Consumer Protection Code for Debt Managers

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DRAFT STRAWMAN FOR DISCUSSION PURPOSES ONLY

A DRAFT CONSUMER PROTECTION CODE

FOR COMMERCIAL DEBT MANAGERS

A SUBMISSION BY BILL HOBBS TO THE EXPERT GROUP ON CONSUMER

INDEBTEDNESS

8TH MARCH 2010

Readers please note it is a working document drawn from existing Financial Regulator codes and The

Office of Fair Trading (OFT) UK guidelines for debt managers. It includes some personal suggestions

designed to enhance consumer protection. It is intended to inform discussion on the appropriate

consumer protection framework for the commercial debt management sector.


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FOREWORD

Preventing Consumer Harm Regulating Commercial Debt Managers

Concerned that unregulated commercial debt managers pose a high risk of harming consumers, I have

written this document as a combined Guidance and Code of Business Conduct, which I hope may prove of

use to the expert group on consumer indebtedness and others concerned that consumers are protected

from harm. I have done so in a personal capacity as a consumerist.

Commercial debt managers are a relatively recent phenomenon and represent a new sector in the

consumer financial services marketplace in Ireland. In the UK, debt managers have existed since the late

90s. Consequently UK experience is instructive in understanding how commercial debt management will

evolve here.

Unregulated firms operating in competitive markets are known to engage in practices that are harmful to

the consumer. This has been the consumer experience of the debt management sector in the UK. The

sector is coming under increasing scrutiny as consumer complaints rise and Office of Fair Trading (OFT)compliance enforcement intervention increases. The OFT licenses and monitors debt managers fitness as

high risk consumer credit operations. Responding to public concern the UK Government is currently

considering regulating debt managers.

Similar to UK experience, there is a high risk that consumers in Ireland will be exposed to harmful

practices such as abusive marketing, predatory sales techniques and misleading claims. Indeed there is

evidence that some harmful practices are already a feature within this rapidly growing sector.

Debt managers core product is a debt management plan, through which on behalf of indebted

consumers they negotiate for reduced payments with their creditors. The consumer makes one payment

to the debt manager who disburses this to the creditors. Fees are charged typically to the consumer and

comprise an initial upfront fee and ongoing administration fee/charge. Various types of charges exist, the

most controversial being a charge based on a percentage of the amount the debtor agrees to pay. While

debt managers act for their customers in some cases the business model takes on aspects of debt

collection. For example when creditors pay debt managers a fee based on the amount paid to them in

certain models.

A question arises as to whether or not debt management plans are a financial product or service. I am of

the opinion that they are financial products and services. A debt manager acts on behalf of the consumer

and intermediates between a consumer and creditor, frequently a regulated credit institution or

regulated credit provider. They market, sell and charge for a distinct product the debt management

plan- which involves the provision of financial planning advice, recommendation of suitability, provision of

negotiation services and the collection of and payment of monies through client accounts.

This draft draws on the Financial Regulators consumer protection and moneylender codes and alsoreflects elements of OFT guidance. Properly implemented it would both protect consumers and provide

for a regulatory framework to underpin what may be a timely development in debt management services

to indebted consumers.

Bill Hobbs

LeaderSense Business Consulting

March 2010


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Contents

FOREWORD...................................................................................................................2

PURPOSE OF THIS CODE ............................................................................................4LICENSING AND AUTHORISATION PROCEDURES....................................................4REASON FOR THIS CODE............................................................................................4AIMS OF THIS CODE.....................................................................................................5KEY INFLUENCES.........................................................................................................7

WHAT IS A DEBT MANAGEMENT COMPANY (DMC)?.............................................7CONCERNS OVER DMCs .........................................................................................8CONCERNS OVER CREDITORS...............................................................................9MANDATORY OR VOLUNTARY CODE OF CONDUCT?...........................................9DMCs AS FINANCIAL SERVICE PROVIDERS........................................................10DMC SERVICES COVERED UNDER THIS CODE...................................................11DEFINITIONS ...........................................................................................................12

