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Debt Advice Policy & Procedures

1. Policy Statement

The company are committed to ensuring that any advice provided in relation to debt and/or financial difficulties, is done so in accordance with the FCA regulations as set out on the CONC sourcebook section 8. Our aim in providing advice is to offers customers a fair, transparent and unbiased service from us, which includes operating within the guidelines and standards of the Treating Customers Fairly and Vulnerable Customers principles.

For the purposes of this policy and any associated documents, the company define ‘debt advice’ to include debt counselling, debt management and debt adjustment, the activities of which apply to credit agreements and consumer hire agreements, whether they are regulated or not.

We are committed to ensuring that any advice provided by us does not cause the customer any additional financial burden or stress and we provide extensive and detailed training sessions to all our staff on a regular basis regarding debt advice and our associated regulatory obligations.

2. Purpose

The purpose of this policy is to ensure that debt advice is only provided to a customer within the guidelines set out by the FCA and that any such advice is accurate, compliant and fit for purpose. This document has been created to provide guidance and support to our staff on providing debt advice and as a statement of intent with regards to the company’s debt advice obligations.

It is our aim and intention to ensure that all advice given in relation to a customer’s existing financial status is appropriate and does not contravene any regulatory or legislative rules. This policy provides us with a compliant and structured set of objectives on which to build any associated procedures and for offering all customers due skill, care and diligence.

The company has clear and defined measures and controls in place where debt advice is concerned, all of which comply with the regulatory requirements as set out in the FCA handbook. We provide frequent and consist staff training on the objectives set out in this policy as well as the requirements set out by the FCA in section CONC 8 of their sourcebook.

3. Scope

This policy relates to all staff (meaning permanent, fixed term, and temporary staff, any third-party representatives or sub-contractors, agency workers, volunteers, interns and agents engaged with the company in the UK or overseas) within the organisation and has been created to ensure that staff deal with the area that this policy relates to in accordance with legal, regulatory, contractual and business expectations and requirements.

4. Related Documents

This policy is used by the company in conjunction with the below policy and procedure documents, which help us to ensure that we always identify, assess, review and handle and financial hardship account using a standardised approach and in compliance with the regulatory requirements.

  • Vulnerable Customers Policy
  • Responsible Lending Policy
  • Treating Customers Fairly Policy & Procedures
  • Arrears Policy & Procedures
  • CPA Policy & Procedures
  • Financial Difficulties Policy
  • Affordability Assessment Calculator
  • Pre-Contract Disclosure Policy
  • [Add/Delete]

5. Objectives

The company addresses the aspect of customers already having debts or experiencing financial difficulties in several our policies and procedures (e.g. Vulnerable Customers, Continuous Payment Authority, Arrears Management etc.), and have taken measures to ensure that our staff are confident and knowledgeable when providing debt advice.

This knowledge extends to having an understanding or differing jurisdictions and country requirements of any customer, whereby debt solutions and/or enforcement actions and procedures can differ from those in the UK.

We have developed several objectives with regards to offering debt advice, both to ensure that we are compliant with the FCA regulations and to meet our own duty of care obligations to our customers.

In instance where debt advice if provided in a verbal or written format, the company objectives are to: –

  • Comply with The Principles for Business in their entirety and to avoid contravening any of the principles in the course of providing debt advice.
  • [Debt Management Firm Only] Ensure that in our first written or oral communication with the customer, we will include a statement that free debt counselling, debt adjusting and providing of credit information services is available to customers and that the customer can find out more by contacting the Money Advice Service
  • [Debt Management Firm Only] Ensure that a link is added to and always available on our company website which provides a direct link to the Money Advice Service web-site – https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice
  • Have a compliant and robust complaints procedure in place which is accessible to all customers and complies with the FCA’s Dispute Resolution: Complaints sourcebook with regards to treating customers fairly
  • Where we communicate with any lender/creditor on behalf of a customer in relation to existing debts, our content will always be transparent so as to ensure that our customers interest is not adversely affected
  • Where entry into a debt solution will lead to a period when payments to lenders (in part or in whole) are not made or are retained by the company, we will always notify the customer’s lenders of the reason payments are not going to be made, and provide details regarding the period during which that will be the case. It is our intention contact the lender in this respect, as soon as possible after the customer enters into the debt solution to avoid any adverse effect on the customer
  • Ensure that we continue to have a detailed and structured Vulnerable Customers Policy in place which provides the company position and aims for dealing with vulnerable customer and provides guidance and support for our staff.
  • Have a frequent and detailed training program in place to guide, train and support our staff with regards to providing debt advice and the regulations that they are obligated to comply with.  Such training will also include assessments to ascertain and evidence knowledge, skill and competency
  • Have strict procedures in place with regards to providing debt advice
  • Ensure that any advice provided in relation to a customer’s financial status: –
    • has regard to the best interests of the customer
    • is appropriate to the individual circumstances of the customer; and
    • is based on a sufficiently full assessment of the financial circumstances of the customer

Where the customer is showing signs of or experiencing 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.

