Business, Innovation & SkillsSupplementary written evidence submitted by MoneyPlus Group
Response to questions from the Business, Innovation and Skills Committee
1. [to DEMSA and DRF] What have you done since the OFT investigation to improve standards in your industry? What evidence do you have of improvements?
MoneyPlus Group Response – We understand that DEMSA has responded to this question. We have had sight of the response and fully support it. As a company that is a member of DEMSA we are particularly encouraged to see that DEMSA continues to raise the bar in relation to the standards that its members must achieve. We believe that the new measures taken by DEMSA will provide reassurance to consumers, creditors and legislators that the service offered by DEMSA members is the best in the commercial sector.
2. [to DEMSA and DRF] How many firms have broken your trade association codes in the last 12 months? What action have you taken against them?
MoneyPlus Group Response – We understand that Demsa has responded to this question.
3. Last week we heard that there needed to be much more transparency in the commercial debt advice market – would you agree? Do you currently publish figures on, for example, the number of people you recommend an individual voluntary arrangement or debt relief order? If not why not?
MoneyPlus Group Response – We support the view that a consumer should be aware of as much information as possible in order to make a qualified decision as to which avenue of advice to take. Each case of consumers finance is different. Each has to be judged on its own merits. As a member firm of DEMSA we are subjected to a degree of mystery shopping each year. This exercise demonstrates that we act in the best interest of each consumer. We will only advise a consumer on a particular service if their circumstances merit it. Presently MoneyPlus Group assists circa 24,000 consumers with either debt management plans or IVAs. In addition where appropriate we signpost consumers for Trust Deed advice, advice on Debt Relief Orders or inclusion in a Debt Advice Scheme. It is worthy to note that even though the total fees charged by us a company in respect of IVA advice across a 5 year period is 50% greater than that charged to a consumer in a DMP, only 1 in 10 of our consumers finds relief in an IVA.
4. What percentage of your debt management plan customers are still making their debt management plan payments after 24 months?
MoneyPlus Group Response – 69% of the consumers that we represent have been in a debt management plan for more than 2 years. Of the balance, namely 31% a proportion will have concluded their plan given the fact that during the first 2 years they will have regained control of their finances. As such, we would submit that the success of a plan should be judged against the back drop of a consumer being in a position to take back control of their finances, rather than the plan running full term.
5. Do you make people who contact your organisations aware of the availability of free debt advice? Should you?
MoneyPlus Group Response – In 2010 the National Audit Office found that amongst over indebted consumers there was a 97% awareness of the Citizens Advice Bureau. On average each consumer that we have in some form of plan has 7 creditors. Each consumer by the time that they make contact with us will have received correspondence from his/her bank. This correspondence will sign post the consumer down the route of free advice. Indeed we act for consumers who have contacted the free sector but choose to instruct us to deal with their affairs. It is apparent to us from speaking with a large number of consumers that many are already aware of the services offered by the free sector. Consumers often choose MoneyPlus Group over the free sector as many are attracted by the discrete and immediate service that we offer, with advice being given at arms length over the telephone often at times out of normal office hours, to suit the individuals need.
6. Do you educate people who come to you about financial planning and budgeting so they are better able to manage their finances in future? Do you think there is capacity for you to do more of this?
MoneyPlus Group Response – We impress on consumers the need for them to budget. We work with them in order to identify a realistic plan that they can stick to. As a commercial company it is not in our interest to see a plan fail. We impress on consumers the absolute need to make payments not only to their debts, via a debt management plan, but also to priority debts such as a mortgage. In each case if we believe that a consumer is not receiving the correct benefits we will try and work with them to identify what they should be applying for. In addition we will challenge them if they are spending money in areas where this spend is unnecessary. We will continue to assist consumers in attempting to identify areas in which they can save additional expenditure.
7 December 2011