Discussion thread - DMPs and the continuing addition of interest.

[Wintry]

That's where I differ a little, though I'll willingly admit to not being as knowledgeable as you.

 

To me, if you offer DMP's, that's what you do. You take on clients with debt problems and sort them out. To me, it is regardless of the type of debt. I don't believe they should be able to pick and choose like that. They're licensed in the same way as other organisations are through the OFT. They should take the clients and resolve their problems. I'll leave the fee paying out of this for now as that's a whole different discussion which would be interesting to have (apologies if you folks have already had it several times!)

 

I don't have a problem with people knowing their limitations - in fact I admire that quality in people. So if people are licensed, but look at a situation and just don't know where to start, I have no problem with them passing them on to a place that can help. I often have people with issues about which I don't know enough, or for which I'm not qualified, so I find them another source of support. Cherry picking clients can, to my mind, be for one reason only - profit. That then takes us to the other discussion.

 

We need to remember that Payplan are a significant source of funding for the IMA as well. Does that mean they bring a certain influence to the organisation?

 

Hi

 

You make some superb and valid points in my opinion.

 

It is not a perfect world in any industry and that definitely applies in the debt advice sector.

 

It keeps coming back to the same old question.

 

If there is any sort of answer then it is probably this: basically there has to be the right balance for the sector to exist as it is, have we got that? not quite is my opinion, but this is nothing new.

 

Things are tight for the profit makers and the funded charity section alike.

 

Independent impartial advice is suffering as a result - marketing and sales people are not usually debt advisers in my experience, they just market and sell (off a script usually)

 

You will always get the strains as some sales and marketing people weave their way around the various agencies and other venues.

 

They all usually say they are better than the others

 

I could say more on here and I am chomping at the bit a little, but I always try to keep it steady & of course professional:)

 

Just my opinions

 

All are welcome to comment and that includes charity reps, so called not for profit reps & profit maker reps, IPs too if they wish, I am here, wont run or hide and won't disappoint you.

[sequenci]

If there is any sort of answer then it is probably this: basically there has to be the right balance for the sector to exist as it is, have we got that? not quite is my opinion, but this is nothing new.

 

I don't think we've got it right either. I have come across countless examples (and I'm sure you will have too) where the fee-chargers have acted in what is clearly a very negligent fashion. I don't think the Debt Management Guidance is robust enough - I really beleive that ANY debt advice firm - be it free-to-client or paid for should at the very least have the ability to advise to a reasonable degree on priority debt issues and bailiffs etc.

 

I've always wanted to have some sort of competition where all the big debt organisations send ten of their advisers randomly picked to sit a money advice exam - I think the results would be really interesting. And I already know which organisations will do very well and which less so.

 

Another bee that I have in my bonnet is The Money Advice Service. Why? Ask 100 people what those adverts are all about - I bet few will be able to tell you. That funding could have sorted out the debt advice field once and for all.

 

MrBlueSkies - Thanks for graciously allowing us to go off-piste a little.

 

On a personal note, I'm really ashamed of the mess I got myself in but at the time I didn't have a choice, things needed to be paid and I had to get credit. I'm a normal person who got in to deep. I am struggling at the moment though, like I mentioned, I'm still at home with my parents. I've watched all my friends move out and buy houses over the last few years which has completely depressed me. My debt free date keeps moving further away and I'm at my whits end.

 

Don't be ashamed, one of the reasons I'm so passionate about debt advice is because I got into a massive mess when I was younger which caused all sorts of problems for me - including a massive falling out with my parents. I know from the work that I do (I've spoken to well over 20,000 clients) that the vast majority of people fall into debt for circumstances that are often beyond their control. The creditors would do well to remember this and help peole in these difficult times rather than adopting an overly aggressive attitude. Some creditors are very goood these days - others less so.

 

Have you investigated any of the alternative measures, such as Bankruptcy? It's often the fastest, cheapest - and easiest route forward. Of course the implications would need to be considered too; but for many it's the quickest way to draw a line in the sand and move on with your life.

[Peterbard]

I do not have the vast experience in DMPs that some have on here, probably helped maybe a couple of dozen people get started with the free commercial ones over the years. Nor do I have the inside knowledge re. funding of free providers that some on here have.

 

Most of my work has been with the credit union, which is a “not for profit” organisation, but I think there are parallels.

The CU is volunteer driven, and the “old school “are very protective of that status. As we all know the directors cannot be employed by the CU(with the possible acceptation of the treasurer who may get a small bursary, I think I got ten pounds a year when I did it).

 

This arrangement works better than you would think when the CU is small, and many think that this is when they are at their best, business conducted in drafty church halls, or at the permission of a friendly LA in the back of some office.

