#malg15 conference report
TRANSCRIPT
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THE MONEY ADVICE LIAISON GROUP
ANNUAL CONFERENCE & EXHIBITION
Wednesday 25th November 2015
Royal College of Physicians
11 St Andrews Place, Regent’s Park, London NW1 4LE
“All’s fair in love & war- but what about debt?”
All presentation slides are accessible via the appropriate link on the MALG
Website Conference page.
Introduction
November did its worst that morning, yet the shift from brolly to jolly was
swift – that old MALG magic was back! A warm smile and handshake
before picking up the programme, checking-in the cloaks, and
meandering the mezzanine for a hot cuppa and chat with some three
hundred folk, come to think on what’s fair.
Over the years that MALG has been in existence, we are no longer
sides. I think we are all here for the same end and that is to get a
better, fairer result for people who might be our customers, our
debt clients, or dealing with firms that we regulate.
This was how, in her fourth term as Conference Chair, Liz Barclay set the
tone, before Justin Urquhart Stewart pumped the pedal to the plate in a
doom-busting tour de force.
Keynote Speech
With confidence in the ascendant, the bad boy in braces banished the
blinkers of micro-economic forecast to distinguish good debt from bad, in
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a drive to consider its impact on every level of finance. From individual to
international states, the economic stakes were high when investment was
sparse. Perpetuating the myth that all debt was bad, Justin saw a
headline-hungry media, career politicians and civil servants, who had not
a jot of business experience among them. Thus, in changing times, where
imagination was needed, we learned that ninety percent of British
companies were unable to access long term investment, despite
mechanisms in the 1940s and ‘50s that delivered this.
Entertaining the risqué to elucidate risk, Justin’s Fifty Shades of Greece
analogy captured a focus on cash-flow like none other - on what terms
should debt be repaid? Far from dodging the issue, Justin’s long term
view regaled us with tales of limited parking spaces in business parks and
enthusiasm for a more entrepreneurial era. How could we allow ourselves
to miss out on this? Yes, we’d seen pensions and savings collapse, and
longer lifetime working looked on the cards, but in the tiny teens of low
growth, low inflation, low interest rates and low returns, the opportunity
to redesign a new future was compelling. What’s more, many young
people are fired up by the prospect of running their own business, it
seems.
You need to have some idea of what the cycle is like to realise that it is
not as bad as it looks, Justin told us. Three per cent a year is the long
term growth average, he said. For the gloom mongers, he had three
figures to share - five, eight and ten. The UK is the world’s fifth largest
economy (forty percent larger than Russia - so although small, we are
immensely more economically powerful than we think). We are also the
world’s eighth largest manufacturer and the world’s tenth largest
exporter. Negativity was simply not an option when we are such a large
part of a global economy that we need to function well if we are to trade.
Reminded that the Northern Powerhouse of yore was a self-made
phenomenon, Justin called on us to muster our collective wealth of
knowledge and resources to invest in financial planning. Most of us have
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up to five generations to help us co-ordinate as a family, looking at cash
flow, managing debt, tax and inheritance, and optimising common assets.
Educating one another at a time when recovery was budding, Justin
concluded that our confidence could only grow to challenge so many of
the narrow minded precepts that hinder our progression.
Refreshments and Exhibition
Asked to #FindMax, a small furry delegate introduced to us by exhibitor
and sponsor, Income Max (who also shared an impromptu update on the
Autumn Statement), brought yet more fun to the day. Fine fare was on
offer from the Royal College of Physicians, in the form of ‘smorgasboard’
of fruits and cheese, as well as a host of food for thought from exhibitors
including Advice UK, Aperture, Auriga Services, Charis Grants, Christians
Against Poverty, Cubic Evolution, DEMSA, entitledto, Experian, Johnson
Geddes, Marston Holdings, Money Advice Scotland, National Consumer
Federation Services CIC, National Homelessness Advice Service, Payplan,
StepChange Debt Charity, TaxAid, the Financial Conduct Authority, the
Financial Ombudsman Service, the Institute of Money Advisers, the Money
Advice Trust and TV Licensing.
A bientôt, Anthony
Greeted by tumultuous applause and ovation, with a soupçon of Hey Big
Spender, Anthony Sharp opened his valedictory speech by putting others
before himself, as usual. He was but one of three people who had
founded MALG 28 years ago. From a small dream had grown a
membership of some 60 national organisations. However, it was not the
scale of this achievement that seemed to touch Anthony, so much as its
progress in supporting issues of debt and mental health.
