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Debt Management Plan Protocol set up by Insolvency Services

Date: (12 February 2013)    |    

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The consumer affairs minister Jo Swinson has launched a new Debt Management Plan (DMP) Protocol which would give protection to consumers who pay for advice on managing their debts.
The Insolvency Service would oversee the protocol, which would have been agreed upon between the management providers and the creditors. Consumer need not pay any fees before signing a contract with a protocol compliant debt management company.
The providers have agreed to make it easy for their clients by spreading the recovery of their set up fees over at least the first six months which would make the plans more affordable and sustainable.
The DMP Protocol is a voluntary choice but those companies signing up would be able to advertise their compliance to consumers.
The Protocol compliant companies are expected to provide clients with information about other appropriate debt management options including the availability of free debt advice by providers.
Jo Swinson said that it was good news for consumers who faced debt problems and appreciated that commercial providers were making these changes which would help consumers by spreading the costs of the plan.
At the same time he put a word of caution to the consumers saying they should be aware that there is also free advice available such as helpline of National Debtline which provides free and confidential advice
Anybody in debt and seeking paid advice would be made aware under the Protocol that free debt advice options are available before they sign any contract with a fee charging provider.
This Protocol is being welcomed by the companies in the wake of the refusal of the Office of Fair Trading (OFT) last week to renew the credit licenses of two debt management companies and refusal of the application of a new business.

The consumer affairs minister added that the government was determined to drive up the standards in the industry and ensure that the people seeking paid for advice were not disadvantaged by debt management companies that do not offer value for money.

 

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