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THE MONEY ADVICE LIAISON GROUP

ANNUAL CONFERENCE & EXHIBITION

Wednesday 25th November 2015

Royal College of Physicians

11 St Andrews Place, Regent’s Park, London NW1 4LE

“All’s fair in love & war- but what about debt?”

All presentation slides are accessible via the appropriate link on the MALG

Website Conference page.

Introduction

November did its worst that morning, yet the shift from brolly to jolly was

swift – that old MALG magic was back! A warm smile and handshake

before picking up the programme, checking-in the cloaks, and

meandering the mezzanine for a hot cuppa and chat with some three

hundred folk, come to think on what’s fair.

Over the years that MALG has been in existence, we are no longer

sides. I think we are all here for the same end and that is to get a

better, fairer result for people who might be our customers, our

debt clients, or dealing with firms that we regulate.

This was how, in her fourth term as Conference Chair, Liz Barclay set the

tone, before Justin Urquhart Stewart pumped the pedal to the plate in a

doom-busting tour de force.

Keynote Speech

With confidence in the ascendant, the bad boy in braces banished the

blinkers of micro-economic forecast to distinguish good debt from bad, in

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a drive to consider its impact on every level of finance. From individual to

international states, the economic stakes were high when investment was

sparse. Perpetuating the myth that all debt was bad, Justin saw a

headline-hungry media, career politicians and civil servants, who had not

a jot of business experience among them. Thus, in changing times, where

imagination was needed, we learned that ninety percent of British

companies were unable to access long term investment, despite

mechanisms in the 1940s and ‘50s that delivered this.

Entertaining the risqué to elucidate risk, Justin’s Fifty Shades of Greece

analogy captured a focus on cash-flow like none other - on what terms

should debt be repaid? Far from dodging the issue, Justin’s long term

view regaled us with tales of limited parking spaces in business parks and

enthusiasm for a more entrepreneurial era. How could we allow ourselves

to miss out on this? Yes, we’d seen pensions and savings collapse, and

longer lifetime working looked on the cards, but in the tiny teens of low

growth, low inflation, low interest rates and low returns, the opportunity

to redesign a new future was compelling. What’s more, many young

people are fired up by the prospect of running their own business, it

seems.

You need to have some idea of what the cycle is like to realise that it is

not as bad as it looks, Justin told us. Three per cent a year is the long

term growth average, he said. For the gloom mongers, he had three

figures to share - five, eight and ten. The UK is the world’s fifth largest

economy (forty percent larger than Russia - so although small, we are

immensely more economically powerful than we think). We are also the

world’s eighth largest manufacturer and the world’s tenth largest

exporter. Negativity was simply not an option when we are such a large

part of a global economy that we need to function well if we are to trade.

Reminded that the Northern Powerhouse of yore was a self-made

phenomenon, Justin called on us to muster our collective wealth of

knowledge and resources to invest in financial planning. Most of us have

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up to five generations to help us co-ordinate as a family, looking at cash

flow, managing debt, tax and inheritance, and optimising common assets.

Educating one another at a time when recovery was budding, Justin

concluded that our confidence could only grow to challenge so many of

the narrow minded precepts that hinder our progression.

Refreshments and Exhibition

Asked to #FindMax, a small furry delegate introduced to us by exhibitor

and sponsor, Income Max (who also shared an impromptu update on the

Autumn Statement), brought yet more fun to the day. Fine fare was on

offer from the Royal College of Physicians, in the form of ‘smorgasboard’

of fruits and cheese, as well as a host of food for thought from exhibitors

including Advice UK, Aperture, Auriga Services, Charis Grants, Christians

Against Poverty, Cubic Evolution, DEMSA, entitledto, Experian, Johnson

Geddes, Marston Holdings, Money Advice Scotland, National Consumer

Federation Services CIC, National Homelessness Advice Service, Payplan,

StepChange Debt Charity, TaxAid, the Financial Conduct Authority, the

Financial Ombudsman Service, the Institute of Money Advisers, the Money

Advice Trust and TV Licensing.

A bientôt, Anthony

Greeted by tumultuous applause and ovation, with a soupçon of Hey Big

Spender, Anthony Sharp opened his valedictory speech by putting others

before himself, as usual. He was but one of three people who had

founded MALG 28 years ago. From a small dream had grown a

membership of some 60 national organisations. However, it was not the

scale of this achievement that seemed to touch Anthony, so much as its

progress in supporting issues of debt and mental health.