Maintaining that MALG was as much our achievement as his own, Anthony
shared some of the developments to take MALG into a new era from April
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2016: incorporation and appointments of a new Chair of the Board,
Executive Officer and Administration Secretary. The forum would
undoubtedly remain discursive, but with legal form, because it was as
important and needed today as it was in 1987.
Standing to attention as he bade us farewell (ahead of his impending
‘stepping down’), we felt honoured to belong to a legacy that keeps
working at liaison, communicating, talking and the common goal of
rehabilitating individuals in serious personal debt. A bientôt, Anthony
said, as we aspired to see his ethos soon in all our thoughts and deeds at
MALG.
Yvonne MacDermid added further recollections of working in the interests
of fairness through the consistency of such as the client details form, a
precursor to the Common (soon to be Standard) Financial Statement.
Reflecting on the impact and diversity that is MALG today, Yvonne shared
a fine Glaswegian epithet: He knows how to hold the reins together.
Concluding that Anthony is an inspiration, a man of vision, who delivers,
through tireless commitment and charm, we were delighted to salute him
for several minutes, with a resounding and heart-felt thank you.
Panel Debate
Considering A question of fairness, Liz Barclay chaired the debate
between delegates and panel including, Annette Lovell, Director of
Engagement, Financial Ombudsman Service, Paul Smee, Director General,
Council of Mortgage Lenders, Robert Skinner, Chief Executive, Lending
Standards Board and Yvonne MacDermid OBE, Chief Executive, Money
Advice Scotland.
Question One: Is there still a role for voluntary Codes of Practice?
Given lots of trade associations have Codes of Practice, Liz asked us to
consider whether these add value to regulation. A majority of both
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participants and the Twitter Poll agreed they do, with the proviso that
there was some scope for trade associations to be more forceful in
ensuring their members achieve a minimum of statutory compliance. The
panel responded:
Industry codes exist for three reasons: firstly to set standards that go
beyond the statutory rules, secondly to help firms meet the
expectations of statutory regulators, offering additional guidance, for
instance, and thirdly to set standards in aspects of trade that are
outside the regulatory remit. However, they do need critical mass and
some form of external validation to be robust.
Voluntary codes are essential because an industry body can be more
responsive than a regulator in moving with the market. Building broad
consensus amongst members and stakeholders means that you can
come out with a pretty good outcome pretty quickly. I don’t think you
will see voluntary codes supplant regulation, but they do work to help
the market work better.
The value of codes depends very much on the association using them
and the guidance they give as well, but that isn’t a reason not to have
them. They should provide the capacity to respond to market
conditions quickly, so not replacing regulation, but actually bringing it
to life. That is what treats customers fairly.
Codes work well when carefully considered and stakeholders may
contribute to their development. They work well when adhered to and
have credibility with everybody. Though not essential, they do bring
some real strengths and we can see examples of where codes have
shaped regulation.
Some of the audience commented on the effectiveness of collaborative
working between professionals supporting customers from different
perspectives, whereas others suggested that the diversity of trade bodies
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with individual codes could create a risk of inconsistency in customer
experience. The opportunity to rationalise standards was noted.
Question Two: Do the benefits of increased data sharing outweigh
the risks?
Whilst the Twitter Poll indicated a majority in favour of data sharing, a
significant minority of delegates were more circumspect, raising both
green for yes and red for no cards, for instance:
From a consumer representative, prominent in Data Protection and
Privacy, we learned that in spite of the significant benefits of data
sharing, the technological mechanisms to ensure consumer protection
were not yet in place, a key issue being protocols for the interpretation of
data collected.
A front-line adviser related how Data Protection seemed to have rendered
information that had previously been shared with ease, subject to more
intervention before it was released, making the advice giving process
slower in some instances.
An enforcement officer recounted how improved data sharing could
prevent the escalation of debt collection. The panel added:
Whilst there are benefits in data sharing between say the statutory and
voluntary sector, which has often resulted in quicker resolution, much
depends on the situation. Care is needed not just in handling data but
also in accurate case recording because information may be
misinterpreted. It is absolutely essential that we have the governance
in place so that everybody knows what is going to happen with their
data.
There is an educational aspect to this in that the customer needs to
know more about the data: some are very aware that we will collect
data for a number of uses and others are not.
