Just What Financial Consultants Should Really Reveal To You

By Nadine Kaufman

There is considerable variation in the standard of service a debtor is likely to get when seeking debt advice from various debt advisers. The Office of Fair Trading (OFT) has published a helpful booklet on its website which summarises the type of debt advice you should expect to get. It is entitled ‘Getting Help with your Debts’ and it is well worth a read.

The first matter to be aware of is that in the UK, debt advisors may be split into two categories: those that give free services and those that charge for their services. No matter which class your debt advisor falls into, the quality of debt advice should be the same.

Debt advisers are capable of doing various things. Their principal role is to look at your finances, explain financial information to you and give you guidance on your specific debt circumstances. For example they will often advise you with regards to which debts you ought to consider paying off first for example your mortgage. This is sometimes called the process of prioritizing your debts. They might furthermore counsel you on ways of budgeting so as to make your funds go further. With your authorization, they could also contact individuals to whom you owe money, i.e. your creditors, and explain your financial predicament to them with a view to agreeing a repayment plan with them for you.

The OFT recommends that you should give careful consideration to the matter of choosing a debt adviser and that you should only deal with debt advisers who have a consumer credit licence which is issued by the OFT itself. You can check this out yourself on the OFT website by looking up the Consumer Credit Register.

Free advice on debt matters can be obtained from a variety of sources including Citizen’s Advice Bureau (CAB), National Debtline, the Consumer Credit Counselling Service (CCCS) and a variety of other charitable organizations. The OFT booklet referred to above provides contact details for a number of these organizations or you can obtain their contact details yourself by searching on line.

There are also many professional fee charging debt management companies and you can source these quite easily on line or you can identify them from their advertisements in the media. While most of these provide some initial preliminary debt advice, they are commercial operations and are in the business of making a profit. Before agreeing to avail of their services and before you hand any money over, you should ask about the cost of their services and be crystal clear as to when you will have to pay for such services. Ideally you should establish the extent of these costs in writing before you agree to anything, bearing in mind that some of these companies do not charge up-front fees and some of them do. In either case, there is usually a limit to the amount of free advice they will provide, as you would expect from any business which is not funded by the state or by creditors.

Before you sign a contract for the provision of debt advice, make sure you know exactly what is going to be done for you. Summarize your queries regarding fees in writing and make sure you get answers to your satisfaction before going forward. Specifically the contract for a debt repayment plan ought to reveal to you the total cost of the service, what service fees are payable at the start of the agreement and what service fees are payable throughout the life of the contract, whether you might get any of your money back and when, how much money will be paid to each of your lenders and when they will be paid, if and how your debt repayment plan will or is likely to have an affect on your credit rating and whatever you need to do if you wish to end the service anytime in the future. Even when you use a non fee charging organization, you should ask all these questions if anything is unclear. If cold callers come to your home without your invitation, don’t give them any personal information and if you want to avoid being cold called on the phone, register your contact information with the Telephone Preference Service (TPS).

Finally, before you sign the contract, ask your debt adviser who you should contact in the event that something goes wrong in the future or if you have a complaint about the service. Remember that in the event of something going wrong and the company does not deal with your complaint or the issue to your satisfaction, you should contact the Financial Ombudsman Service.

No matter what the type of solution you attempt to cope with your debt problems there are a variety of things you should do to control your financial situation. You ought to create a budget to determine how much money you’ve got coming in and going out so you can calculate how much remains for you to pay your bills. You need to keep paying your bills, particularly your priority debts such as your mortgage (or rent) and your utility bills. Continue to communicate with the people to whom you owe money and keep your debt adviser fully up to date with regards to their correspondence and telephone calls and of your responses. It may be that your debt adviser takes over this duty and if so ensure that you pass over any messages from your creditors and report any phone calls you are receiving to your adviser. Stay in regular touch with your debt adviser and check to ensure that he or she is passing on the funds you have paid to your lenders in accordance with your repayment plan.

There are many debt repayment options available and if you want to get hold of information about them you ought to get your hands on The Insolvency Service’s publication ‘In Debt? Dealing with your Creditors’. It details each of the repayment solutions in detail and is especially appropriate for people of England and Wales. It is also useful for people of Northern Ireland where the insolvency laws and associated procedures differ somewhat from those pertinent to England and Wales. People of Scotland should read ‘Debt Advice and Information Package’ which is also provided by The Insolvency Service. These guides can also be found on the internet at The Insolvency Service website.

For advice on debt, our business is here to assist. We provide no cost, confidential, no obligation help with debt, so you’re able to have peace of mind.

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Topics: Finance | Comments Off

Tags: debt adviser, debt problem, Finance, OFT

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