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A meeting was held yesterday at the Department of Business Innovation and Skills (BIS) to discuss the future of debt management plans in the UK. The event was hosted by the Minister responsible for consumer debt policy, Norman Lamb. The event was attended by debt management plan providers, debt advice provider trade associations, free-to-client advice organisations, bank representatives, debt purchase trade associations, insolvency practitioner representatives, consumer organisations, and representatives from various departments of Government.
The hope is that the various parties will be able to agree a way forwards to introduce a “debt management plan protocol” which will help to improve the standard of debt management plans and in particular to improve the outcomes for those people that use them. The commercial DMP industry has for some time stood accused in some quarters of too often putting its’ commercial interests ahead of the best-interests of their clients.
As well as being of interest to the industry itself, these moves could be very significant for users of debt management plans around the UK. Unlike protected trust deeds, sequestration, or the Scottish debt arrangement scheme, an informal DMP offers a client little certainty or security in comparison to statutory debt solutions.
It might be expected that few people in Scotland would enter into informal debt management plans given that the formal debt arrangement scheme (which exists only in Scotland) seems to offer many more benefits to individuals that have circumstances which might otherwise be deemed appropriate for a DMP. However, some companies and even debt charities seem only too willing to continue putting people into informal debt management plans (or fail to inform existing clients that a more suitable alternative is now available to them). This is the type of advice issue that may become subject to further scrutiny and criticism should a debt management plan protocol be agreed.
Significant support for the establishment of a debt management plan protocol exists. Government would seemingly prefer to see such an agreement rather than feeling forced to legislate on the matter. DMP providers would also prefer to establish arrangements over which they have some say rather than having a legislative solution imposed upon them. Creditors have a vested interest in DMPs performing well as this debt solution, when managed correctly, can greatly assist their own debt recovery efforts. It would be expected that consumer organisations would come out in support of any measures that would ensure the public can access great advice and robust debt solutions. Much work however remains to be done in order to find a way through the various vested interests that exist.
Tags: debt arrangement scheme, debt management plan