So what happens when the volume of business increases, pretty soon you find that in order to provide a consistent level of service a dedicated phone line is required perhaps computerised accounts packages, premises?

In the 90s I was employed by my LA to facilitate the merger and growth of several smaller CU,s, this met with a degree of hostility from many of my colleagues, as suddenly I was getting paid(quite well) for as they saw as doing exactly what they did for nothing.

 

There were many uncomfortable meetings with the committees, to which I could no longer take an active roll in.

However, because I was able to dedicate all my time to the enterprise I was able to create a funding source( a “friends of” charity), this is the parallel I am referring to.

 

In my twelve months I was able to raise over £100000 of funding from various sources, I could not care less where the money came from, much came from the National Lottery, which many class as a reprehensible tax on the poor, I had a grant from Ladbrokes the bookies for instance.

 

I have no issues about who provides the money, certainly in my experience the thought that these funders would be entitled to a say in the running of the CU would be absurd, is the situation regarding creditor’s charitable donation to DMP providers so different, I only ask?

[sequenci]

I have no issues about who provides the money, certainly in my experience the thought that these funders would be entitled to a say in the running of the CU would be absurd, is the situation regarding creditor’s charitable donation to DMP providers so different, I only ask?

 

It's an interesting point for sure - and something that many of the fee-charging sale people highlight to their potential customers as part of their 'pitch' - Oh, the free DMP providers get funded by the creditors, therefore they're working on behalf of the funders and not the debtor.

 

Which, of course, is a bit misleading - although it can be argued that the free DMP providers would have a vested interest in getting their callers on to DMPs (or IVAs(!)). I'm not sure that creditors would have much of a say, though, and certainly the amounts being offers would be based upon a CFS compliant (or similar) financial statement. I do, however, feel that anyone having a free DMP should be made aware of how the 'fair share' contribution works.

 

Out of the 'major' debt charities I guess you can argue that the only three that are truly holistic are the CAB, National Debtline and Christians Against Poverty. I don't know a great deal about CAP, though - I've not had the chance to visit them, yet.

[Peterbard]

Perhaps we need more charities which truly receive no external funding? They are a sort of parallel to Dodgeball's CU's in the draughty Church Hall.

 

I wouldn't say CAB are holistic in the slightest Seq. I find the way they operate very bizarre, and they get to claim the best of two worlds - firstly being small, supposedly independent charities while secondly being part of an absolutely huge, funded charity. I was VERY uncomfortable seeing CAB taking on the work of sifting Trading Standards' complaints for which should and which should not be progressed further. At that very time, I was dealing with a case where Trading Standards were offering to sue CAB. Now I'd have thought that would cause a conflict of interest if monumental proportions.

 

CAP are interesting. They do good work with mixed reports - it will be interesting to see what you think of them.

[sequenci]

Perhaps we need more charities which truly receive no external funding?

Not sure what you mean by that - wouldn't most charities get funding externally?

I wouldn't say CAB are holistic in the slightest Seq. I find the way they operate very bizarre, and they get to claim the best of two worlds - firstly being small, supposedly independent charities while secondly being part of an absolutely huge, funded charity

I think it's an interesting point - each CAB is their own little entity which means that their practices can differ from one branch to the next. Their money advisers are generally very well trained, though, so the service to the client shouldn't be pretty good. I guess it *may* be a bit of a postcode lottery but I think it would be unfair to tarnish them all as being poor. I would imagine some are, though.

 

. I was VERY uncomfortable seeing CAB taking on the work of sifting Trading Standards' complaints for which should and which should not be progressed further. At that very time, I was dealing with a case where Trading Standards were offering to sue CAB. Now I'd have thought that would cause a conflict of interest if monumental proportions.

I don't understand *that* either.

CAP are interesting. They do good work with mixed reports - it will be interesting to see what you think of them.

I've no direct experience but I've heard good things.

[Peterbard]

Not sure what you mean by that - wouldn't most charities get funding externally?

 

Indeed - the vast majority, but not all. There are a fair few who are entirely self-funded.

 

 

I think it's an interesting point - each CAB is their own little entity which means that their practices can differ from one branch to the next. Their money advisers are generally very well trained, though, so the service to the client shouldn't be pretty good. I guess it *may* be a bit of a postcode lottery but I think it would be unfair to tarnish them all as being poor. I would imagine some are, though.

 

 

I don't think they should be tarnished as poor either - it would be grossly unfair. It is odd though the way they can act independently, yet can and do act together when it suits as well. They are, in my experience, not quite as independent as they might have you believe.

