Worried – about all sorts of stuff

The Office of Fair Trading (OFT) have been conducting a review of fee-charging debt management companies, to say they aren’t entirely happy is an understatement. A shame, because we do much well and work hard for our clients.

However, it looks like we will need to work harder to meet standards if we are going to get to the point where our industry is trusted by consumers and creditors.

The Debt Resolution Forum (a trade association for fee-charging debt management and IVA providers like ClearDebt – the company I am proud to work for) recently published it’s annual newsletter and included this article (reproduced here unedited) from Marie Whitley, the top dog in the OFT’s debt management team:

“OFT’s Debt Management Guidance Compliance Review – update

The OFT launched a review of compliance with its Debt Management Guidance (the Guidance) in November 2009 following an increase in enforcement action against businesses operating in the debt management sector, which has included formal interventions and warnings about misleading IVA mailings, ‘look alike’ debt advice websites, cold calling and other forms of bad practice. The overall aims of the review are to probe compliance levels across the industry and use the findings to prioritise OFT’s future enforcement strategy and prepare a revised version of the Guidance for consultation.

An analysis of the results is well underway and we will aim to publish a report in the summer.  Provisional findings indicating non-compliant advertising were conveyed to DRF members at last year’s industry conference.  Subsequent findings of wider and more systemic non-compliance drawn from the evidence obtained from our questionnaire survey, compliance audits and mystery shopping exercise have also been shared with DRF Board members.

A key message for the industry is that it has to do more to improve compliance levels which our review suggests have fallen well below minimum standards.  By now DRF members should have reviewed and amended their advertising to ensure compliance with the Guidance.  Remedial action should also have been taken to address the non-compliance issues highlighted by Trading Standards officers during recent audits.

The OFT is determined to protect vulnerable consumers from those that may look to take advantage of them by making misleading claims in their advertising or providing poor quality advice and information.  Whilst the OFT will continue to work co-operatively with the industry to drive up standards we will not hesitate to take targeted enforcement action against individual businesses in the coming months unless we see a step change improvement in their behaviour.”

I don’t think this could be much clearer. And, I do believe the best companies in the business can rise to the challenge.

I am not happy with our parliamentary candidates.

Few of them seem to think that personal debt is an issue worth paying a couple of moments of their attention.

What has surprised me is that the Liberal Democrats turned out to be the party that care least. Strange, given Vince Cable’s strong interest in consumer debt issues over the past few years.

My company did another survey (of people in debt) which shows (as I write – the poll is still live) that people in debt will (by a short head) mostly vote Lib Dem. Perhaps they should rethink?

I am going to tweet this at mine using tweetminster. Why don’t you?

An exhibition at the new Manchester branch of Whitewall Galleries swept me back to my childhood in so many ways his morning.

I’d heard that they were opening a brief exhibition of Rolf Harris’s work and I darn well had to see it before I dashed down south to see my daughters.I had to go, not because I was expecting much of the art (my expectations were a good deal lower than the reality) but because I had always wished he  could be my favourite uncle and I had to see what he could do when he had an easel, rather than an entire TV studio, to paint on. I’m glad I did.

Not for the alien Australian landscapes (which rushed me back to a book of photos I often took refuge in as a sickly, bedridden child) – I’ve never been to Oz and I would, at a shot, to experience red and orange tinder-dry grasslands, blue leaved gum trees and all the shapes and colours that English landscapes lack, Nor for the cool greens and dappled sunlight of foliage dripping over an English stream with boys (who could have been my mate Stuart and me) fishing for sticklebacks – I wonder if those colours would look alien too, to an untravelled Aussie?

No. It was “Dad”. On one wall hung a small black ink drawing on buff paper of a man in his prime, relaxed and pipe-smoking, brylcreemed hair and an air of calm self-confidence about the future. A man one could look up to. A man who might be your mate as well as your mentor.

Diagonally opposite and even tinier (and in navy blue Quink) hung “My old man”. Patently the same bloke, But much older, sunk into himself, A man with little future left and a man who needed the artist’s care and support, having little left to offer to others.

I wish I’d had the money for both (I couldn’t stretch to either – but it would have had to be the pair). The artist’s journey between the two drawings was extraordinary. Seeing them singly, you’d assume they were simple, expressive portraits. Together they seemed to be about the artist more than the subject and about the journey they had made.

Perhaps it’s just me. Those two drawings summed up in an instant my life with my father. They turned a moments’s idle curiosity into a morning of extraordinary memories.

Thank you Mr Harris.

For some years now Its seemed to me (because I’m in the debt business) that the Liberal Democrats have taken the issue of personal debt more seriously than the other two major parties.

My company is running a poll on its website, with most of the respondents coming from our community of people with debt problems. It’s early days – but the LibDems are leading the pack with (at the moment), the Tories at their heels and Labour a shabby third.