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Sharing data is a very attractive notion because it means we might be
able to provide services to individuals that are better tailored to their
circumstances. However, there are some big risks in terms of accuracy
and interpretation, not least because it’s not a debate about what may
happen, but what is happening. It is important to open the debate
about how.
To this, Liz contributed commentary from a technological event she had
previously attended where she learned that the level of data currently
shared is about a tenth of what will be possible in five years’ time.
The data genie is out of the bottle, so it is a question of how we ensure
it is used in the right way. My experience is that I have seen more
problems caused by failing to share data than sharing data, so I do
think there is an obligation to better educate consumers on how data
are used. For instance, if aiming to prevent lending arrears, it does
really help to have a wider picture of other pressure points, such as
council tax debt.
A red card holder in the audience added that industry needs to be more
aware of what the consumer wants, rather than assuming a need for
education at a time when society as a whole is experimenting with new
technology. A green card holder suggested there are fewer faults in the
technology of data sharing than the risk of human error in interpretation
and that this is not a reason to preclude data sharing.
Liz concluded that discussion should continue on what risks may occur in
the future, as the use of data sharing looks set to continue.
Question Three: Should creditors and their collection agencies
check affordability of repayment offers in all cases?
Liz kicked off by asking the panel what they understood by all cases.
An holistic approach demands affordability assessments in all cases
because you cannot make sense of a customer’s circumstances without
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this. It’s very easy to take one off payments but that might solve only
one problem and may well be giving priority to the wrong debt.
Picking up on the prior theme of data applications, Liz challenged whether
such stringency need be applied to new lending.
Yes because without it, you could offer something that could worsen a
customer’s situation.
Most of the audience seemed to agree with this, as did respondents to the
Twitter Poll. Disagreement came with the comment that an extensive
income and expenditure assessment could be excessive for people on
means tested benefits, for whom lack of affordability was self-evident.
Another delegate suggested that impartial checks for income and
expenditure created an important precaution against lenders attempting
to give priority to their own repayment over that to others.
We don’t want to put people through an unnecessary bureaucracy, but
the exercise can actually help people in understanding where income
and expenditure is going, so in the majority of cases I believe it is
better to check than not.
I don’t think checking takes away from the need to consider individual
circumstances.
I think the issue comes when a customer is obliged to complete an
extensive income and expenditure exercise several times, possibly in
any one month. When someone has recently completed an assessment
you don’t want to be repeating it every time they contact you.
Particularly if you can establish fairly quickly that a customer has very
little income then I think you have to just accept the payment, rather
than go through all their income.
To this was added that assessments are seen as little more than a
process, with little attention paid to customer circumstance; for instance,
when families club together to resolve an individual’s debt, assessments
can be counter-productive. Systems and processes must be responsive to
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a degree. Asking the panel a final word on fairness, Liz was happy to
conclude the debate that customers must be treated as an individual.
Close of Conference
Conference Chair, Liz Barclay thanked everyone for their contributions
throughout the day, highlighting the extent of discussion in the workshops
and their potential for future policy development, particularly in aligning
civic and consumer credit debt collection practices. Thereafter, we retired
to the Library for a valedictory toast to Anthony Sharp.
In 2016, the MALG Conference will take place on Thursday 24th November
most likely at Royal College of Physicians, 11 St Andrews Place, Regent’s
Park, London NW1 4LE once again.
Report produced by Emma Bryn-Jones, National Consumer
Federation, Fairness in Finance Committee
WORKSHOPS
Workshop A
Unlock your pension- who stands to benefit?
Presenters: Nick Lord, Consultant
Henry Aitchison, Senior Policy Advisor,
Finance and Leasing Association
Facilitator: Christopher Brooks, Senior Policy Manager at Age UK
Scribe: Keith Osborne, Counsellor, Health & Wellbeing,
Metropolitan Police & representing the South East Discussion Forum
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Both sessions of the Workshop were well attended by representatives
from a broad cross section of all interested parties. The presentations
were designed to stimulate debate on the impact the recent pension
changes would have on both advisers and creditors and indeed the
consumer, and it was pleasing to have such great contributions from the
audience.
Listed below is a summary of the presentations and the open forum
discussions, which can be read in conjunction with the slides that give the
full detail of the presentation.
Christopher Brooks opened the workshops by introducing the panel and
outlining the framework for the sessions. There are benefits, advantages
and disadvantages with the introduction of the new pension access rules.