 

I don't understand *that* either.

 

 

Cases for Trading Standards are now reported through CAB.

 

This online Trading Standards 'leaflet' from Devon CC shows an example of this:

 

http://www.devon.gov.uk/tsdocfulldetails.htm?docClass=eng%3Bcons%3Badv%3Bpwc&docId=122489&returnTo=motor_vehicle_leaflets

 

Here's one extract:

 

Mileage

If you are buying from a trader, check to see if there is a disclaimer stating that the mileage is not guaranteed and so cannot be relied on. It should be 'bold, precise and compelling' and effectively brought to your attention. If there is no disclaimer, it could be argued that the trader is stating that the mileage is correct and you can rely on it. It then becomes part of the contract and the description of the vehicle. It can be difficult to prove a car has been 'clocked', so the golden rule is to walk away if you are not satisfied. There are organisations that will provide you with information on a vehicle for a fee - check online for details. If you believe the mileage has been altered on a vehicle you have bought contact Citizens Advice for the case to be referred to trading standards

 

The other part I mentioned here referred to the time when the shift from reporting directly to TS to reporting to CAB who then choose what to pass on to TS. At that time I was dealing with a case where TS were investigating CAB for misconduct, and offered to take further action against CAB due to the misconduct in that particular branch. Given the set up now, this would cause huge problems. I know it must be very rare, but it did happen, so could again.

Edited August 2, 2013 by Dodgeball

[Wintry]

Hi

 

According to this article things are not looking too good

 

http://www.bbc.co.uk/news/business-23534877

 

All the more reason for people to be able access genuine independent impartial advice with their debts and finances.

 

If people are doing their best to deal with their debts then they should be treated properly and with respect, interest and charges frozen every time, no exceptions or nonsense.

 

All the agencies should be shouting this off the rooftops, name and shame, quote the OFT guidelines.

 

There has to be a universal approach and the advice given has to in the interest of those in debt first (like it is supposed to be)

 

Nothing good is coming from putting and keeping people in arrangements that they cannot afford or lets say less than appropriate solutions including making them fit.

 

Communities and families are increasingly coming under the financial cosh and it will get much worse for some before there is any sign of things getting better.

 

It cannot be allowed to go on

 

My views

[Peterbard]

 

It cannot be allowed to go on

 

My views

 

I agree with you. I do worry a little about the standard of living people expect as a right though. Just looking back through my 50 odd years of living, standards have risen massively, and I do question now how reasonable some peoples' expectations are.

[Wintry]

I agree with you. I do worry a little about the standard of living people expect as a right though. Just looking back through my 50 odd years of living, standards have risen massively, and I do question now how reasonable some peoples' expectations are.

 

Hi

 

Thanks for the reply

 

I often hear these type of points and questions and admit to the same thoughts crossing my mind on occasions

 

You are right, living standards have risen massively and in a paradoxical way this is why the fall can be so severe when in financial trouble especially where there are families with children involved.

 

The pace and stress of it all piles on the pressure and can often contribute to health and relationship issues

 

It can be and is an awful mess for an increasing number of people and families and is definitely getting worse for a great many people.

 

Just look at the rise in the cost of living and mixed with the pay cuts and freezes, job losses it is turning into a living nightmare for some

 

Some people are working all hours only to find that they have nothing left (or worse) after just paying the essentials and when any unexpected bill such as the car, washing machine or house repair arises it can push them into real trouble financially and the spiral begins.

 

Many people are in debt payment arrangements at the same level they have been set at from months and years ago which of course cannot go on given the above - In some cases the payments were set at the limit then based on the cost of living at the time, so it is obvious that they will now be struggling, couple this if & where interest and charges are still being added and it basically cannot go on.

 

Where an agency or company have a financial interest in a particular debt solution then obviously there have to be issues - such as independence and impartiality and if these agencies are funded directly by the creditors (for example out of their clients DMP payments) then nobody can seriously tell me that this is not at least a point of debate especially in these tough times - of course the marketing and sales people might try:)

 

The above is becoming a hot discussion potato amongst a growing number of people in the debt advice sector and is definitely set to intensify despite the apparent deafening silence from some quarters that we appear to be witnessing (simple economics will see to that)

 

I will talk about the Common Financial Statement (CFS) and a few other issues later.

 

My opinions

Edited August 3, 2013 by Wintry

[Peterbard]

I dealt with one yesterday where a debt of £5440 had been put on a DMP which had been paid for the past 10 years, and still had 17 years and 8 months to go. To me, that is total and utter madness, as now the account has been sold and the person is facing much tougher times. The debt should have been tackled realistically at the start; to my mind a 28 year DMP for that size of debt is not sensible.