Maintaining that MALG was as much our achievement as his own, Anthony

shared some of the developments to take MALG into a new era from April

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2016: incorporation and appointments of a new Chair of the Board,

Executive Officer and Administration Secretary. The forum would

undoubtedly remain discursive, but with legal form, because it was as

important and needed today as it was in 1987.

Standing to attention as he bade us farewell (ahead of his impending

‘stepping down’), we felt honoured to belong to a legacy that keeps

working at liaison, communicating, talking and the common goal of

rehabilitating individuals in serious personal debt. A bientôt, Anthony

said, as we aspired to see his ethos soon in all our thoughts and deeds at

MALG.

Yvonne MacDermid added further recollections of working in the interests

of fairness through the consistency of such as the client details form, a

precursor to the Common (soon to be Standard) Financial Statement.

Reflecting on the impact and diversity that is MALG today, Yvonne shared

a fine Glaswegian epithet: He knows how to hold the reins together.

Concluding that Anthony is an inspiration, a man of vision, who delivers,

through tireless commitment and charm, we were delighted to salute him

for several minutes, with a resounding and heart-felt thank you.

Panel Debate

Considering A question of fairness, Liz Barclay chaired the debate

between delegates and panel including, Annette Lovell, Director of

Engagement, Financial Ombudsman Service, Paul Smee, Director General,

Council of Mortgage Lenders, Robert Skinner, Chief Executive, Lending

Standards Board and Yvonne MacDermid OBE, Chief Executive, Money

Advice Scotland.

Question One: Is there still a role for voluntary Codes of Practice?

Given lots of trade associations have Codes of Practice, Liz asked us to

consider whether these add value to regulation. A majority of both

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participants and the Twitter Poll agreed they do, with the proviso that

there was some scope for trade associations to be more forceful in

ensuring their members achieve a minimum of statutory compliance. The

panel responded:

Industry codes exist for three reasons: firstly to set standards that go

beyond the statutory rules, secondly to help firms meet the

expectations of statutory regulators, offering additional guidance, for

instance, and thirdly to set standards in aspects of trade that are

outside the regulatory remit. However, they do need critical mass and

some form of external validation to be robust.

Voluntary codes are essential because an industry body can be more

responsive than a regulator in moving with the market. Building broad

consensus amongst members and stakeholders means that you can

come out with a pretty good outcome pretty quickly. I don’t think you

will see voluntary codes supplant regulation, but they do work to help

the market work better.

The value of codes depends very much on the association using them

and the guidance they give as well, but that isn’t a reason not to have

them. They should provide the capacity to respond to market

conditions quickly, so not replacing regulation, but actually bringing it

to life. That is what treats customers fairly.

Codes work well when carefully considered and stakeholders may

contribute to their development. They work well when adhered to and

have credibility with everybody. Though not essential, they do bring

some real strengths and we can see examples of where codes have

shaped regulation.

Some of the audience commented on the effectiveness of collaborative

working between professionals supporting customers from different

perspectives, whereas others suggested that the diversity of trade bodies

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with individual codes could create a risk of inconsistency in customer

experience. The opportunity to rationalise standards was noted.

Question Two: Do the benefits of increased data sharing outweigh

the risks?

Whilst the Twitter Poll indicated a majority in favour of data sharing, a

significant minority of delegates were more circumspect, raising both

green for yes and red for no cards, for instance:

From a consumer representative, prominent in Data Protection and

Privacy, we learned that in spite of the significant benefits of data

sharing, the technological mechanisms to ensure consumer protection

were not yet in place, a key issue being protocols for the interpretation of

data collected.

A front-line adviser related how Data Protection seemed to have rendered

information that had previously been shared with ease, subject to more

intervention before it was released, making the advice giving process

slower in some instances.

An enforcement officer recounted how improved data sharing could

prevent the escalation of debt collection. The panel added:

Whilst there are benefits in data sharing between say the statutory and

voluntary sector, which has often resulted in quicker resolution, much

depends on the situation. Care is needed not just in handling data but

also in accurate case recording because information may be

misinterpreted. It is absolutely essential that we have the governance

in place so that everybody knows what is going to happen with their

data.

There is an educational aspect to this in that the customer needs to

know more about the data: some are very aware that we will collect

data for a number of uses and others are not.