Generally the changes can be viewed as positive, however they pose all
concerned with some difficult challenges.
Nick Lord opened and invited the audience to consider the impact and
challenges that the changes would have on debt advisers.
Henry Aitchison followed and invited the audience to consider this from
the viewpoint of the creditor
Keith Osborne summarised the content of the presentations and together
with both the presenters and facilitator responded to the healthy debate
stimulated by questions and observations from the floor.
The Presentations
Nick Lord opened his part of the presentation by asking the audience to
consider the new challenges that were being faced by advisers and
creditors. He suggested that for advisers this is a potential minefield.
New freedoms to access pensions after age 55 has the potential to change
the way our clients view, what is essentially a long term saving- pensions-
and how they might use the money. Auto enrolment means more debtors
are going to be encouraged to save into a pension. Regulation is a big
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factor and FCA rules need careful attention. FCA views a pension as a
Retail Investment product and as debt advisers are we qualified to give
advice/guidance in this area? We need to consider how to best give
guidance in the area of bankruptcy and Debt Relief Orders (DRO),
although this is at yet untested with only 10 people with DRO’s known to
have applied for early pension release. Debt advisers would need to
consider how to give best guidance to clients in the area of pension
release and the overall debt situation that meet their needs.
Henry Aitchison then continued the presentation, however now looking at
it from the creditor perspective. Some of the questions here included the
following: Will Creditors expect or pressure consumers to access pension
savings to pay debts? How will a creditor react when requested to reduce
repayments because the debtor is auto-enrolled into a pension scheme?
What if some-one wished to dip into a pension pot to pay off a debt,
should the creditor accept this, would they know where the money was
coming from, where should they signpost them for advice? What about
accessing affordability?
Regulation; are the existing FCA rules enough as they stand? What about
lending decisions? These are just some of the questions and there are
certainly more questions than answers at present, with even some more
questions yet to be asked.
The Debates
Christopher Brooks thanked the presenters for their presentation and
Keith summarised some key points. After which Christopher opened the
floor up for discussion and facilitated the debate that followed. Below are
some of the points, observations and questions posed by the audience:
Yvonne MacDermid OBE (Money Advice Scotland) commented that the
new rules might lead to advisers going beyond the parameters guidance
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and that more training would be required and questioned how who would
fund this.
Nick Lord agreed that following the parameter guidance is perhaps more
useful than FCA Conc rules.
Christopher Brooks observed that guidance decisions would depend on
personal circumstance and a long-term view was required. There was
also the view that behavioural traits could lead to a ‘spend now and worry
about it later mentality’.
Nick Pearson (Debt Counsellors Charitable Trust) said he felt this would
take advisers into new areas of advice and reaction to the low level of
DRO’s impacted by the new rules was because by and large they are
ignored. David Hawkes (Advice UK) did not believe this to be the case
and highlighted the review of DRO’s in this area and that the impact on
welfare benefits was going to be a potential minefield. It was felt that
there was no clear line from DWP in this area.
John Deans (Nationwide) questioned who/where does the signposting
guidance fall?
Antoinette Eaton (Lloyds Banking Group) observed that there was not
clear guidance of how pensions would be treated in an IVA. She further
commented that guidance given would be best if it was a “One Stop” shop
as clients would get confused if they had to go to several different areas
and then the guidance would be disjointed
Bruce Bebbington (Lambeth Law Centre) questioned if people could opt
out of auto-enrolment and it seems that you can. He also remarked that
the new standard financial statement would include a savings element
and wondered how the pension pot would be treated.
There was a collective viewpoint that MALG could have a role to play in
best practice guidance as this was unlikely to come from the FCA.
Nick Waugh (FCA) agreed, although he did state they had a role to play in
guidance, and action around scams.
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Paul Ozimek (North East Derbyshire CAB) pointed out that there was an
urgent need to give guidance now because companies were already
stepping in and targeting customers. Even if these are not scams as such
they could certainly be giving bad advice.
Paul also commented that auto-enrolment should be treated as essential
expenditure.
In terms of guidance currently available it was mentioned that Which
Advice have a helpline to guide people through the various options and
choices.
James Jones (Experian) said the online guidance tools could be built to
provide best advice.
Callistus Asirvatham said guidance should be holistic and review risks
benefits advantages and disadvantages.
Gill Moores (CAB) Highlighted that it was crucial that clients get
appropriate advice on where/when they are signposted and mentioned
this was proving difficult at times.