It’s early days – but if it stays like this, I think the credit (or blame) can be placed firmly at the feet of Vince Cable – the LibDem’s candidate for chancellor (and noted ballroom dancer) and shows the value of diligence and consistency in politics.

I reckon its possible that people with debt problems have, over the long haul, noticed who takes them most seriously, and decided to honour that party with their vote, thanks to Mr Cable.

And this could make a big difference – more than one in ten of the UK’s voters is struggling with personal debt. That’s a big lobby.

(Well, not much anyway).

The government today announced a new scheme to help people with debt problems that has been cooked up by the British Bankers Association (BBA), The Consumer Credit Counselling Service (CCCS) and Citizens’ Advice Bureau (sorry just Citizen’s Advice these days – CitA to their many friends).

This has sort of been presented as a government initiative (LOTs of ministerial comment in the press release) and I think it represents a kind of micro-electioneering. If so, the government have got it wrong, big-time, on a number of counts:

• First, this solution will help a tiny number of people – between a quarter and a half of one per cent of the people who ask for debt help every year.
• Secondly, the nature of the help offered (temporary help for people with short term problems) is not the kind of help most people in debt need – their problem is almost always long term and will take years, not months to sort out.

If my theory is correct, that a minister somewhere thought “there’s a few votes in this – might as well have them”, then i think they have got things terribly wrong. It’s not a few votes. It’s probably the votes of 3-5 million people at stake here. Most of whom are aware of their debt situation every waking moment and will know they’ve been offered nothing really new – or helpful.

All a damn shame really. What the debt help system in the Uk really lacks is a procedure for people who can repay most or all of what they owe – just not quite as quickly as the lenders breathing down their necks would want. I thought, with the proposed Regulated Debt Management Plan, we were about to get it. Tragic that the government wimped out.

I was gobsmacked, when I googled “Cartel Client Review” to discover more about their current run-in with the Ministry of Justice, to find a pay per click (PPC) advert from the BBC linking to a December article on their news site about this company.

I wasn’t sure if I was seeing an illusion or having a quietly histrionic moment.

The BBC? Paying for advertising on Google?

I tried again and it seemed to have gone. Fortunately I had taken a screenshot.

So, chaps – any ideas? Was it:

• An inexplicable abberation
• Crusading by the BBC, trying to warn potential Cartel Client Review Customers of the BBC’s concerns?
• Something else entirely?

Here’s what I saw:

Here is the story it linked to – this was published on December 4. Has the ad. been running that long?

I saw this by Sophie Ridge of the News of the World, on their politics blog.

I thought it only told half the story – so I wrote a reply  to say that pay day loans  seemed to resemble that vile invertebrate – the necessary weevil – and that they would do so until the major banks decided to do some low margin, but socially responsible, lending.

I’ve no brief for the pay-day loan vultures, but I believe we should think hard before tarring the entire sector with the same brush. And the minister (Kevin Brennan) knows this too: I was at a meeting he hosted last month where he and the charitable sector were reminded that the people who take this kind of credit just can’t get it anywhere else.

The poor funts (financial untouchables – a word I helped coin) just can’t get credit elsewhere. The burgeoning Credit Union sector has told government they would need to charge as much as the high interest credit providers (I am thinking more of people like Provident here) simply because of the risk of non-repayment from customers in this sector. The guy at the meeting representing the mainstream banks (through the British Bankers Association) admitted his members “did not have the expertise” to lend in that sector.

So, whilst huge amounts of credit are miss-sold in this marketplace, where does a person go when the washing machine finally becomes irreparable, when two new tyres are needed for the van to pass its MoT or a cot, car seat and buggy are needed for a new arrival?

Part of the problem is in the nature of the credit and the character of the consumer. If a payday loan is used as intended (and repaid in a month or two), then the interest paid (whilst high by any interpretation) is no worse than saying to a mate “lend us a tenner till the end of the month and I’ll buy you a pint”. And if the borrower does repay quickly (probably by making real sacrifices in other areas of living), then all is not unreasonable. However, the temptation is to roll the credit onwards and upwards and, even if you don’t add another penny to what you owe – but just repay the interest, the amounts soar and become ludicrously unaffordable.

For me, there is a solution, something I’ve been bleating on about for years – but which is now fashionable. Force the mainstream banks to offer products in this market. They can afford to absorb the risk. And, as we are now, in many cases, their majority shareholder, we can afford to say that they should represent their shareholders’ interests and lend to them. All of them.

Even the funts.

Really interested to see this piece in the Daily Telegraph today.

It is all about some ex-directors of Debt Free Direct setting up a charity to give people free debt advice.

The Telegraph article is interesting, saying that two of the men are still directors of commercial debt management companies and that the Foundation they set up had an association with a trading company (I presume doing IVAs and debt management) which itself went bust.