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Sharing data is a very attractive notion because it means we might be

able to provide services to individuals that are better tailored to their

circumstances. However, there are some big risks in terms of accuracy

and interpretation, not least because it’s not a debate about what may

happen, but what is happening. It is important to open the debate

about how.

To this, Liz contributed commentary from a technological event she had

previously attended where she learned that the level of data currently

shared is about a tenth of what will be possible in five years’ time.

The data genie is out of the bottle, so it is a question of how we ensure

it is used in the right way. My experience is that I have seen more

problems caused by failing to share data than sharing data, so I do

think there is an obligation to better educate consumers on how data

are used. For instance, if aiming to prevent lending arrears, it does

really help to have a wider picture of other pressure points, such as

council tax debt.

A red card holder in the audience added that industry needs to be more

aware of what the consumer wants, rather than assuming a need for

education at a time when society as a whole is experimenting with new

technology. A green card holder suggested there are fewer faults in the

technology of data sharing than the risk of human error in interpretation

and that this is not a reason to preclude data sharing.

Liz concluded that discussion should continue on what risks may occur in

the future, as the use of data sharing looks set to continue.

Question Three: Should creditors and their collection agencies

check affordability of repayment offers in all cases?

Liz kicked off by asking the panel what they understood by all cases.

An holistic approach demands affordability assessments in all cases

because you cannot make sense of a customer’s circumstances without

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this. It’s very easy to take one off payments but that might solve only

one problem and may well be giving priority to the wrong debt.

Picking up on the prior theme of data applications, Liz challenged whether

such stringency need be applied to new lending.

Yes because without it, you could offer something that could worsen a

customer’s situation.

Most of the audience seemed to agree with this, as did respondents to the

Twitter Poll. Disagreement came with the comment that an extensive

income and expenditure assessment could be excessive for people on

means tested benefits, for whom lack of affordability was self-evident.

Another delegate suggested that impartial checks for income and

expenditure created an important precaution against lenders attempting

to give priority to their own repayment over that to others.

We don’t want to put people through an unnecessary bureaucracy, but

the exercise can actually help people in understanding where income

and expenditure is going, so in the majority of cases I believe it is

better to check than not.

I don’t think checking takes away from the need to consider individual

circumstances.

I think the issue comes when a customer is obliged to complete an

extensive income and expenditure exercise several times, possibly in

any one month. When someone has recently completed an assessment

you don’t want to be repeating it every time they contact you.

Particularly if you can establish fairly quickly that a customer has very

little income then I think you have to just accept the payment, rather

than go through all their income.

To this was added that assessments are seen as little more than a

process, with little attention paid to customer circumstance; for instance,

when families club together to resolve an individual’s debt, assessments

can be counter-productive. Systems and processes must be responsive to

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a degree. Asking the panel a final word on fairness, Liz was happy to

conclude the debate that customers must be treated as an individual.

Close of Conference

Conference Chair, Liz Barclay thanked everyone for their contributions

throughout the day, highlighting the extent of discussion in the workshops

and their potential for future policy development, particularly in aligning

civic and consumer credit debt collection practices. Thereafter, we retired

to the Library for a valedictory toast to Anthony Sharp.

In 2016, the MALG Conference will take place on Thursday 24th November

most likely at Royal College of Physicians, 11 St Andrews Place, Regent’s

Park, London NW1 4LE once again.

Report produced by Emma Bryn-Jones, National Consumer

Federation, Fairness in Finance Committee

WORKSHOPS

Workshop A

Unlock your pension- who stands to benefit?

Presenters: Nick Lord, Consultant

Henry Aitchison, Senior Policy Advisor,

Finance and Leasing Association

Facilitator: Christopher Brooks, Senior Policy Manager at Age UK

Scribe: Keith Osborne, Counsellor, Health & Wellbeing,

Metropolitan Police & representing the South East Discussion Forum

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Both sessions of the Workshop were well attended by representatives

from a broad cross section of all interested parties. The presentations

were designed to stimulate debate on the impact the recent pension

changes would have on both advisers and creditors and indeed the

consumer, and it was pleasing to have such great contributions from the

audience.

Listed below is a summary of the presentations and the open forum

discussions, which can be read in conjunction with the slides that give the

full detail of the presentation.

Christopher Brooks opened the workshops by introducing the panel and

outlining the framework for the sessions. There are benefits, advantages

and disadvantages with the introduction of the new pension access rules.