There was reference made to a CAB pilot on integrating pension advice
into debt advice.
The comments listed are not verbatim, however they are a broad cross
section of the discussions in the workshops which enabled the key points
to be summarised below:
Summary
The key points to emerge are as follows:
The changes are broadly viewed as positive
There could be a fundamental shift in how pensions are viewed and
treated by all concerned
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There are already companies diving into the market and targeting
people, (perhaps in some cases with scams and bad advice)
There is a need for some clarity around rules, regulation and best
practice
MALG could be asked to take a lead in this area, although there is
also a role for the FCA and Pension Advisory Service
Debt advisers may need some extra training to be able to give best
guidance
There would need to be funding for this training, (by whom?)
The issue of appropriate signposting needs to be addressed
We need to be clearer on what the customer expects to receive
from our various services
There are currently more questions than answers
More questions continue to emerge and some still remain hidden
from view
Workshop B
Debt Collection by local authorities and other creditors- are they
playing by the same rules?
Presenters: Lesley Pigott, Assistant Director of Finance (Revenues),
Camden Council
Peter Wallwork, Chief Executive Officer,
the Credit Services Association
Facilitator: Alistair Chisholm Creditor Liaison Policy Officer,
Partnership Intelligence Team, Citizens Advice
Scribe: Darryl Matthews, Group Head of External relations,
Harrington Brooks & representing
The Midlands Discussion Forum
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Alistair welcomed all to the workshop and introduced the panel. He then
proceeded to talk through a brief presentation.
All presentation slides are accessible via the appropriate link on the MALG
Website Conference page.
Key highlights:
In 2013 council tax debt was the biggest single issue that CAB’s
were dealing with.
From a CAB adviser opinions survey, dealing with council tax
collections scored 69% which was 2nd out of 11 categories.
Debt Collection Agencies (DCA) scored 63%, being 4th out of 11
categories.
Highest scoring creditor category was 78% and lowest 34%, so
council tax and DCA’s scoring well overall.
After running through his slides Alistair introduced and welcomed Peter
Wallwork to the podium.
Peter thanked everybody for joining the workshop and his slides were
presented to the floor.
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Key highlights:
The CSA represent and has around 400 members which are approx.
90% of all 3rd party collection in the UK.
The CSA isn’t a regulator and can’t stop members trading, but their
members’ clients would typically insist on them being a member of
the CSA.
DCA’s are seen as specialists in advising creditors/lenders.
Research shows that after further investigation, around 25% of
collections letters returned marked ‘gone away’ are actually sent
back by customers still living there as stated
The CSA Code of Practice which all members have to sign up to, has
developed over the years alongside the OFT Debt Collection
Guidance so when The FCA’s CONC Rule 7 landed, there were very
few surprises.
Financial Ombudsman Service handles between 600/700 annual
complaints for over 400 CSA members.
Lesley took to the floor and welcomed all delegates to the London
Borough of Camden, where she has worked for 35 years.
Key highlights:
Camden has 230,000 council tax households and has its own
housing stock.
Google will be moving into the borough shortly.
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The average monthly rent for a 2 bedroomed flat is £2000pm.
The borough is home to the very rich and the very poor. 10% of
people earn over £75k.
32% of children are living in poverty.
Business rates collected in the borough are re-distributed amongst
other boroughs that are not as vibrant.
There is a huge funding gap, despite already delivering £93m in
savings over the last 4 years.
Questions
1. It seems that current laws, rules, cuts, and principles are
making it difficult for all to do business and treat customers
fairly.
Cuts, not just in Camden, but across the UK are complicating
matters.
There are different cultural points between types of the debts.
Credit card companies can allow for bad debt provision, but with
cuts, councils can’t really do that.
Effective communication between all parties is required surrounding
vulnerability, and this should be over-arching.
Communication and co-operation between the advice/creditor sector
has never been more prominent now as the landscape changes.
2. All of this (the presentations) seems like a dream world, if
priority debts are never addressed and we have so much
regulation.
At the CSA conference this year, a key subject of debate was
whether there should be just one regulator with one set of rules,
rather than having FCA, Ofcom, Ofwat, Ofgem, when it comes to
debt collection.
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3. Do so many regulations/regulators ultimately cause
consumer detriment?
A common problem out there right now seems to be getting
consumers to identify that they need help, and then getting them to
seek it.
