Business, Innovation & SkillsSupplementary written evidence submitted by Payplan
Response to written 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?
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?
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?
We very much agree. We currently share data with relevant organisations (creditors, other advice providers, researchers etc) and believe it would be of value to require all providers to publish key information.
Experience within the free sector where we have shared data over several years leads us to strongly recommend that any requirement needs to be carefully worded to ensure a true like for like comparison. It is also worth noting that the general client profile and therefore outcomes will vary between providers. This will particularly be the case for organisations who target advertising at particular types of consumer, or who operates by paying a third party for “leads” of a particular type of client.
Any requirement to publish data should include a requirement to publish data on the sustainability of arrangements.
4. What percentage of your debt management plan customers are still making their debt management plan payments after 24 months?
82% are still in their DMP, 1.75% have switched to an IVA, 3% have left because their circumstances have improved and the remaining cases have failed, either because circumstances have deteriorated or the client has stopped paying and we have been unable to make contact.
5. Do you make people who contact your organisations aware of the availability of free debt advice? Should you?
Not sure this is relevant to us as a free provider.
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?
Our advice process involves helping our clients work out a realistic budget and, for those who enter into a DMP we provide ongoing support in managing their budget. We are not authorised to give advice on pensions etc but have a reciprocal referral arrangement with the Money Advice Service whereby we can direct clients to them for help with these matters and they can direct customers approaching them with debt problems to us. Our own staff are able to help with non-regulated advice such as benefits entitlement and utility switching which can help free up additional income.
It would be feasible for us to give our clients additional help on financial planning and budgeting – particularly for those who do not enter a repayment arrangement. We would in principle be happy to undertake additional work but we are not currently funded to do so.
6 December 2011