Generally the changes can be viewed as positive, however they pose all

concerned with some difficult challenges.

Nick Lord opened and invited the audience to consider the impact and

challenges that the changes would have on debt advisers.

Henry Aitchison followed and invited the audience to consider this from

the viewpoint of the creditor

Keith Osborne summarised the content of the presentations and together

with both the presenters and facilitator responded to the healthy debate

stimulated by questions and observations from the floor.

The Presentations

Nick Lord opened his part of the presentation by asking the audience to

consider the new challenges that were being faced by advisers and

creditors. He suggested that for advisers this is a potential minefield.

New freedoms to access pensions after age 55 has the potential to change

the way our clients view, what is essentially a long term saving- pensions-

and how they might use the money. Auto enrolment means more debtors

are going to be encouraged to save into a pension. Regulation is a big

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factor and FCA rules need careful attention. FCA views a pension as a

Retail Investment product and as debt advisers are we qualified to give

advice/guidance in this area? We need to consider how to best give

guidance in the area of bankruptcy and Debt Relief Orders (DRO),

although this is at yet untested with only 10 people with DRO’s known to

have applied for early pension release. Debt advisers would need to

consider how to give best guidance to clients in the area of pension

release and the overall debt situation that meet their needs.

Henry Aitchison then continued the presentation, however now looking at

it from the creditor perspective. Some of the questions here included the

following: Will Creditors expect or pressure consumers to access pension

savings to pay debts? How will a creditor react when requested to reduce

repayments because the debtor is auto-enrolled into a pension scheme?

What if some-one wished to dip into a pension pot to pay off a debt,

should the creditor accept this, would they know where the money was

coming from, where should they signpost them for advice? What about

accessing affordability?

Regulation; are the existing FCA rules enough as they stand? What about

lending decisions? These are just some of the questions and there are

certainly more questions than answers at present, with even some more

questions yet to be asked.

The Debates

Christopher Brooks thanked the presenters for their presentation and

Keith summarised some key points. After which Christopher opened the

floor up for discussion and facilitated the debate that followed. Below are

some of the points, observations and questions posed by the audience:

Yvonne MacDermid OBE (Money Advice Scotland) commented that the

new rules might lead to advisers going beyond the parameters guidance

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and that more training would be required and questioned how who would

fund this.

Nick Lord agreed that following the parameter guidance is perhaps more

useful than FCA Conc rules.

Christopher Brooks observed that guidance decisions would depend on

personal circumstance and a long-term view was required. There was

also the view that behavioural traits could lead to a ‘spend now and worry

about it later mentality’.

Nick Pearson (Debt Counsellors Charitable Trust) said he felt this would

take advisers into new areas of advice and reaction to the low level of

DRO’s impacted by the new rules was because by and large they are

ignored. David Hawkes (Advice UK) did not believe this to be the case

and highlighted the review of DRO’s in this area and that the impact on

welfare benefits was going to be a potential minefield. It was felt that

there was no clear line from DWP in this area.

John Deans (Nationwide) questioned who/where does the signposting

guidance fall?

Antoinette Eaton (Lloyds Banking Group) observed that there was not

clear guidance of how pensions would be treated in an IVA. She further

commented that guidance given would be best if it was a “One Stop” shop

as clients would get confused if they had to go to several different areas

and then the guidance would be disjointed

Bruce Bebbington (Lambeth Law Centre) questioned if people could opt

out of auto-enrolment and it seems that you can. He also remarked that

the new standard financial statement would include a savings element

and wondered how the pension pot would be treated.

There was a collective viewpoint that MALG could have a role to play in

best practice guidance as this was unlikely to come from the FCA.

Nick Waugh (FCA) agreed, although he did state they had a role to play in

guidance, and action around scams.

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Paul Ozimek (North East Derbyshire CAB) pointed out that there was an

urgent need to give guidance now because companies were already

stepping in and targeting customers. Even if these are not scams as such

they could certainly be giving bad advice.

Paul also commented that auto-enrolment should be treated as essential

expenditure.

In terms of guidance currently available it was mentioned that Which

Advice have a helpline to guide people through the various options and

choices.

James Jones (Experian) said the online guidance tools could be built to

provide best advice.

Callistus Asirvatham said guidance should be holistic and review risks

benefits advantages and disadvantages.

Gill Moores (CAB) Highlighted that it was crucial that clients get

appropriate advice on where/when they are signposted and mentioned

this was proving difficult at times.

