Debt Management Protocol not gone far enough
Under the Protocol, launched by Consumer Affairs Minister Jo Swinson, consumers will not be charged any fees before signing a contract with a Protocol compliant debt management company.
But Chris Davis, chief executive of MoneyPlus, wants only Protocol compliant companies to be able to provide debt advice in order to further safeguard consumer protection.
Davis said: “As a leading member of the Debt Managers Standards Association we fully support any initiative which results in consumers getting a better service.
“Whilst the Protocol is a real improvement more can and should be done to help customers.”
Davis said the government and parts of the industry have worked hard to raise standards of best practice.
He said: “In order to ensure that no customer is excluded from these higher standards we strongly believe only Protocol compliant providers and approved free service providers should be allowed to give debt advice or administer debt management plans.”
Under the new Protocol providers have agreed to spread the recovery of initial set up fees making plans more affordable and sustainable.
And firms which have signed up to the voluntary will also have to issue clients with information about other appropriate debt management options including the availability of free debt advice by providers accredited by the Money Advice Service (MAS).
Lee Birkett, chief executive of eMoneyGroup, described the protocol as a “game changer”.
He said: “This move has happened a lot quicker than the industry expected and it will damage a lot of commercial debt management companies which will have to tell their clients that a free alternative is available but it means the consumer is getting a fairer deal.”
Birkett said the House of Lords wanted to ban commercial debt management companies completely but the government, which realised the switch to free advice would be too big to tackle in one move, has introduced the Protocol as a bridge between the two business models.