6. Procedures

[If you already have existing debt advice procedures, insert them here to replace and/or add to the below regulatory requirements]

6.1 Initial Customer Contact

When a customer first contacts the company’s in relation to any debt advice service offered, we will ensure that the FCA regulations under section CONC 8.3 are adhered to and complied with. It is our procedure with initial contact to provide in writing sufficient information so that the customer can make an informed decision regarding the services we offer. At a minimum, the information we provide to the customer during the initial contact includes: –

a) the nature of the service that we offer in the contract to the customer

b) the duration of the contract

c) the total cost of our service or, where it is not possible to state the total cost, the formula that we use for calculating its fees or charges or an estimate of the anticipated likely total cost may be given

d) any fee or deposit, such as an arrangement fee, a periodic fee, a management fee, or an administrative fee

e) any fee or charge which can be imposed on the customer in relation to cancellation of the contract

f) any other costs likely to be incurred under the contract and the circumstances in which these would be payable

g) where we base our fees or charges on some percentage or an hourly rate or some other formula, an explanation of how the fees or charges are calculated

h) the elements of the service that the fees cover

i) the circumstances in which a customer may terminate the contract and receive a refund in accordance with relevant law and any fees or charges the customer may be required to pay in that case

j) the consequences on the customer’s credit rating, including how long the matter will show on the customer’s credit file and that the customer may not be able to obtain credit or other financial services in the future

k) whether a right to cancel applies and, if so, the period and any conditions for exercising the right to cancel the contract and any amount the customer may be required to pay

l) how payments will be allocated to lenders and when payments will be made; and

m) the period of time between payments being received from the customer and payments being made to lenders, including the date when the first payment will be made to lenders.

6.2 Assessment of Suitability

It is the company policy to assess a customer’s current financial situation prior to providing any debt advice or offering a debt management, consolidation or refinancing service. Our procedures include the below affordability and suitability checks: –

Affordability Assessment

We use a pre-defined assessment calculator to assess the customers’ income, expenditure and other creditor commitments and use this information alongside evidence of income (wage slips, benefits etc), to obtain their monthly disposable income. We then use this figure to ascertain if they are able to afford any repayments.

Credit Checks

We use Experian/Equifax/CallCredit to assess the customers’ current credit status and score and obtain information about any outstanding County Court Judgments, Bankruptcy Orders or IVA’s. We also assess their current financial obligations and any defaults on their account.

Existing Creditors

We use a questionnaire style form to obtain applicable information about the customer, which includes requesting the details of any existing creditors, repayment amounts and value of total existing debt.

The suitability information gathered from the customer is used as a guide for staff on providing debt advice and for selecting the most appropriate debt solutions for the customer based on their current circumstances. Copies of all questionnaires and affordability assessments are retained in the customers file for a minimum of 6 years after the initial enquiry for audit and regulatory purposes.

Where the company assesses that the customer falls into one or both below categories, we will always refer them to not-for-profit debt advice providers to gain further help and information: –

  1. The customer does not have enough disposable income to meet our fees or any ongoing payment arrangement; and/or
  2. The customer has problems with debt which requires immediate attention and we are either unable or unwilling to offer a suitable service.

6.3 Provision of Information

Where the company have assessed a customer’s status and affordability and we can offer debt advice and/or a suitable debt solution, the following procedures are followed in all cases and by all staff: –

  • If the initial contact is made by telephone, staff then follow up the call by putting all information in writing to the customer. The written format is clear, easy to understand and suitable for the customer’s needs.
  • The written provision of information allows the customer 7 working days to read and assess the information, prior to further contact being made by our staff – allowing the customer time to seek alternative advice and/or to consider our advice and proposals.
  • The written format provides our exact fees and/or charges and provides a clear explanation of what and when the customer is expected to pay their fees and make any ongoing payments.

6.4 Written Contract

When a service has been agreed, we provide the customer with a contract in writing and include our standard terms and conditions.

Our written contract includes: –

  1. the nature of the service to be provided by the company, including the specific debt solution to be offered to the customer
  2. the duration of the contract
  3. the total cost of the company service or, where it is not possible to state the total cost, the formula the company uses for calculating its fees or charges or an estimate of the anticipated likely total cost may be given
  4. the circumstances in which a customer may terminate the contract and receive a refund in accordance with relevant law and any fees or charges the customer may be required to pay in that case; and
  5. the duration and conditions for exercise of any right to cancel that may apply and any fees or charges the customer may be required to pay.

6.5 Lender Communication

On making a debt solution agreement with a customer, it is our policy to contact the lender/s on the customer’s behalf and as an ongoing concern.

Once the agreement is in place, we contact any lender within 48 hours in writing and provide them with the customer’s financial statement. A copy of this document is also provided to the customer at the same time.

6.6 Repayment Services

Where the company offers to repay the lender on behalf of the customer and then retain an ongoing repayment arrangement directly with the customer, we always ensure that: –

  • The offer to the lender is realistic, sustainable and follows the CONC 8.3.2 regulations.
  • Any offer is always made with the customer’s best interests in mind
  • We always ensure prior to any offer that the customer repayments are suitable, affordable and meet the criteria of our affordability assessment
  • Customers are always provided with their right to cancel and our staff follow our Cancellation and Refund Policy in all debt solution instances.

7. Responsibilities

The company will ensure that all staff are provided with the time, training and support to learn, understand and implement the Debt Advice Policy and the related TCF, Financial Difficulties and Vulnerable Customers policies. Management are responsible for a top down approach and in ensuring that all staff are included and have the support needed to meet the regulatory requirements in this area.