Allegedly, more debt management client money has gone missing from supposedly ring-fenced client accounts in the failure of Smooth Financial. We’ve heard it’s quite a large amount – but have no confirmation.
Money Expert acquires Smooth Financial
We can only hope that the company that bought Smooth’s book (Money Expert) will make the losses good – something that we offered to Smooth Financial’s administrators.
But, this isn’t really about Smooth Financial, they are only the latest debt management company to go bust with a black hole where the clients’ money should be, there have been at least two, possibly three others in the last couple of years.
Debt Resolution Standards
So, for clients who are worried about their plan that would be the first thing I would check.
Beyond that I do think that we, as an industry, need to formalise the way we use and check client accounts so we can always show we are meeting our duty to keep client money safe.
Having a declaration that a client account exists and has been reviewed by a firm of accountants isn’t enough unless that review also confirms procedures are in place and the account has been operated properly in the period concerned
I think that any shortfall at the time of reconciliation should be paid into the client account from the office account to ensure there is always sufficient money in the client account to cover current client monies.
This isn’t a perfect science – but it would give monitors (for trade association members and companies that are debt management plan protocol compliant) the information they need to be able to say that money is unlikely to be going missing.
It would be a real quality win for consumers and creditors.
