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A new debt management plan protocol has been launched to give greater protection to consumers who pay for debt management advice. It ensures consumers using a debt management provider who is subject to this protocol receive a high standard of service that is fully compliant and in their best interest.
The new protocol is voluntary but companies that sign up to it will be able to advertise their compliance to consumers, once they have been through the monitoring process and been cleared by the standing committee.
Standards will be expected to improve in the sector which is to be regulated from the 1st April 2014 by the Financial Conduct Authority (FCA). Debt management firms are already expected to fully comply with the OFT’s Guidance and be able to evidence they have robust checks and processes in place.
The protocol covers a wide range of areas including, advertising, administration, training, monitoring and fees to name just a few. A key point for many firms will be the requirement to distribute funds to creditors from month one for new Plans with any initial or set-up fees to be spread over a minimum of six months. Protocol compliant firms would no longer be able to take 100% of the first one/two months payments as fees and pay the creditors nothing.
The protocol goes beyond the OFT’s Guidance and it may only be a matter of time before the regulator insists on compliance with these new guidelines. We have seen first hand the increase in regulatory ‘intrusion’ especially for new firms entering the industry.
We look after debt management firms from the very start, helping new entrants to obtain a Consumer Credit Licence, completion of the CCP1 form, providing manuals and documents, advertising checks, file and call recording reviews, checking client money procedures and giving guidance with training and competency for both new and existing staff. If you have not carried out any monitoring or feel you need additional support then please get in touch and we will explain more on how we can help your business.