However, this rang a bell. Back in 2003 (I think) an organisation called Debt Advice Trust (which seemed to be associated with the new one – Debt Advice Foundation, only Debt advice Foundation is actually older than Debt Advice Trust: Confused – you will be) was set up and advertised itself as “independent” and “not for profit”. My company, ClearDebt (another IVA peddler, Mr Telegraph) complained about it to the Advertising Standards Authority (ASA) saying it was neither and that we thought it was a vehicle to pass cases to Debt Free Direct.

The ASA upheld the complaint. They said:

“The ASA noted that the words “not for profit” appeared four times in ad (a) and three times in ad (b) and considered the word “Trust” emphasised the organisation’s not for profit nature.  We noted that DAT was incorporated as a company limited by guarantee on 30 April 2007 and whose Memorandum of Association precluded the distribution of profit or payment to directors and required that on winding up any surplus assets needed to be applied to another charitable institution with similar objects.  We noted that DAT’s profits were gifted to the Debt Advice Foundation, a registered charity whose last published accounts, for 2006, revealed no expenditure.  We noted that two of DAT’s directors were trustees of the Debt Advice Foundation. We also noted that DAT’s three directors were also the three executive directors of Debt Free Direct plc, now Fairpoint Group plc, a commercial company whose principal activity was also the provision of financial advice and appropriate solutions to individuals experiencing personal debt problems.  We understood the company had a turnover of £28M in the year to 30 April 2007.  In addition to the proportion of referrals to Debt Free Direct, we noted that re-mortgage referrals were made to DFD Mortgages, a subsidiary of Debt Free Direct.  We considered that in context “not for profit” suggested DAT had no financial interest in the advice they gave and the solutions they recommended, whereas their links with Debt Free Direct’s staff, knowledge, premises, directorships and shareholdings and the support they expected from those to whom enquirers might be referred did not support that.”

The full ASA ruling is here.

What goes around, comes around.

Sent to me by a tireless obsessive who, I think, shares my passion for romance:

I Crave Your Mouth, Your Voice, Your Hair

Don’t go far off, not even for a day, because –
because — I don`t know how to say it: a day is long
and I will be waiting for you, as in an empty station
when the trains are parked off somewhere else, asleep.

Don’t leave me, even for an hour, because
then the little drops of anguish will all run together,
the smoke that roams looking for a home will drift
into me, choking my lost heart.

Oh, may your silhouette never dissolve on the beach;
may your eyelids never flutter into the empty distance.
Don’t leave me for a second, my dearest,

because in that moment you`ll have gone so far
I’ll wander mazily over all the earth, asking,
Will you come back? Will you leave me here, dying?

Pablo Neruda

Got really ticked off by this guy Martin Bamford today – he wrote a blog I didn’t understand: If I am right it appears to be wilful misinterpretation of  an article written by the BBC and a press release issued by the Ministry of Justice – they have banned a whole load of companies making false claims about being able to resolve personal injury claims and unenforceable contracts.

Damn right these chaps should be banned. However, Bamford’s piece implied  it was fee-charging debt management companies that were being banned willy-nilly. Some of these firms did do debt management – but for that to be used to imply that we are all charlatans and rogues infers ignorance or worse on Bamford’s part. Actually there are some good quality standards in place.

Here’s what I wrote in response:

“Martin,

I think you may be misleading people.

Most of these weren’t debt management firms – they were claims assistance (either personal injury or unenforceable contract) firms. Kudos to the MoJ for closing them down!

As for fee-charging debt management firms: First, there is at least one quality standard (see www.debtresolutionforum.org.uk – members of which represent more than half the fee-charging DM firms in the UK). Secondly, the charitable sector reckons it has the capacity to deal with two million enquiries – when the need is for four million per annum. Thirdly, much of the charitable sector only provide advice, they don’t make distributions from their clients to creditors – precisely the service many of these people need – just getting advice from CAB won’t necessarily make you less hopeless with money.

Fourthly, using a fee-charging DM company can make a huge difference: We do often succeed in negotiating interest freezes on our clients’ balances – which makes a huge difference – and many of us are able to offer Individual Voluntary Arrangements (IVA), where possible – which is, potentially, a final solution to debt – with real debt forgiveness thrown in.

Even the Money Advice Trust (despite the spin in its press release) has done research which shows the value brought by fee-charging DM companies: http://www.moneyadvicetrust.org/images/fee_charger_research_final_report.pdf

DRF (Debt Resolution Forum) members are part of a body that has created the first properly academically accredited qualification in debt resolution (Cert.DR – three 80 hour study modules with proper exams, accredited by EdExcel) and an independent monitoring and accreditation scheme designed to keep members up to the mark and adminstered by the Insolvency Practitioners’ Association (http://www.insolvency-practitioners.org.uk).

Yes – there are loads of cowboys in the debt business – that is one of the reasons DRF exists. But, don’t tar us all with the same brush”.