[Wintry]

I dealt with one yesterday where a debt of £5440 had been put on a DMP which had been paid for the past 10 years, and still had 17 years and 8 months to go. To me, that is total and utter madness, as now the account has been sold and the person is facing much tougher times. The debt should have been tackled realistically at the start; to my mind a 28 year DMP for that size of debt is not sensible.

 

Hi

 

Interesting, I have had a go at the maths on this one, slightly mad really by the look of it and like you say does not make sense.

[Wintry]

That's where I differ a little, though I'll willingly admit to not being as knowledgeable as you.

 

To me, if you offer DMP's, that's what you do. You take on clients with debt problems and sort them out. To me, it is regardless of the type of debt. I don't believe they should be able to pick and choose like that. They're licensed in the same way as other organisations are through the OFT. They should take the clients and resolve their problems. I'll leave the fee paying out of this for now as that's a whole different discussion which would be interesting to have (apologies if you folks have already had it several times!)

 

I don't have a problem with people knowing their limitations - in fact I admire that quality in people. So if people are licensed, but look at a situation and just don't know where to start, I have no problem with them passing them on to a place that can help. I often have people with issues about which I don't know enough, or for which I'm not qualified, so I find them another source of support. Cherry picking clients can, to my mind, be for one reason only - profit. That then takes us to the other discussion.

 

We need to remember that Payplan are a significant source of funding for the IMA as well. Does that mean they bring a certain influence to the organisation?

 

Hi

 

Just had another read through this

 

Cherry picking is an interesting point and perhaps this does not just apply to the fee chargers & profit makers.

 

Another question, how many of these agencies and companies make applications for charitable grants on behalf of their clients or 'customers' - for example, bankruptcy, DRO fees, essential household appliances, goods and make write off requests?

 

Concentrating on the areas where more money is made or generated cannot really be classed as true independent impartial advice.

 

Profit & funding are current leading issues and this is part of the problem, how far it goes and how out of touch it gets is becoming a issue in parts, could cost some of them heavily in the long run as people are not daft and might be fooled some of the time but as the saying goes: not all of the time!

 

My opinions

Edited August 5, 2013 by Wintry

[Peterbard]

Hi

 

Just had another read through this

 

Cherry picking is an interesting point and perhaps this does not just apply to the fee chargers & profit makers.

 

Another question, how many of these agencies and companies make applications for charitable grants on behalf of their clients or 'customers' - for example, bankruptcy, DRO fees, essential household appliances, goods and make write off requests?

 

Concentrating on the areas where more money is made or generated cannot really be classed as true independent impartial advice.

 

Profit & funding are current leading issues and this is part of the problem, how far it goes and how out of touch it gets is becoming a issue in parts, could cost some of them heavily in the long run as people are not daft and might be fooled some of the time but as the saying goes: not all of the time!

 

My opinions

 

Again, my experience is not in this industry, but as far as charitable grants for CUs are concerned, the charity is a separate entity to the CU(although created to provide funds for it).

There is no two way traffic, the money from the benefactors is paid to the charity, and it just goes into the pot if you like, there is no identification as to where the cash came form once it reaches the end user, that is all down to the charity.

 

I would think that charitable donations to the DMP provider ran along similar lines, or am I being naive.

[sequenci]

I would think that charitable donations to the DMP provider ran along similar lines, or am I being naive.

 

The DMP providers receive a contribution from the creditors - known as a 'fair share' contribution, this is a percentage of the payment they get from the person paying the DMP. For the individual 100% of their money reduces the debt - but in practice the creditors are actually getting a percentage in the pound back - due to paying a little back to the DMP company.

[Peterbard]

The DMP providers receive a contribution from the creditors - known as a 'fair share' contribution, this is a percentage of the payment they get from the person paying the DMP. For the individual 100% of their money reduces the debt - but in practice the creditors are actually getting a percentage in the pound back - due to paying a little back to the DMP company.

 

Well you learn something everyday, is this just Stepchange or do Payplan have a similar arrangement ?

[sequenci]

Well you learn something everyday, is this just Stepchange or do Payplan have a similar arrangement ?

 

Both the same as far as I'm aware (or at least similar). I'm no expert though.

 

Nick will know more, I'm sure.

[Peterbard]

I wish I did! You begin to see how some can be self funding with this sort of arrangement in place.

[brokebutnotbeatn]

This is why I used to remind people that the service is not 'free'. It also means you have to push hard and be totally on top of the plan and driving the freezing of interest; it's not in CCCS / Payplan's 'interests' for interest to be frozen is it? My preference would be self-manage your plan; or set it up then take ownership of it once it's running...