This can only be achieved by getting the creditors & debt advice
industry to work closer together-even more than they are now.
This is, and always has been a common issue in this sector.
Lots of work needs to be done to look at new ways of engaging with
consumers.
4. I have seen examples of where CSA members, who are
purchasing debt from creditors, are phoning consumers
stating bailiffs are on the way around.
The CSA is certainly not receiving any complaints around this, so we
haven’t been able to flag this to our members. Could you please
provide individual feedback to that this se it can be looked into?
5. Does Camden have a visible Corporate Debt Policy?
Yes, and it is readily embraced. It is on our website and officers
can signpost it to members. It is also freely available by other
means.
6. With regard to council tax arrears, why are we seeing more
liability orders across the industry?
Speaking for Camden, I can categorically confirm that the first
process is not for a liability order. It may be that consumers are
only starting to seek advice as a liability order is applied for so it
appears this way.
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Workshop C
New Approaches to dealing with debt- where Scotland leads
should the rest of the UK follow?
Presenters: Christine Sinclair, Convenor, Money Advice Scotland
Ian Fiddeman, Policy Director, Retail,
British Bankers Association
Facilitator: Andrew Smith, Debt Resolution Forum and Director of Marketing, External Affairs and Compliance,
ClearDebt
Scribe: Yasmin Mohammed, Debt Adviser,
Tameside Metropolitan Borough Council
Christine Sinclair – Convenor, Money Advice Scotland gave an overview of
the Debt Arrangement Scheme (DAS), Protected Trust Deed and
Sequestration currently running as the Scottish Statutory Debt Solutions.
Advantages and disadvantages for both the debtor/client and creditor
were stated for the DAS along with how the Protected Trust Deed favours
the debtor/client and creditor along with its drawbacks for both parties
involved. Finally, when applying for Bankruptcy the benefits for the
debtor/client along with the downsides within this option for both sides.
Ian Fiddeman – Policy Director, British Bankers Association concentrated
on what makes a ‘good debt solution’ with good outcomes for both the
creditor and customer. Ian also spoke about the flexibility within the
current options available in England and Wales and referenced these
within the Regulatory and Legislative Frameworks.
Andrew Smith from Debt Resolution Forum concentrated on what was
good about the DAS, how it could be evolved for England and Wales and
how this would be delivered through supply, regulation, funding and
simplicity.
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Each Workshop separated into two smaller groups to focus on a series of
questions to help create discussion and thought on the matter.
Some audience participants are already working with the DAS as an
option and highlighted the current flaws within this scheme along with
other advisers and creditors raising their concerns accordingly if the DAS
were to be adopted in its current form within the rest of the UK:-
Matters raised
Secured Debts and Rent Arrears are now included within the DAS,
this is proving to be somewhat difficult as there appears to be some
reluctance from debtors/clients to pursue this option on the premise
that they are still worried regarding the possible action that can be
taken by the landlord or mortgage lenders.
Council Tax liability needs to be up-to-date – as otherwise the
Council Tax Department can request for the DAS to be revoked by
the Administrator.
DAS having a long term impact on the individual’s credit file.
Timescales and flexibility within the DAS when clients are on ‘zero
hours’ contracts are proving to be difficult due to the inflexibility of
the Scheme.
Risks - if all the creditors do not agree to the terms
Future Financial Resilience from the debtor/client will be needed
Length of time taken to repay the whole amount – questions around
whether this is reinventing the IVA
Reported ‘drop-out’ rates of 12.9% of live cases in 2014/15.
Not much or very little revenue generated for fee-paying companies
who take on DAS cases for ‘payment manageability’ and are the
lifetime costs of the DAS made clear to the customer?
Some debtors/clients confusing the DAS with Insolvency
Existing DAS advisers concerned whether there are enough funds in
the ‘pot’ to promote awareness through outreach and project work;
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capacity to deliver and fund debt/money advisers due to interviews
being mandatory in order to progress to the next stage of the DAS
which involves submitting the application on –line.
3 missed payments can result in the DAS failing.
Lifetime costs of the DAS – are these made clear to the customer? –
do they cover re-engagement costs?
Many creditors already stop interest and charges and provide time
for further information to follow.
Guarantor loans raising some concerns as no priority appears to be
given to this category.
The need to build Financial Capability into debt solutions
Qualifications – Are advisers who currently hold the MIMA cert in
the UK be classed as being ‘sufficiently qualified’ to undertake DAS
work if it was adopted in the rest of the UK?