GENERAL PRINCIPLES ..............................................................................................15COMMON RULES FOR DEBT MANAGERS................................................................16

GENERAL.................................................................................................................161. PROVISION OF INFORMATION TO THE CONSUMER....................................162. PRESERVATION OF A CONSUMERS RIGHTS ..............................................203. CONTRACT TERMS .........................................................................................204. HANDLING MONEY..........................................................................................215. OTHER TERMS ................................................................................................226. KNOWING THE CONSUMER ...........................................................................237. SUITABILITY.....................................................................................................238. FINANCIAL POSITION......................................................................................239. PAYMENTS TO CREDITORS...........................................................................24

10. REASONS WHY STATEMENT .....................................................................2411. OTHER POINTS............................................................................................2512. DEBT MANAGEMENT PLAN ADMINISTRATION .........................................2513. UNSOLICITED CONTACT (COLDCALLING) ................................................2614. DISCLOSURE REQUIREMENTS..................................................................2715. FEES AND CHARGES ..................................................................................2916. HANDLING COMPLAINTS ............................................................................3017. CONSUMER RECORDS...............................................................................3118. FEES, COMMISSIONS AND OTHER REWARDS.........................................3219. DMC AGENTS...............................................................................................3220. MINIMUM COMPETENCY REQUIREMENTS ...............................................3321. FIT AND PROPER.........................................................................................33

22. ADVERTISING GENERAL REQUIREMENTS ...............................................3423. DMC ACTING AS AN AGENT FOR THE CONSUMER DEBTOR..................3524. REFERAL TO DMCs.....................................................................................3525. COMPLIANCE WITH THIS CODE.................................................................36


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PURPOSE OF THIS CODE

The purpose of this code is to help consumers make informed financial decisions in asafe and fair market and to foster a sound dynamic commercial debt advice and debtmanagement sector in Ireland.

This is done by helping consumers to make informed choices through the provision ofinformation to educate them and through developing and enforcing codes ofconduct/practice, which seek to ensure that commercial debt management, debtcounseling and debt advisory service providers act in a fair and transparent way.

LICENSING AND AUTHORISATION PROCEDURES

A Consumer Protection Code for Debt Managers will apply to all debt managers licensed

or regulated under the Consumer Credit Act or any other Act once enabling legislationhad been passed.

In the interim this code is being published by the National Consumer Agency undersection 90 of the Consumer Protection Act 2007 as a matter of consumer protection.

Administration and compliance with the code will be undertaken by the CBFSAI inaccordance with section 94 of the Act.

Please refer to the Definitions section for any term shown in bold and italics throughoutthe text of the Code.

This code does not apply to the Money Advisory Budgeting Service, Citizens AdviceBureau or Free Legal Aid Centres.

Note: It should be possible for commercial debt managers to voluntarily commit tocomply with the code. In this scenario a list of those who have signed up to the codecould be published on the Financial Regulators website and or NCA website andadvertised to the public. In turn DMCs should undertake to declare their status usingsome agreed form of disclosure. The IBF and its members could agree deal withCommercial Debt Managers who have signed up for the code.See Rules section 23.

REASON FOR THIS CODE

Advice to consumers about debt problems has for many years been provided by theMoney Advice and Budgeting Service (MABS), the Citizens Advice Bureau and FreeLegal Aid Centres.

Since 2008, fee charging commercial debt management companies (DMCs) haveentered the market. Consumers, consumer bodies, credit institutions and others haveraised concerns about DMCs and marketplace behaviors. They point to problems


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emerging here similar to problems experienced in the UK where DMCs have operatedfor some time.

