MoneyPlus Advice calls for ‘combined effort’ to safeguard consumers against debt packager opportunists
26th November 2021
Manchester based MoneyPlus Advice, one of the UK’s leading FCA approved debt management firms, has enthusiastically welcomed the Financial Conduct Authority’s move to ban debt packager firms from receiving referral fees, first proposed on 17th November 2021.
However, this will do little to prevent such firms from finding ways to avert this proposal; therefore, the involvement and support from other professional bodies, such as the Insolvency Service, and Insolvency practices, is essential, MoneyPlus Advice suggests.
Struggling consumers have long been put in harm’s way by unscrupulous firms pushing people into unsuitable solutions, often to take advantage of the elevated commercial pay-out of Individual Voluntary Arrangements (IVAs), making clear that the debt packager business model is causing real detriment to those seeking help with their debts.
MoneyPlus Advice, which currently supports tens of thousands of customers with their debt, wholly supports the FCA’s push to ensure that all people get the right advice from the right people at the right time however, it acknowledges the clear and ever-increasing gap between the FCA regulated firms and the insolvency firms operating under the Insolvency Service.
Despite the introduction of guidance for Insolvency Practitioners and updating the Code of Ethics, a large majority of the high-risk advertising that MoneyPlus Advice has reported to regulatory and professional bodies has been specific to insolvency solutions and providers, prompting the need for greater safeguarding collaboration within the industry.
Jonathan Mills, Commercial Director at MoneyPlus Advice says: “The FCA’s consultation is a wake-up call for the whole industry. For debt packager firms, these proposals should be seen as an opportunity to develop their business model to focus on customer outcomes and customer experience. There may still be a place for these firms in the market if they can adapt and pivot in the right direction.
“That being said, there is more to do. At MoneyPlus Advice, we’ve been at the forefront of pushing for more oversight on how debt solutions are advertised. As the high-risk, misleading adverts we’ve seen mainly relate to insolvency solutions, these actually fall outside of the FCA’s jurisdiction, so we are keen to see a positive reaction from the insolvency professional bodies to align with this initiative.”
Currently under the insolvency Code of Ethics, debt packagers, or lead providers, are banned from receiving referral fees from debt management companies yet use a workaround of ‘receiving payment for work completed’.
Mills continues: “We are concerned as to how the FCA’s proposals will prevent this continual poor practice without any further action or intervention by the Insolvency Service in the personal insolvency market.
“We will continue to communicate and support the FCA within this endeavour and remain positive that the outcome will lead to people who desperately need debt support getting fair, consistent, and honest advice.”
NOTES TO EDITORS.
MoneyPlus Advice is a trading style of MoneyPlus Group Limited, which offers financial and legal services designed to help people save money and live better. MoneyPlus Advice is a commercial debt management provider, and does not receive referral fees for passing customers to alternative providers.
Launched in 1996, the Manchester-based firm (previously known as Chiltern) has since diversified and grown to support tens of thousands of customers across its Advice and Legal services, which are available to those living in England, Scotland and Wales. It’s financial arm, MoneyPlus Advice, gained full FCA approval in 2016, and became one of the first commercial debt advice companies to do so.
Group CEO, Chris Davis, has led the firm since its inception, recently helping to secure a £60m investment from private equity firm Intriva Capital.