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Debt Advice

FCA Principle 2 governs and regulates all firms in the respect of providing appropriate and accurate advice to customers. This Principle applies to giving debt advice (debt counselling, debt adjusting or credit information services), where the firm has a duty to the customer and its obligations under the regulatory system to provide honest, accurate, open and suitable advice in relation to debt solutions and plans.

The company confirms that it has procedures and controls in place to ensure that all requirements under CONC 8 of the FCA handbook are complied with and that all of our staff are fully aware of and have a good understanding of how each rule and requirements applies to their job roles and any business function that they perform.

When contacting a customer for the first time in respect to debt management plans, we confirm that we always provide guidance on the access of free debt counselling and that our Vulnerable Customers policy and procedures clearly has such guidance noted. We signpost the below organisations in our initial correspondence and on our website so that customers are aware of the alternative, free options open to them in respect to managing debt.

Where the customer vulnerability relates to financial hardship, we always ensure that we signpost access to free and impartial help for the customer and include the below contacts in our communication with the customer.

The company has clear procedures and staff guidelines in place for dealing with vulnerable customers, especially when providing debt advice. We assess and audit our procedures and staff with regards to vulnerable customers and have rolling training programs in place to ensure that staff feel supported and confident in dealing with vulnerable customers.

Where we charge for any debt management plans provided to customers, we have clear records and communication materials in place that detail our fees and provide clear and easy to understand breakdowns of which parts of the customers’ payments are retained by us as a fee and which parts go to the creditor/s to pay off the debt.

We provide a clear and transparent service to our customers and ensure that the firm’s business practices, procedures and staff all act in compliance with the rules set out in CONC 8 of the FCA Handbook.

21.21.2 Credit Information Services

Where we provide Credit Information Services, we ensure that our communicative material (letters, emails, promotional material etc) and our staff during their communications with any customers, do not claim to be able to remove negative or adverse (but accurate) information from a customer’s credit file.

We never mislead a customer about how long any negative information will remain on the credit file or advise that changing address will result in a new credit file being created.

21.22 Debt Management Plans

The company confirms that where it has entered into a debt management plan with a customer, we keep in frequent communication with that customer and regularly monitor and review the financial position and circumstances of the customer through the use of robust procedures and an Income & Expenditure check.

Any notifications, communications or discussion outcomes with lends on behalf of the customer will be provided to the customer with immediate effect in writing and the customer will be kept informed about the stays of their account at all times.

Customers will be furnished with copies of all communications and documentation between the form and the creditor and will be notified immediately if a creditor refuses to deal with us on their behalf.

It is our firm’s policy to provide the customer with an opening balance statement at the start of the debt management plan and then to provide them annually unless the customer requests them more frequently. Copies of all statements are kept on file along with records of when they are sent out to the customer.

21.22.1 Prudential Rules for Debt Management Firms 

[Delete this section if you are not acting in the capacity of a debt management firm or a not for profit-debt advice body]

The company that it has controls, measures and procedures in place to ensure that the below Prudential resource requirements are met at all times: –

  • A firm must, at all times, ensure that it is able to meet its liabilities as they fall due.
  • A firm must ensure that, at all times, its prudential resources are not less than its prudential resources requirement.
  • A firm must recognise an asset or liability, and measure its amount, in accordance with the relevant accounting principles applicable to it for the purpose of preparing its annual financial statements unless a rule requires otherwise.
  • The prudential resources requirement for a firm carrying on a regulated activity or activities in addition to those covered by this chapter, is the higher of:
    • the requirement which is applied by this chapter; and
    • the prudential resources requirement which is applied by another rule or requirement to the firm.
  • On its accounting reference date in each year, a firm must calculate:
    • the total value of its relevant debts under management outstanding on that date; and
    • the sum of: –
      • 25% of the first £5 million of that total value
      • 15% of the next £95 million of that total value
      • 05% of any remaining total value