There was reference made to a CAB pilot on integrating pension advice

into debt advice.

The comments listed are not verbatim, however they are a broad cross

section of the discussions in the workshops which enabled the key points

to be summarised below:

Summary

The key points to emerge are as follows:

The changes are broadly viewed as positive

There could be a fundamental shift in how pensions are viewed and

treated by all concerned

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There are already companies diving into the market and targeting

people, (perhaps in some cases with scams and bad advice)

There is a need for some clarity around rules, regulation and best

practice

MALG could be asked to take a lead in this area, although there is

also a role for the FCA and Pension Advisory Service

Debt advisers may need some extra training to be able to give best

guidance

There would need to be funding for this training, (by whom?)

The issue of appropriate signposting needs to be addressed

We need to be clearer on what the customer expects to receive

from our various services

There are currently more questions than answers

More questions continue to emerge and some still remain hidden

from view

Workshop B

Debt Collection by local authorities and other creditors- are they

playing by the same rules?

Presenters: Lesley Pigott, Assistant Director of Finance (Revenues),

Camden Council

Peter Wallwork, Chief Executive Officer,

the Credit Services Association

Facilitator: Alistair Chisholm Creditor Liaison Policy Officer,

Partnership Intelligence Team, Citizens Advice

Scribe: Darryl Matthews, Group Head of External relations,

Harrington Brooks & representing

The Midlands Discussion Forum

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Alistair welcomed all to the workshop and introduced the panel. He then

proceeded to talk through a brief presentation.

All presentation slides are accessible via the appropriate link on the MALG

Website Conference page.

Key highlights:

In 2013 council tax debt was the biggest single issue that CAB’s

were dealing with.

From a CAB adviser opinions survey, dealing with council tax

collections scored 69% which was 2nd out of 11 categories.

Debt Collection Agencies (DCA) scored 63%, being 4th out of 11

categories.

Highest scoring creditor category was 78% and lowest 34%, so

council tax and DCA’s scoring well overall.

After running through his slides Alistair introduced and welcomed Peter

Wallwork to the podium.

Peter thanked everybody for joining the workshop and his slides were

presented to the floor.

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Key highlights:

The CSA represent and has around 400 members which are approx.

90% of all 3rd party collection in the UK.

The CSA isn’t a regulator and can’t stop members trading, but their

members’ clients would typically insist on them being a member of

the CSA.

DCA’s are seen as specialists in advising creditors/lenders.

Research shows that after further investigation, around 25% of

collections letters returned marked ‘gone away’ are actually sent

back by customers still living there as stated

The CSA Code of Practice which all members have to sign up to, has

developed over the years alongside the OFT Debt Collection

Guidance so when The FCA’s CONC Rule 7 landed, there were very

few surprises.

Financial Ombudsman Service handles between 600/700 annual

complaints for over 400 CSA members.

Lesley took to the floor and welcomed all delegates to the London

Borough of Camden, where she has worked for 35 years.

Key highlights:

Camden has 230,000 council tax households and has its own

housing stock.

Google will be moving into the borough shortly.

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The average monthly rent for a 2 bedroomed flat is £2000pm.

The borough is home to the very rich and the very poor. 10% of

people earn over £75k.

32% of children are living in poverty.

Business rates collected in the borough are re-distributed amongst

other boroughs that are not as vibrant.

There is a huge funding gap, despite already delivering £93m in

savings over the last 4 years.

Questions

1. It seems that current laws, rules, cuts, and principles are

making it difficult for all to do business and treat customers

fairly.

Cuts, not just in Camden, but across the UK are complicating

matters.

There are different cultural points between types of the debts.

Credit card companies can allow for bad debt provision, but with

cuts, councils can’t really do that.

Effective communication between all parties is required surrounding

vulnerability, and this should be over-arching.

Communication and co-operation between the advice/creditor sector

has never been more prominent now as the landscape changes.

2. All of this (the presentations) seems like a dream world, if

priority debts are never addressed and we have so much

regulation.

At the CSA conference this year, a key subject of debate was

whether there should be just one regulator with one set of rules,

rather than having FCA, Ofcom, Ofwat, Ofgem, when it comes to

debt collection.

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3. Do so many regulations/regulators ultimately cause

consumer detriment?

A common problem out there right now seems to be getting

consumers to identify that they need help, and then getting them to

seek it.