It is clear that certain unwelcome practices have emerged here in particular

false and misleading claims,

opacity ambiguous or hidden pricing and fee models

predatory selling

deceptive online marketing

marketing of free advice

DMCs generate revenue from charging consumers for setting up and administeringplans. In some cases creditors may pay a fee or charge to the DMC which is in turncharged to their customers account.

The DMC business model here is similar in almost all respects to those operating in theUK for the past decade or so. DMCs in the UK and Northern Ireland are licensed by theOffice of Fair Trading (OFT) under the UK Consumer Credit Act and required to complywith OFT guidance. The OFT considers 1DMC to be a high risk consumer credit sector.

The UK experience is instructive as some DMCs operating here are UK companies thatare operating cross border, have established operations here or are in alliance with localpartners.

Its notable that having first issued guidelines for DMCs in 2001 and updating them in2008 the 2OFT, instancing concerns over the level compliance interventions andcontinuing harmful practices, is engaged in a review of the sector. Responding toheightened public concern about debt management practices, the UK Government isconsidering regulating the sector.

It is timely then to consider a code of conduct for commercial debt managers offeringtheir services in Ireland.

AIMS OF THIS CODE

1The number of UK DMCs is somewhere between 150 (OFT) and 800 (Moneysupermarket.com). The largest operations service

c80% of customers. Companies range in size from large operations to small one man in a garage operations. Some have multiple

online shop fronts and some masquerade as charities, non-for profit and governmental type agencies.

2The OFT issued debt management guidance (the guidance) in December 2001 (updated September 2008 to reflect the reforms

introduced by the UK Consumer Credit Act 2006). The guidance sets out minimum standards for debt management businesses that provide

debt advice (including free to client) and/or seek to re-schedule customers' repayment of debt and charge for doing so. Key principles relate

to the transparency of advertising and promotion of a debt management businesses' services, fees charged to consumers, acting in the

best interests of the consumer and keeping the consumer informed. Applicants and license holders are expected to abide by the guidance.


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The purpose of the code is to set out minimum standards to be met by DMCs. The codedoesnt, however, set out a comprehensive checklist and not all of its elements will applyto some DMCs. It is not exhaustive and conduct or omissions not included in the codemay be taken into account in determining compliance with its general principles. DMCsare expected to abide by the spirit as well as the letter of the code.

Some of the practices highlighted in the code are clearly unfair or improper, for example,lack of transparency about the services to be provided. In those cases DMCs shouldhave been aware even before the issue of this code of the risk of action if they engagedin such practices or allowed their employees, agents, or associates to do so. In othercases the position might have been less clear, and the code is intended to be helpful inoutlining the kinds of business practice to which the3FR/NCA is likely to object

The key requirements of the code are:

Advertisements and marketing must be accurate, clear and not misleading.Any reference to 'savings' on repayments must make it equally clear thatdebt rescheduling will usually lead to an increase in the size of the sum to

be repaid, the period of repayment and may potentially affect theconsumer's credit record

No claims of being able to guarantee debt forgiveness or freezing ofinterest. Such claims are not within the competence of a DMC to deliver on.

No cold calling by personal visit or misleading or unlawful cold calling bytelephone or sending of unsolicited emails

Consumers must be given adequate information before entering into anagreement.

Contracts should specify the nature of the services provided, total cost tothe consumer, amount to be repaid and duration of the contract. Contractterms should be fair, legible and in plain language

A realistic assessment of the customer's financial circumstances must bemade before advice is given, including verification of income and regularoutgoings. Any advice must be given in the best interests of consumers.

Where a debt management plan is recommended DMCs must demonstratesuitability. This is especially important as the suitability of a debtmanagement plan is determined by the consumers financialcircumstances.

DMCs must inform clients of the outcome of negotiations with creditors,as well as any developments with creditors such as the issue of defaultnotices or the threat of legal action

3ISSUANCE AND COMPLIANCE MONITORING ROLESTO BE DECIDED


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Payments from consumers should normally be passed on to creditorswithin five working days of receipt of cleared funds.