Positives of the DAS
Advisers in Scotland have found the DAS to provide ‘inclusivity’
giving debtors/clients protection from creditors with at least 90% of
the debt being paid off and with immediate freezing of the accounts
this is helping clients to engage fully. This gives more incentive for
this to work to achieve its full potential.
Due to the DAS being ‘statutory’, binding initial advice does not
involve the adviser having to ‘negotiate’ with the creditor(s) in order
to request for a payment holiday or forbearance.
The DAS provides customer certainty and protection and along with
the common financial statement being accepted it gives a totally
uniformed approach.
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Final Thought
To adopt the DAS and follow Scotland‘s lead it was highlighted that the
need to make significant changes is a ‘Must’ and several modifications
would be required. Advisers did not dismiss this as a possible option but
wanted convincing how this could differ and create a debt solution which
works well for all parties concerned.
The amount of funding required to deliver this through Outreach or raise
awareness was again at the forefront of everyone’s concerns due to all
advice agencies being hit with a continuous stream of job-cuts.
The DAS could be piloted on a small scale with modifications to establish
if the rest of the UK should follow.
Workshop D
Small Business owners’ debt - the elephant in the room?
Presenters: Claire King, Insight Manager, Money Advice Trust
Dawn Jennings, Adviser, Business Debtline
Facilitator: Leigh Berkley, President, Credit Services Association & Director of External Affairs & Development,
Arrow Global
Scribe: Phill Holdsworth, Phill Holdsworth Consultancy and
representing The North East Discussion Forum
Leigh Berkley opened both sessions with an overall look at the industry
and stated there are 560,000 small businesses that start in any one year.
1/3rd to 1/2 fail and around half are self-funded. In addition many don't
receive any advice and often get into difficulties with their accounts which
get harder to unravel than a normal consumer.
23
Claire started by saying that small businesses are the heroes of the UK
economy as they play a critical role in the economic recovery.
The room was then asked what they thought of when considering small
businesses. The responses were self-employed gardeners, window
cleaners. Micro business and those with less than 10 employees. sole
traders, such as a small family businesses- a shop may be! We need to
see the people behind the business and where possible they need to be
provided with holistic and balanced advice beyond just the business.
Treating Customers Fairly (TCF) is not an obligation for creditors towards
businesses.
Small businesses have grown 2.7% since 2007 and since 1971 are the
fastest growing part of the UK population representing 15%. Being your
own boss offers greater flexibility and the increase of women in business
is the fastest growth even overtaking men. Men however, are still the
dominant force in the small business field.
Dawn spoke to us about many of the challenges that Business Debt Line
(BDL) see in small businesses such as the lack of business education. For
example, businesses knowing they need to register with HMRC and how
important it is to keep good accounts and submit them on time including
their tax returns. The implications of not doing so can be devastating.
There were some comments about unintentional landlords not
appreciating the need to declare this income and notify their lenders. In
addition, an understanding of selective licensing, which places restrictions
on an area, street, or property, is crucial. Not knowing something can risk
putting a business into debt.
Claire mentioned that the success story for 2014 was expected to be a
year of growth with 2015 building on this but by the end of 2014 7.9% of
businesses expected to downsize or even wind up. Also median incomes
had fallen by 22% since 2008/9. BDL sees first-hand the struggles
businesses have and a survey they carried out amongst their clients
24
backed up what they were seeing. Even though they knew anecdotally
what businesses were facing they were still shocked at what the survey
found. Some clients owed £20 for every £1 earned and 10% of those
surveyed had debts in excess of £100,000.
Many of BDL clients who were surveyed were cutting back on things such
as gas and electricity, 70% reduced spending on food. Many of the clients
were families with children and had already cut back on school outings
and school clubs. Many of them were suffering with stress, anxiety and
relationship problems all of which contributed to them not being able to
manage their debts well.
Dawn told us of a client who took over his family business which had been
running since 1965 but when he realised he had to close the business, lay
staff off and explain to his family, the sense of guilt was palpable.
Many businesses don't have financial resilience, for example 91% of BDL's
clients don't have savings. Households are very vulnerable to income
shocks or interest rate rises when they do come. The insight into the
personal cost of debt has been quite sobering when you realise what
emotional strain many are under.