This can only be achieved by getting the creditors & debt advice

industry to work closer together-even more than they are now.

This is, and always has been a common issue in this sector.

Lots of work needs to be done to look at new ways of engaging with

consumers.

4. I have seen examples of where CSA members, who are

purchasing debt from creditors, are phoning consumers

stating bailiffs are on the way around.

The CSA is certainly not receiving any complaints around this, so we

haven’t been able to flag this to our members. Could you please

provide individual feedback to that this se it can be looked into?

5. Does Camden have a visible Corporate Debt Policy?

Yes, and it is readily embraced. It is on our website and officers

can signpost it to members. It is also freely available by other

means.

6. With regard to council tax arrears, why are we seeing more

liability orders across the industry?

Speaking for Camden, I can categorically confirm that the first

process is not for a liability order. It may be that consumers are

only starting to seek advice as a liability order is applied for so it

appears this way.

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Workshop C

New Approaches to dealing with debt- where Scotland leads

should the rest of the UK follow?

Presenters: Christine Sinclair, Convenor, Money Advice Scotland

Ian Fiddeman, Policy Director, Retail,

British Bankers Association

Facilitator: Andrew Smith, Debt Resolution Forum and Director of Marketing, External Affairs and Compliance,

ClearDebt

Scribe: Yasmin Mohammed, Debt Adviser,

Tameside Metropolitan Borough Council

Christine Sinclair – Convenor, Money Advice Scotland gave an overview of

the Debt Arrangement Scheme (DAS), Protected Trust Deed and

Sequestration currently running as the Scottish Statutory Debt Solutions.

Advantages and disadvantages for both the debtor/client and creditor

were stated for the DAS along with how the Protected Trust Deed favours

the debtor/client and creditor along with its drawbacks for both parties

involved. Finally, when applying for Bankruptcy the benefits for the

debtor/client along with the downsides within this option for both sides.

Ian Fiddeman – Policy Director, British Bankers Association concentrated

on what makes a ‘good debt solution’ with good outcomes for both the

creditor and customer. Ian also spoke about the flexibility within the

current options available in England and Wales and referenced these

within the Regulatory and Legislative Frameworks.

Andrew Smith from Debt Resolution Forum concentrated on what was

good about the DAS, how it could be evolved for England and Wales and

how this would be delivered through supply, regulation, funding and

simplicity.

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Each Workshop separated into two smaller groups to focus on a series of

questions to help create discussion and thought on the matter.

Some audience participants are already working with the DAS as an

option and highlighted the current flaws within this scheme along with

other advisers and creditors raising their concerns accordingly if the DAS

were to be adopted in its current form within the rest of the UK:-

Matters raised

Secured Debts and Rent Arrears are now included within the DAS,

this is proving to be somewhat difficult as there appears to be some

reluctance from debtors/clients to pursue this option on the premise

that they are still worried regarding the possible action that can be

taken by the landlord or mortgage lenders.

Council Tax liability needs to be up-to-date – as otherwise the

Council Tax Department can request for the DAS to be revoked by

the Administrator.

DAS having a long term impact on the individual’s credit file.

Timescales and flexibility within the DAS when clients are on ‘zero

hours’ contracts are proving to be difficult due to the inflexibility of

the Scheme.

Risks - if all the creditors do not agree to the terms

Future Financial Resilience from the debtor/client will be needed

Length of time taken to repay the whole amount – questions around

whether this is reinventing the IVA

Reported ‘drop-out’ rates of 12.9% of live cases in 2014/15.

Not much or very little revenue generated for fee-paying companies

who take on DAS cases for ‘payment manageability’ and are the

lifetime costs of the DAS made clear to the customer?

Some debtors/clients confusing the DAS with Insolvency

Existing DAS advisers concerned whether there are enough funds in

the ‘pot’ to promote awareness through outreach and project work;

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capacity to deliver and fund debt/money advisers due to interviews

being mandatory in order to progress to the next stage of the DAS

which involves submitting the application on –line.

3 missed payments can result in the DAS failing.

Lifetime costs of the DAS – are these made clear to the customer? –

do they cover re-engagement costs?

Many creditors already stop interest and charges and provide time

for further information to follow.

Guarantor loans raising some concerns as no priority appears to be

given to this category.

The need to build Financial Capability into debt solutions

Qualifications – Are advisers who currently hold the MIMA cert in

the UK be classed as being ‘sufficiently qualified’ to undertake DAS

work if it was adopted in the rest of the UK?