KEY INFLUENCESPrinciples set out the broad expectations as to how DMCs should interact with theircustomers. These principles should be reflected in all aspects of a DMCs businessdealings with consumers.

The Code comprises general principles and more detailed rules designed to enhanceunderstanding of and compliance with those general principles. In all circumstances, theoverriding obligation on DMCs is to adhere to the letter and spirit of the generalprinciples.

The Code comprises the same provisions, where feasible and practicable, that apply to

other sectors of the financial services industry, whilst endeavoring to take account of thenature of debt management business. It also contains some provisions that are specificto debt managers because of the nature of that business.

Drawing up the code has been guided by the Governments six core principles for betterregulation i.e. necessity, effectiveness, proportionality, transparency, accountability andconsistency.

WHAT IS A DEBT MANAGEMENT COMPANY (DMC)?

A DMC offers a service to individuals in debt for a payment. They provide advice to theconsumer and negotiate with creditors on their behalf to set up a payment plan for theindividual that may involve a reduction in monthly payments and a freeze on interestcharges. The individual consumer makes one payment to the DMC, which is thendistributed to each creditor. The core product is called a debt management agreementwhich is the service individuals pay for.

They may offer services such as debt consolidation, arranging mortgages and orconsumer credit products and act as insurance intermediaries. Where they do so theyare required to comply with the Financial Regulators authorisation procedures andcomply with its prudential regulations, codes of business conduct, fitness & probity andminimum competency requirements.

Some DMCs charge a percentage of the monthly payments as a fee. Some charge afee to establish a debt management plan and scaled charge related to the number ofcreditor payments per month. Others charge a percentage of the monthly saving. Inaddition, the entire first month's payment may be kept as a deposit or a charge forsetting up the payment plan. Some DMCs offer a refund of the first payment when theindividual has paid off their debt on the payment plan. Fees are usually taken from themonthly payment, before payments are distributed to creditors.


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While there is no objection to DMCs 4charging for, or consumers choosing to pay for,debt management services, the consumers using these services will, however, often bevulnerable because of the nature of their financial problems and, almost by definition,have the least available financial resources. It is therefore, particularly important that theservices provided by DMCs are carried out with due care, skill and fairness.

The practice of basing charges on a percentage of the payment made by a debtor orpaid to creditors is considered inimical to consumer interests. Consequently thepermitted charging structure set out in this code allows for an initial plan set up fee andan administration charge based on the number of creditor payments to debtor accountswhich may be set on tiered basis.

The practice of charging for negotiating a lump sum early settlement with creditor(s) isbased on a percentage fee charged on either the lump sum payment or amount writtenoff. This practice is inimical to consumer interests. The code will establish a maximumchargeable fee in either case.

There are two generic models one in which the consumer pays the DMC the secondwhere the creditor pays the DMC with charges for the consumer debtor account. SomeDMC business models include elements of debt collection processes principally themonitoring of payments, reporting on these to creditors and undertaking reviews atcreditors request.

This code will apply equally to DMCs who provide advice and a similar range ofnegotiation and payment services for no direct charge to the consumer.

CONCERNS OVER DMCsA number of concerns have been raised by consumers, consumer agencies, lenders andothers as follows:

In the absence of licensing, guidance and regulations there is a high risk ofabusive marketing practices and predatory selling which are known aspects ofunregulated markets for consumer financial products and services.

Certain DMCs were operating cross border online business models some ofwhich are 5ambiguous and non-transparent.

Some DMCs may claim to be not-for profit and/or charitable concerns.

Differing models some of which are marketed as free to the consumer are in factnot 6free.

4Consider regulating for fees and charges structures there are many variations ranging from debtor pay to c redit pay models.

Transparency is critical.

5 Some DMCs are UK based operations with a thin online Irish content font page. Some offer IVAs and other products unavailable here.

Others appear to different companies but are fronts for one company.

