high levels of service.
Clearly not all consumers in need of debt management advice are the same however a frequently seen character trait is that they are not on top of their own finances and administration and need ongoing active support to keep on top of things.
Left to their own devices they may set up a debt management plan but will make low monthly payments to creditors and break their arrangements sooner than if they are with a plan being managed by a commercial specialist such as Harrington Brooks.
While there will always be exceptions, the majority of consumers will repay more of their debts if they are being actively encouraged and supported by commercial debt management companies than if they attempt to do it themselves or through the “free” sector…which of course is subsidised by the creditors (so just free to the consumer).
If creditors ever calculated the cost effectiveness of collecting their debts through the different channels of their own collections departments, the “free” sector and selling off their debts to agencies then they might realise that commercial debt management business can do the right thing for both debtors and creditors.
Matt Cheetham
CEO
Harrington Brooks
The bureau I work as a debt case worker in, as well as the other bureau local to ourselves, all employ specialist trained and experienced debt staff.
We don’t bother setting up DMP arrangements for clients as we know the likelihood of payments being made are low. We signpost suitable clients to the free DMP providers CCCS and Payplan.
CAB come into their own when dealing with priority and disputed debts, something most DMP’s don’t deal with.
I don’t know of any CAB who use volunteers to deal with debt work.
Thanks Jim, that’s useful. I did not know all CAB caseworkers were employed – and I take your point about priority/disputed debts, though I suspect the industry will need to look at these as the product develops.
CCCS and PayPlan are creditor-funded, rather than free and this does seem to reflect in service, which, our mystery shopping tells us, is not as immediate as it should be. Also, whereas the industry finds that between one in four and one in seven cases are suitable for an IVA. CCCS tell us they do IVAs in two per cent of their cases. I do wonder why the characteristics of CCCS debtors seem so different.
Is the CCCS practice of not setting up DMP arrangements widespread? We see many CAB proposals coming in to two creditors we work with.
Also – see this from the recent Ministry of Justice consultation on regulated debt management plans: “There is anecdotal evidence, supported by Payplan case studies, of a growing tendency for some creditors to apply interest after DMPs have operated for some time.” I was speaking to John Fairhurst of Payplan recently and quoted the proportion of DMP cases arranged by one of the country’s biggest fee charging providers where interest is frozen and John told me he doubted the figure, because Payplan got now where near that. I happen to trust the guy who told me – and John: I guess you must make up your own mind who you believe.
And, Par 115 of the MoJ’s consultation says:” However, it seems that the mechanism by which the “fair share” contribution is actually paid differs between operators and also individual creditors. In some cases creditors are invoiced, others are asked for a charitable donation while others are prepared to allow operators to ‘top slice’ from repayments made. Additionally, it is not clear that all creditors consider their debt to be settled when the fair share contribution is applied and that some may pursue the debtor for the fee element.
(My bold).
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