It's not all doom and gloom, there are some success stories such as some
utility providers adopting practices for business clients focused on
affordability. some even refer customers to BDL. BDL also find good
practice surprisingly within a client’s complaint. One example was when a
client complained to a DCA which would not accept his offer and referred
him to BDL. Having unraveled the complaint it was obvious the client
couldn't afford what he was offering.
Dawn spoke of a couple who had approached BDL for help having become
overwhelmed with their situation. Through BDL's help they were able to
continue trading and have since paid off all their debts. Positive outcomes
are possible and do happen with 1/3rd of callers continuing to trade due
to help from BDL.
25
The floor was opened to questions:
Q: Will BDL advise before a business starts?
A: Yes; although this is not what we were designed to do as an
organisation; it is an area where we offer advice as there is often no
alternative available for callers.
Q: Have we seen credit rise and from where, i.e. high cost
credit/illegal lenders?
A: Yes; but mainly through credit card debt.
Q: Unintended landlords, could lenders do more to prevent
defaults by providing support at the point of lending?
A: Changes in circumstances are not always reported to the lender but it
is important that businesses have access to support and information and
that TCF is vital when both lending and calling in loans, etc.
Q: Mental health issues, where do you start in order to put a
financial statement together?
A: The starting point is the business analysis and to be prepared to
challenge some figures. Question whether the business is viable but bear
in mind that there can at times be short term solutions.
Q: What sort of relationship does BDL have with HMRC?
A: Staff have built good relations but we still find that front line HMRC
staff are not always aware of vulnerability. It can be a challenge to get
through to the right person and HMRC reducing offices doesn't help. One
last thing; clients are not always comfortable with the online approach.
26
Q: Should Government give compulsory training before a person is
allowed to go self-employed?
A: Yes, most emphatically.
The following is a summary of the quantitative feedback from the
Evaluation Forms received after the event. Thanks to those who
contributed them. The lucky prize draw winner, drawn at the
December main MALG meeting, was Cecilia Torsney from the Mary
Ward Legal Centre
27
EVALUATION FORM
MALG Annual Conference & Exhibition – 25th November,
2015
“All’s fair in love and war – but what about debt?”
NOTE – the following summary is based upon 63 returns received (5 of
which were anonymous). Not all delegates answered all questions
Excellent Good Average Fair Poor
Liz Barclay, Conference Chair 37
(63%)
22
(37%)
- - -
Keynote Speaker: Justin Urquhart
Stewart
47
(78%)
12
(20%)
-
- 1
(2%)
Workshop A: “Unlock your
pension – who stands to benefit?
11
(52%)
9
(43%)
1
(5%)
- -
Workshop B: “Debt collection by
local authorities and other
creditors – are they playing by the
same rules?”
7
(18%)
21
(52%)
9
(23%)
2
(5%)
1
(2%)
Workshop C: “New approaches to
dealing with debt – where
Scotland leads should the rest of
the UK follow?”
3
(9%)
17
(52%)
11
(33%)
2
(6%)
-
Workshop D: “Small business
owners; debt – the elephant in the
room?”
6
(38%)
8
(50%)
1
(6%)
- 1
(6%)
Panel session: 13
(33%)
22
(56%)
3
(7%)
1
(4%)
-
Post conference reception 12
(60%)
8
(40%)
-
- -
The sections below this table show additional comments:
28
General Excellent Good Average Fair Poor
Accessibility within venue? 34
(58%)
23
(39%)
-
1
(1.5%)
1
(1.5%)
Venue easy to reach? 39
(65%)
20
(33%)
1
(2%)
-
-
Ambience/Atmosphere 40
(67%)
18
(30%)
1
(1.5%)
1
(1.5%)
-
Refreshments 43
(73%)
16
(27%)
-
- -
Lunch 32
(58%)
20
(36%)
3
(6%)
- -
Helpfulness of RCP staff 32
(60%)
21
(40%)
-
- -
P.A. System/IT 28
(52%)
24
(44%)
2
(4%)
- -
Conference administration 44
(77%)
12
(21%)
- 1
(1%)
-
Delegate Packs 40
(70%)
17
(30%)
-
- -
Exhibition 32
(57%)
22
(39%)
2
(4%)
- -
Were you made welcome on arrival? 40
(80%)
15
(20%)
-
- -
How was the format of the day? 29
(53%)
23
(42%)
2
(4%)
1
(1%)
-
How do you rate this conference
overall?
37
(73%)
17
(30%)
2
(7%)
- -