6 Free advice is marketed as a sales generation tactic


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Advertising can be misleading

Transparency over the nature and cost of the services provided

the quality of advice and information given to the consumer

The handling of client money.

Websites purporting to be a DMC when in fact they are lead gathering agents toany number of DMCs

Websites where the DMC is not identifiable and contains no reference torecognisable debt management companies.

CONCERNS OVER CREDITORS

Some creditors have a blanket policy of refusing to enter into negotiations with DMCs,or refusing to accept payments sent by DMCs on behalf of consumers. Where aconsumer appoints a representative to negotiate on their behalf it is an unfair andimproper business practice on the part of the creditor to operate a policy, without reason,of refusing to consider such requests.

It is expected that where a creditor agrees to accept lower payments that debt collection

activity will be suspended by it. It would be unfair consumer practice to agree to accept alower payment and continue to pursue a debtor for the balance.

It is the intention to ensure that creditors agree to accept payments from a DMC subject

to some criteria. This is not a matter for this code but will be dealt with separately.

MANDATORY OR VOLUNTARY CODE OF CONDUCT?

Some DMCs or a trade body may propose a voluntary code of conduct. However thesector is considered to be a high risk consumer protection area of concern and for thisreason a mandatory consumer protection code is identified as a priority.

A DMC when operating as a mortgage broker or insurance intermediary is required tocomply with authorisation requirements, codes of conduct, minimum competency andfitness and probity regimes.

In the case where a DMC has appointed agents, licensed third parties or otherwiseaccepts applications from others who call on potential customers, the code whereapplicable applies to these agents or third parties.


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DMC SERVICES COVERED UNDER THIS CODE

DMC services covered under this code of conduct consist of the following services whenprovided to debtors who are individuals defined as consumers:

Advising on how to restructure debts, how to alter debt repayments or how toachieve early resettlement of debts.

Contacting creditors and/or negotiating with creditors, on behalf of the consumerdebtor, in order to have any of the above arrangements (whether that conductamounts to negotiation or not)

Providing a facility for the debtor to make a single repayment which is thendistributed on his/her behalf to his/her creditors

In addition, if and when credit reference services are provided:

undertaking reviews of the consumer debtors' financial circumstances and/ormaking payments on their behalf, including ascertaining whether a creditinformation agency holds information relevant to the financial standing of thedebtor

ascertaining the contents of such information so held

advising consumers on how they might take steps to secure the correction of, theomission of anything from, or the making of any other kind of modification to,information relevant to their financial standing

advising consumers on how they might take steps to secure that an agencywhich holds such information about them stops holding it or does not provide it toanother person

taking steps on behalf of a consumer with a view to securing the correction of,the omission of anything from, or the making of any other kind of modification to,information relevant to the financial standing of that individual

and

taking steps on behalf of a consumer to secure that an agency which holds suchinformation stops holding it or does not provide it to another person.

Where any DMC gives assistance, on a non commercial basis, in one or more of theways outlined above to consumers in debt, it will be expected to meet relevant parts ofthe minimum standards set out in the guidance. Elements of the code and its guidanceare relevant where they set out the principles or deal with actions or circumstances thatare a feature of the relationship between the DMC and the consumer.


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DEFINITIONS

In this Code:

advertisement means any commercial communication usually paid for by a debtmanager, which is addressed to the consumer public or a section of it, the purpose beingto advertise a product, service

advertised product or service means the product or service that is the subject of anadvertisement;

agent a person or company that markets, advises and arranges for debt managementplans on behalf of a debt manager or debt management company

associated undertaking means an associated undertaking within the meaning of

Regulation 34 of the European Communities (Companies Group Accounts) Regulations1992;

business day means any day except Saturday, Sunday, bank holidays and publicholidays;

certified person has the meaning assigned to it by section 55 of the InvestmentIntermediaries Act, 1995;

charge means any cost or fee which a consumer must pay in connection with a productor service provided by a debt manager;