Positives of the DAS

Advisers in Scotland have found the DAS to provide ‘inclusivity’

giving debtors/clients protection from creditors with at least 90% of

the debt being paid off and with immediate freezing of the accounts

this is helping clients to engage fully. This gives more incentive for

this to work to achieve its full potential.

Due to the DAS being ‘statutory’, binding initial advice does not

involve the adviser having to ‘negotiate’ with the creditor(s) in order

to request for a payment holiday or forbearance.

The DAS provides customer certainty and protection and along with

the common financial statement being accepted it gives a totally

uniformed approach.

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Final Thought

To adopt the DAS and follow Scotland‘s lead it was highlighted that the

need to make significant changes is a ‘Must’ and several modifications

would be required. Advisers did not dismiss this as a possible option but

wanted convincing how this could differ and create a debt solution which

works well for all parties concerned.

The amount of funding required to deliver this through Outreach or raise

awareness was again at the forefront of everyone’s concerns due to all

advice agencies being hit with a continuous stream of job-cuts.

The DAS could be piloted on a small scale with modifications to establish

if the rest of the UK should follow.

Workshop D

Small Business owners’ debt - the elephant in the room?

Presenters: Claire King, Insight Manager, Money Advice Trust

Dawn Jennings, Adviser, Business Debtline

Facilitator: Leigh Berkley, President, Credit Services Association & Director of External Affairs & Development,

Arrow Global

Scribe: Phill Holdsworth, Phill Holdsworth Consultancy and

representing The North East Discussion Forum

Leigh Berkley opened both sessions with an overall look at the industry

and stated there are 560,000 small businesses that start in any one year.

1/3rd to 1/2 fail and around half are self-funded. In addition many don't

receive any advice and often get into difficulties with their accounts which

get harder to unravel than a normal consumer.

23

Claire started by saying that small businesses are the heroes of the UK

economy as they play a critical role in the economic recovery.

The room was then asked what they thought of when considering small

businesses. The responses were self-employed gardeners, window

cleaners. Micro business and those with less than 10 employees. sole

traders, such as a small family businesses- a shop may be! We need to

see the people behind the business and where possible they need to be

provided with holistic and balanced advice beyond just the business.

Treating Customers Fairly (TCF) is not an obligation for creditors towards

businesses.

Small businesses have grown 2.7% since 2007 and since 1971 are the

fastest growing part of the UK population representing 15%. Being your

own boss offers greater flexibility and the increase of women in business

is the fastest growth even overtaking men. Men however, are still the

dominant force in the small business field.

Dawn spoke to us about many of the challenges that Business Debt Line

(BDL) see in small businesses such as the lack of business education. For

example, businesses knowing they need to register with HMRC and how

important it is to keep good accounts and submit them on time including

their tax returns. The implications of not doing so can be devastating.

There were some comments about unintentional landlords not

appreciating the need to declare this income and notify their lenders. In

addition, an understanding of selective licensing, which places restrictions

on an area, street, or property, is crucial. Not knowing something can risk

putting a business into debt.

Claire mentioned that the success story for 2014 was expected to be a

year of growth with 2015 building on this but by the end of 2014 7.9% of

businesses expected to downsize or even wind up. Also median incomes

had fallen by 22% since 2008/9. BDL sees first-hand the struggles

businesses have and a survey they carried out amongst their clients

24

backed up what they were seeing. Even though they knew anecdotally

what businesses were facing they were still shocked at what the survey

found. Some clients owed £20 for every £1 earned and 10% of those

surveyed had debts in excess of £100,000.

Many of BDL clients who were surveyed were cutting back on things such

as gas and electricity, 70% reduced spending on food. Many of the clients

were families with children and had already cut back on school outings

and school clubs. Many of them were suffering with stress, anxiety and

relationship problems all of which contributed to them not being able to

manage their debts well.

Dawn told us of a client who took over his family business which had been

running since 1965 but when he realised he had to close the business, lay

staff off and explain to his family, the sense of guilt was palpable.

Many businesses don't have financial resilience, for example 91% of BDL's

clients don't have savings. Households are very vulnerable to income

shocks or interest rate rises when they do come. The insight into the

personal cost of debt has been quite sobering when you realise what

emotional strain many are under.

