If you are reading this as an adviser on the front line dealing with people who want to get out from under an avalanche of debt have you established a real working relationship with a suitable debt advice and solutions provider?
I am also going to assume that you are not still turning away existing customers for whom you have set up secured loans or remortgages for debt consolidation in the past, but for whom you can no longer offer the prospect of a lending solution.
How do you go about finding a source of good advice on debt solutions, which you can be assured is in tune with your efforts to meet your obligations under the Treating Customers Fairly initiative?
If you have found such a source and not simply handed out the telephone number of the nearest Citizen’s Advice Bureau then that is great but what I want to do is to illustrate the factors to look for when assessing a new partner.
What do they offer advice on? Many companies only deal in debt management plans because they are easier to set up and require less specialist knowledge.
DMPs are a very good way of helping people but it is not the only way and in certain cases, particularly those with larger debts in excess of £15000, Individual Voluntary Arrangements might be a better answer. Clients need more than a one trick pony.
How much do they charge? Be wary if it is not transparently obvious how much money is paid over by the client to pay his debt down is going into administration, including the fee being paid to you before the balance goes to creditors.
One of the biggest criticisms levelled at debt solutions companies is that they take a disproportionate fee for their services and you need to satisfy yourself that the deal is fair.
What is their record? You wouldn’t recommend a lender who was unable to complete a deal and had a poor record of customer service. Similarly, what record do they have of successfully managing DMPs and IVAs.
Many are set up incorrectly and clients are unable to maintain payments which means that they are in a worse position than before they started.
Are you being asked to give advice on the best debt solution? Be very careful that you will not be saddled with the responsibility for actually giving the advice.
Some companies carefully omit to tell you that they are actually putting the responsibility back on you. Do make sure that you are properly covered because your PI or your principal might not take kindly to find that you are giving advice in an area which they do not cover.