complaint refers to an expression of grievance or dissatisfaction by a consumer, eitherverbally or in writing, in connection with:

a) the provision of a product or service to a consumer by a debt manager orb) the failure of a debt manager to provide a product or service to a consumer;

connected party shall, except where otherwise stated, include a partner, officer,controller, associated undertaking, related undertaking or subsidiary undertaking,employee or person authorised to engage in the business of debt management onbehalf of a DMC including any associate of the person concerned;

consumer means any of the following:a) a natural person acting outside their business, trade or profession;

b) a person or group of persons, but not an incorporated body with an annualturnover in excess of 3million (for the avoidance of doubt a group of personsincludes partnerships and other unincorporated bodies such as clubs, charitiesand trusts, not consisting entirely of bodies corporate);

c) incorporated bodies having an annual turnover of 3 million or less in theprevious financial year (provided that such body shall not be a member of a


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group of companies having a combined turnover greater than the said 3 million);or

d) a member of a credit union; and includes where appropriate, a potentialconsumer (within the meaning above);

customer or client means any person to whom a DMC provides or offers to provide aservice the subject of this Code, and any person who requests such a service;

client account the account into which consumer debtors make a regular payment andfrom which regular payments are made to their creditors;

debt management company a company providing debt management services asdefined in the code;

debt manager a person or company providing debt management products andservices;

DMC a commercial debt management company or debt manager;

debt management plan a voluntary agreement between a consumer debtor and debtmanager in which; the debt manager negotiates a payment schedule with the debtorscreditors; and collects and administers regular payments from the debtor which itdisburses to the debtors creditors;

debt management programme the same meaning as a debt management plan

employee means a person employed under a contract of service or a person otherwiseemployed by a DMC;

group includes a company, its parent and its subsidiaries and any associatedundertaking or related undertakings;

officer in relation to a DMC, means a director, chief executive, manager or secretary,by whatever name called;

online activity means the advertising of and offer of services to consumers via theinternet. It also includes lead generation or online response forms.

outsourced activity is where a DMC employs another person (other than a naturalperson who is an employee of the DMC under a contract of service) to carry out anactivity on its behalf;

person means a natural person or a legal person;

record means any document, file or information (whether stored electronically orotherwise) and which is capable of being reproduced in a legible form;

related undertaking means:


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a) companies related within the meaning of section 140(5) of the Companies Act1990;b) undertakings where the business of those undertakings has been so carriedon that the separate business of each undertaking, or substantial part thereof, isnot readily identifiable; or

c) undertakings where the decision as to how and by whom each shall bemanaged can be made either by the same person or by the same group ofpersons acting in concert.


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GENERAL PRINCIPLES

A debt management company must ensure that in all its dealings with customers and(within the context of any future authorisation/licence procedures), it:

1. acts honestly, fairly and professionally in the best interests of its customers andthe integrity of the market;

2. acts with due skill, care and diligence in the best interests of its customers;

3. does not recklessly, negligently or deliberately mislead a customer as to the realor perceived advantages or disadvantages of any product or service;

4. has and employs effectively the resources and procedures, systems and control

checks that are necessary for compliance with this Code;

5. seeks from its customers information relevant to the product or servicerequested;

6. makes full disclosure of all relevant material information, including all charges, ina way that seeks to inform the customer;

7. seeks to avoid conflicts of interest;

8. corrects errors and handles complaints speedily, efficiently and fairly;

9. does not exert undue pressure or undue influence on a customer;

10. ensures that any outsourced activity complies with the requirements of this Code;

11. without prejudice to the pursuit of its legitimate commercial aims, does not,through its policies, procedures, or working practices, prevent access to basicservices such as those provided for by MABS; and

12. complies with the letter and spirit of this Code.


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COMMON RULES FOR DEBT MANAGERS

GENERAL

A debt manager must ensure that all warnings required by this Code are prominent, i.e.they must be in a box, in bold type and of a font size that is larger than the normal fontsize used throughout the document or advertisement.