It's not all doom and gloom, there are some success stories such as some

utility providers adopting practices for business clients focused on

affordability. some even refer customers to BDL. BDL also find good

practice surprisingly within a client’s complaint. One example was when a

client complained to a DCA which would not accept his offer and referred

him to BDL. Having unraveled the complaint it was obvious the client

couldn't afford what he was offering.

Dawn spoke of a couple who had approached BDL for help having become

overwhelmed with their situation. Through BDL's help they were able to

continue trading and have since paid off all their debts. Positive outcomes

are possible and do happen with 1/3rd of callers continuing to trade due

to help from BDL.

25

The floor was opened to questions:

Q: Will BDL advise before a business starts?

A: Yes; although this is not what we were designed to do as an

organisation; it is an area where we offer advice as there is often no

alternative available for callers.

Q: Have we seen credit rise and from where, i.e. high cost

credit/illegal lenders?

A: Yes; but mainly through credit card debt.

Q: Unintended landlords, could lenders do more to prevent

defaults by providing support at the point of lending?

A: Changes in circumstances are not always reported to the lender but it

is important that businesses have access to support and information and

that TCF is vital when both lending and calling in loans, etc.

Q: Mental health issues, where do you start in order to put a

financial statement together?

A: The starting point is the business analysis and to be prepared to

challenge some figures. Question whether the business is viable but bear

in mind that there can at times be short term solutions.

Q: What sort of relationship does BDL have with HMRC?

A: Staff have built good relations but we still find that front line HMRC

staff are not always aware of vulnerability. It can be a challenge to get

through to the right person and HMRC reducing offices doesn't help. One

last thing; clients are not always comfortable with the online approach.

26

Q: Should Government give compulsory training before a person is

allowed to go self-employed?

A: Yes, most emphatically.

The following is a summary of the quantitative feedback from the

Evaluation Forms received after the event. Thanks to those who

contributed them. The lucky prize draw winner, drawn at the

December main MALG meeting, was Cecilia Torsney from the Mary

Ward Legal Centre

27

EVALUATION FORM

MALG Annual Conference & Exhibition – 25th November,

2015

“All’s fair in love and war – but what about debt?”

NOTE – the following summary is based upon 63 returns received (5 of

which were anonymous). Not all delegates answered all questions

Excellent Good Average Fair Poor

Liz Barclay, Conference Chair 37

(63%)

22

(37%)

- - -

Keynote Speaker: Justin Urquhart

Stewart

47

(78%)

12

(20%)

-

- 1

(2%)

Workshop A: “Unlock your

pension – who stands to benefit?

11

(52%)

9

(43%)

1

(5%)

- -

Workshop B: “Debt collection by

local authorities and other

creditors – are they playing by the

same rules?”

7

(18%)

21

(52%)

9

(23%)

2

(5%)

1

(2%)

Workshop C: “New approaches to

dealing with debt – where

Scotland leads should the rest of

the UK follow?”

3

(9%)

17

(52%)

11

(33%)

2

(6%)

-

Workshop D: “Small business

owners; debt – the elephant in the

room?”

6

(38%)

8

(50%)

1

(6%)

- 1

(6%)

Panel session: 13

(33%)

22

(56%)

3

(7%)

1

(4%)

-

Post conference reception 12

(60%)

8

(40%)

-

- -

The sections below this table show additional comments:

28

General Excellent Good Average Fair Poor

Accessibility within venue? 34

(58%)

23

(39%)

-

1

(1.5%)

1

(1.5%)

Venue easy to reach? 39

(65%)

20

(33%)

1

(2%)

-

-

Ambience/Atmosphere 40

(67%)

18

(30%)

1

(1.5%)

1

(1.5%)

-

Refreshments 43

(73%)

16

(27%)

-

- -

Lunch 32

(58%)

20

(36%)

3

(6%)

- -

Helpfulness of RCP staff 32

(60%)

21

(40%)

-

- -

P.A. System/IT 28

(52%)

24

(44%)

2

(4%)

- -

Conference administration 44

(77%)

12

(21%)

- 1

(1%)

-

Delegate Packs 40

(70%)

17

(30%)

-

- -

Exhibition 32

(57%)

22

(39%)

2

(4%)

- -

Were you made welcome on arrival? 40

(80%)

15

(20%)

-

- -

How was the format of the day? 29

(53%)

23

(42%)

2

(4%)

1

(1%)

-

How do you rate this conference

overall?

37

(73%)

17

(30%)

2

(7%)

- -