[sequenci]

This is why I used to remind people that the service is not 'free'. It also means you have to push hard and be totally on top of the plan and driving the freezing of interest; it's not in CCCS / Payplan's 'interests' for interest to be frozen is it? My preference would be self-manage your plan; or set it up then take ownership of it once it's running...

 

I disagree. CCCS and Payplan have a duty to their clients, and both have a very good track record of getting interest and charges frozen very quickly. The problem is that you'll often have rogue creditors - often of the more 'sub-prime' nature that drag things out. There is often misguided opinion banded about that CCCS(Stepchange) and Payplan work on behalf of the creditors - of course that's not really the case. That said I think both firms have room for improvement in several areas.

 

It's important to bear in mind that many people don't have the time, inclination or the abilities to do their own negotiating for one reason or another - so for that reason DMPs can be very, very useful things indeed.

[Peterbard]

Yes I can only speak as I have found , and certainly Payplan have had 100% success rate in my experience.

Also isn't it the case that a creditor is more likely to accept the accuracy of the I and E if it is signed off by a recognized agency.

 

Personally I cannot see why someone would want the hassle of dealing with multiple creditors when there are companies that do all the leg work for you, it is difficult enough to make the decision to do something about your debt I find, sometimes the leg work involved in sorting letters etc. is used as an excuse for further prevarication.

[Wintry]

Hi

 

Some interesting comments

 

There is no doubt that it is easier if someone does and handles the DMP for you and in a perfect world where everything runs smoothly it would be utopia.

 

But we all know that there is no such place as a perfect world and there are many issues surrounding DMPs.

 

Once a DMP is set up and running then how hard is it for someone to continue it themselves, not that hard I would say for those that feel capable.

 

If you have taken full advice and a DMP is an appropriate solution that you feel you can handle yourself then again how hard would that be (time permitting of course)

 

Give em the right tools and support and they can do the job themselves

 

There are issues with flexibility (especially when things go wrong) where people are having to contact their providers to ask for a reduction in payments or an actual break to pay for an emergency or essential repair - do they always get the smooth & speedy support they should with these type of issues, honestly, do they?

 

There are many who have little or no option other than to self manage, they get told by some providers, you don't have enough disposable income or some other reason, so you will have to basically self manage, but its OK here are the template letters, so according to that 'philosophy' it is OK to self manage when it suits certain DMP providers.

 

Of course some of these providers have a financial interest and based on this then there has to be question marks regarding true independence and impartiality - how many of these providers ever recommend a choice other than themselves (unless of course there is no money or income to be had or generated, then its a case of go and see this or that agency they might be able to help you)

 

Yes, I am for the free sector and its a no brainer going with one of the free providers every time and of course there are always those that cannot manage themselves however these agencies and companies 'maybe' don't seem too keen on those who cannot manage themselves if they don't have enough disposable income to make it worthwhile for them to be taken on - see the clear contradiction, its easy to spot when you want to look.

 

Self administering is being made easier and easier, it is flexible, more control, educational, and is on the increase, the old boys club has a challenge on its hands like never before and they are all looking a little unsure how to handle it, keep quiet, detract a little here & there perhaps and hope it goes away maybe, nahh that wont work, its too late, the bird has flown and it is just a matter of time.

 

It is also a huge help for the overwhelmed agencies and advisers that get left with those that nobody else seems to want to take on, maybe its because they are the wrong type of debt enquiry or something!

 

It has to be down to choice though at the end of the day

 

My opinions as always

 

PS - great debate guys

Edited August 6, 2013 by Wintry

[sequenci]

It is also a huge help for the overwhelmed agencies and advisers that get left with those that nobody else seems to want to take on, maybe its because they are the wrong type of debt enquiry or something!

 

That's a great point. I've know that NDL gets calls from people that couldn't be helped by SC and Payplan for whatever reason.

[Nick Pearson]

Just catching up on whats being going on at CAG and saw your post wintry - I agree with you entirely! on a seperate issue Ive just done a search on CAG for any mention of the demise of Smooth Debt Management last week. As there is none I will share http://www.insolvencynews.com/article/15697/corporate/ips-instructed-about-debt-management-firm I understand the smooth DMP book of c2500 customers on DMP's has now been sold to MoneyExpert.Expect to see a lot more fee chargers exiting the market via either this route or less distressed sales shall we say.

[Nick Pearson]

Both the same as far as I'm aware (or at least similar). I'm no expert though.

 

Nick will know more, I'm sure.

 

Both SC and Payplan have the same model but I understand that many creditors pay back different (lower) rates to Payplan as a FSC.