Time for debt management firms to come clean
Wednesday 21st October 2009
By Andy Moody, managing director of TCF Debt Solutions
Henry Ford famously told customers that they could have any colour on their Model T cars, provided it was black. Fortunately for Mr Ford, customers were happy to buy into his then affordable dream of mass motoring regardless of its colour. For customers who need advice on debts and the best way to handle them, clearly Henry’s philosophy of one-size fits cannot apply to such an emotive issue.
Yet there are plenty of companies specialising in only one solution and asking intermediaries to refer clients to them in the belief that their one trick pony is best advice. Of course, the debt solutions industry is not regulated by the FSA, so it does not fall under the ‘Treating Customers Fairly’ remit by which intermediaries are judged and the majority of the products they sell are focussed. Intermediaries would not be allowed to get away with telling customers that their service was not whole of market, so why is it that debt companies can obscure the fact that they offer at best a partial answer and are definitely not in the main ‘whole of market’? Oh yes, that’s right - they don’t have to.
Is it such a bad deal? Well, I think it is. As a company dealing exclusively with intermediaries, we think that it is only right to clearly lay out the basis on which we treat customers and offer the widest range of possible options including the usual debt management plans and IVAs. Many brokers who introduce their clients are perhaps naively expecting that they will be treated to a ‘whole of market’ experience as they would for their own clients on mortgages, insurance or investments. Some debt solutions companies are just not making sure that intermediary clients referred to them are aware of the narrowness of the ‘advice’ that is on offer and that their advice is not whole of market.
Returning to an earlier theme, this is all part of the lack of transparency, which I believe will have consequences when the debt solutions industry really comes under the spotlight by the regulatory authorities. Instead of waiting for legislation, now is the time to step up and aim for a standard of transparency which will mean that intermediaries are not confused by the offerings in the market and we can build real confidence among brokers and their clients.
Andy Moody is Managing Director of TCF Debt Solutions and has spent his career in financial services, with particular emphasis on businesses working exclusively with an intermediary focus.
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