After recent figures showing yet more growth in consumer credit, and last week’s cut in interest rates, it seems a good time to share my thoughts on the piece of legislation that underpins much of the borrowing that takes place in the UK.
Since responsibility for the regulation of consumer credit moved from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) two years ago, the FCA has had some high profile successes in tackling this new brief – not least its intervention in the high cost credit market through the payday loan cap.
Some of its other work, of course, is less headline-grabbing, but every bit as important. In no area is this more true than its review of the Consumer Credit Act (CCA).
This review came about during the transfer of consumer credit from the OFT, at which point the Treasury required the FCA to carry out a review of whether to keep the remaining provisions of the CCA or replace these with FCA rules. The review will report back by April 2019, and is a hugely significant piece of work.
There has been much discussion in the world of credit and debt about what the debt advice landscape will look like after the FCA authorisation process is completed. It is possible that many fee-charging debt management companies will be permanently removed from the market. This is to be welcomed if future consumer detriment is prevented as a result.
However, we are concerned that there is a very real chance that a new regulatory gap in the market is opening up instead.
In the next few weeks we should see the final report of the Ministry of Justice’s Civil Courts Structure Review, chaired by Lord Justice Briggs.
Here at the Trust we have been engaged with the Review throughout the consultation process, and more specifically, highlighting our concerns over the prospect of unifying County Court and High Court enforcement processes.
Anyone who has worked on the debt advice front line knows that supporting individuals in vulnerable circumstances can be a huge challenge. Many are trying to cope with difficult situations and limited resources. Changes in employment status, health issues and other life events can suddenly put someone in a vulnerable situation, either temporarily or for a longer duration.
They might be distressed, worried or finding it hard to cope – and at the point of seeking advice, receiving the right support, sensitive to their situation is crucial.
At National Debtline, clients have told us that they need advisers to be “patient, understanding, knowledgeable and reassuring”, to be able to “[feel] comfortable talking about a difficult problem.” As one couple our advisers recently helped put it, “We are extremely anxious, very exhausted and emotional. Being able to speak to someone who understands and gives clear advice is a godsend.”
Today sees the launch of the Money and Mental Health Policy Institute’s new report – Money on your Mind – revealing the relationship between financial difficulties and mental health problems.
Money and Mental Health has had a busy first few months since it was launched by MoneySavingExpert.com’s Martin Lewis, and its director Polly Mackenzie and her team have put together an excellent first report that throws a welcome spotlight on this crucial issue.
The Trust’s Head of Learning Development, Lyndsey Humphries, shares her reflections on this year’s Institute of Money Advisers’ (IMA) annual conference in Manchester.
This year’s Institute of Money Advisers conference – my first – was an excellent mix of workshops and sessions which provided useful insight on some of the issues facing our sector. In this blog I’ve collected some quick thoughts on various aspects of the two days.
Tying them all together is the sheer scale of the changes impacting both the sector and the people that we exist to help. The impact of FCA regulation, a renewed focus on financial capability and for many of our clients, the enormous implications of the Universal Credit roll-out, all add up to the need for all advisers and agencies to keep up to date as the landscape changes around us.
Colin Trend is an independent consultant and an approved subject matter expert and instructor for the Money Advice Trust’s ‘mental health’ and ‘vulnerability’ training programmes. With Chris Fitch, he co-authored the Trust’s new vulnerability guidance for advice agencies, launched by the charity with the backing of a range of organisations across the advice sector in June 2016.
In “Vulnerability: a guide for advice agencies, 12 steps for treating clients in vulnerable situations fairly”, Chris Fitch and I ask 12 central questions that advice agencies should reflect on in terms of their approach to vulnerability and supporting clients through their over-indebtedness options. Launched by the Money Advice Trust with the backing of a range of organisations in the sector this month, we hope it will prove useful to agencies at a time when vulnerability has never been higher up the agenda. Read more
Here at the Trust we have long been concerned by the use of bailiffs by local authorities – and our advisers continue to help National Debtline clients confronted by this prospect week in, week out. I suspect most people would be surprised if you told them that the worst organisation to owe money to is often your local council – but the truth is that this is a big problem, and getting worse.
Our recent Stop The Knock campaign showed that 2.1 million debts were passed to bailiffs by local authorities in England and Wales during 2014/15, an increase of 16 percent over a two-year period. Of these, 1.27 million referrals were for Council Tax arrears – itself a growing problem. One in four callers to National Debtline were behind on their Council Tax last year – up from just 14 percent in 2007.
Today’s Queen’s Speech set out the government’s legislative programme for the year ahead. At a time when the public policy discourse is dominated by Brexit, it gives us a glimpse of government priorities in a post-referendum world.
Given that the domestic agenda has inevitably been less high profile than usual in the last few months, it’s no surprise that there was a heavy focus in the speech on supporting consumers and social reform. For people and organisations working in debt advice, the key bills to watch out for include: Read more
The collapse of Compass (R M R Financial Services) debt management company has been much in the news. This has had a huge impact on their clients, many of whom thought they were paying off their debts but have in fact lost thousands of pounds and are left devastated.
Full and final settlement debt management models
This model appears to work by the company offering creditors low or token payments whilst the rest of the client’s available income goes into a “savings pot”. The intention is that the saving pot is built up to be used in future to make offers to creditors in full and final settlement of the debt. While the pot is building up, which can take years, the client pays considerable monthly fees to the company. Read more