1. PROVISION OF INFORMATION TO THE CONSUMER

A Debt Manager must:

ensure that the name of a product or service which it provides is not misleading in termsof the benefits that the product or service can deliver.

not make the sale of a product or service contingent on the consumer purchasinganother product or service from the DMC.

not charge a consumer a fee for any optional extra(s) offered in conjunction with aproduct or service, unless that consumer has positively indicated that they wish topurchase the optional extra(s).

must ensure that all warnings required by this Code are prominent, i.e. they must be in abox, in bold type and of a font size that is larger than the normal font size usedthroughout the document or advertisement.

assist a consumer in understanding the product provided, including all related paymentsand charges. Consumers must be provided with adequate information about the serviceand the consequences and costs of entering into an agreement.

prior to entering into an agreement with a consumer, disclose all the fees and costs in aclear manner and prominently indicate the cost nature of the service in alldocumentation.

provide information as to the nature of the service that is being offered; the total cost tothe consumer of the service including any initial or fixed charge fee or deposit, theperiodic management fee to be paid to the DMC multiplied by the estimated length of thecontract; the amount to be repaid; and the likely duration of the contract must be clearly

explained at the outset.

where it is not possible to establish at the pre-contract stage the cost or durationof the contract, the consumer must be given a realistic estimate of cost and theduration of the contract. This should be accompanied in close proximity by aclear warning that it is an estimate. The assumptions on which the estimate isbased should be set out. If during the pre-contractual stage it becomes clear that


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the estimate does not adequately reflect the consumer's circumstances, arevised estimate must be given.

where an initial up front fee, part payment of an up front fee or deposit is payable, theconsumer must be given a clear explanation of:

what aspect of the service is covered by the fee or (as the case may be) what thedeposit is held for

the manner on which it is calculated

the manner in which the balance of the up front fee is payable i.e. over threemonths

the effect this part payment schedule will have on payments made to creditorsduring the part payment period

whether it is refundable, with due regard to the principles of contract law inrelation to deposits and part payments

must advise the consumer that they will be given the opportunity to withdraw from the

contract, the procedures for withdrawal the circumstances in which costs will and will notbe incurred and, if they are, what they are likely to be.

provide the opportunity for the consumer to withdraw from the contract, if when he/she isinformed of the of the total cost of service, he/she decides the service is unsuitablemust warn the consumer in writing:

where the first payment goes to the DMC and not to the creditors (whether as aninitial up front fee, part payment of an up front fee, as a deposit or for some otherreason) that they will miss a payment or payments or their payments will bereduced to their creditors and will therefore go into arrears or further into arrears

This warning must appear prominently on either on debt management plan agreements

that creditors are not obliged to accept reduced repayments to freeze interestand charges and that, unless they do, repaying the same debt over a longerperiod of time will lead to an increase in the total amount to be paid

that collection actions, including default notices and litigation, can ensue and thatthere is no guarantee that any existing or threatened proceedings will besuspended or withdrawn. The possibility of default notices including that theymay incur costs that are added to the debt must be made clear.

of the likely impact of the debt management programme on the consumers creditrating. In particular it should be stated that they might not be able to obtain creditin the short term and that there is some likelihood that they will not be able to doso in the medium to long term either. Consumers must not be misled into thinking

Warnings should be developed for each section


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that their credit rating will improve earlier than when the payment of their debt iscompleted, or even immediately thereafter; records are retained by creditreference agencies for a further six years.

of the importance of meeting debts such as mortgage, rent, utility and certaininsurance payments.

in particular there must be a consumer warning that their home is at risk if theydo not keep up repayments or clear arrears

not to ignore correspondence or other contact from creditors or those acting onbehalf of creditors

advise the consumer of the nature of those commitments that will, and especiallyimportantly those that as a matter of the DMC's own decision, will not be included withinthe repayment plan, must be made clear to potential clients. The DMC must exercise alldue care to ensure that debts that it says it cannot deal with are not included inprogrammes by mistake.

