In Reply to Graham Hiscott, Daily Mirror
I need to declare an interest – I work for a protocol compliant debt resolution firm (ClearDebt/Abacus), I speak for one of the trade association representing these companies (Debt Resolution Forum) and I sat on the committee that drafted and negotiated the protocol.
I came across this post by Graham Hiscott on the Daily Mirror’s website and tried to leave a comment on it. It wouldn’t let me, so I thought I’d leave it here instead.
The biggest change arising from the DMP Protocol (other than the new fee arrangements) is that it has created a group of companies that have opened themselves to rigorous independent on-site annual inspection, overseen by an independent approval committee.
To be fair, this inspection is similar to that the the two trade associations (DRF and DEMSA) already have in place – but the examination of calls and case files will assure clients and creditors that, for example, the firm is recommending a solution purely on the basis of the client’s need (as the OFT requires) and that the client is aware of free solutions too. if it doesn’t happen firms will be kicked out without ceremony and required to re-apply
Money Advice Trust and Citizen’s Advice both sat on the group that created the protocol – so consumer interests were well represented, though they might have been happier if talks had failed,
The framework for regulation changes next April, when our sector moves from OFT to FCA and things will be much more rigorous. The protocol will still be a badge for companies that choose to exceed regulatory standards and to be openly examined to ensure they do so.
The guidance group on the protocol is going to continue to work to ensure this becomes a respected quality mark.
The article said:
According to the charity StepChange, a standard debt-management plan from a fee-charging firm could cost an extra £5,000.
Data from our DMP casebook shows that StepChange may be over-egging the pudding. A typical DMP with us (£151 contribution each month, paying off the client’s debt in ten years) would cost nearly £2,000 less than StepChange’s estimate (£3,016 over the ten years of the plan).
Incidentally, independent research funded by DRF shows that around one in five of the clients of fee charging debt management companies look at free advice and solutions or are in a free-to-client plan and choose to move to a fee-charger.