where a DMC is aware that a particular creditor refuses to deal with it, (for whateverreason and whether or not the DMC regards this refusal as justified), the consumer mustbe told of this as soon as the DMC is aware that the consumer has an account with thatcreditor.

where consumers make payments by way of standing order or direct debit, issuemonthly statements to consumers who pay weekly and quarterly statements toconsumers who pay monthly.

give adequate notice to affected customers by registered post or by hand, where itproposes to withdraw its services. A debt manager must ensure that any outstanding

business is properly completed.

inform consumers of the amount and order in which payments will be allocated todifferent creditors outstanding balances

ensure that, where it intends to record a telephone conversation with a consumer, itinforms the consumer, at the outset of the conversation, that it is being recorded.

ensure that, where it communicates with a consumer using electronic media it has inplace appropriate arrangements to ensure that secure transmission of information to,and receipt of information from, the consumer.

ensure that all printed information it provides to consumers is clear, plain language, be aprint size that is clearly legible and must state clearly the implications of entering a debtmanagement agreement.

where contact is made with a potential client after a referral from a credit or mortgagebroker or lender, the debt manager must disclose at the outset of the conversation howthey obtained the consumers details, what service they offer and that they cannotthemselves provide a loan.


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where a debt manager remunerates third parties for providing referrals or referringconsumers to it, it must disclose this to the consumer and set out the terms and amountof any referral fee paid for the introduction or any fee that may be charged to an accountwith the referring party.

where a debt manager operates by means of any distance communications it must

comply with the requirements of the xxx to provide amongst other things certaininformation to the consumer before the contract is concluded.

where a debt manager recommends that, one of the consumers options is a remortgage,or further advance, or consolidation loan, the DMC must disclose to the customer inwriting the level of remuneration they will receive from the third party who arranges thisservice, if not already disclosed by the third party.


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2. PRESERVATION OF A CONSUMERS RIGHTS

A debt manager must not, in any communication or agreement with a consumer (exceptwhere permitted by applicable legislation), exclude or restrict, or seek to exclude orrestrict:

a) any legal liability or duty of care to a consumer which it has under applicable law orunder this Code;

b) any other duty to act with skill, care and diligence which is owed to a consumer inconnection with the provision to that consumer of financial services;

or

c) any liability owed to a consumer for failure to exercise the degree of skill, care anddiligence that may reasonably be expected of it in the provision of a financial service.

3. CONTRACT TERMS

A specimen 7consumer information sheet is attached in appendix X in a formacceptable. DMCs should not materially depart from its form and structure. Inparticular the consumer health warnings must remain prominently displayed inthe relevant sections.

Contract terms and conditions should be fair, written in plain, intelligible language andeasily legible.

The contract should set out the :

nature of the services that are being supplied (including the kinds of debt that willand will not be covered)

total cost to the consumer of the service, including any initial or fixed charge feeor deposit and the periodic management fee to be paid to the DMC multiplied bythe estimated length of the contract

the amount to be repaid and,

the duration of the contract.

7To be developed


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Where it is not possible to state firmly the cost or duration of the contract, the contractmust include realistic estimates of cost and the duration of the contract. This should beaccompanied in close proximity by a clear warning that it is an estimate. Theassumptions on which the estimate is based should be set out.

The contract should set out the circumstances in which the consumer may withdraw

and receive a refund of any monies paid to the DMC

Under the Distance Selling Regulations where a consumer enters into a contract beforehe has received any written information, he/she has both

a cooling-off period of at least seven working days during which he/she canwithdraw from the contract with a full refund and,

a right to be informed that he/she has that cooling off period

The contract must not include any term which says or implies that there are nocircumstances in which a client is entitled to refund. For example a refund (and in some

cases a full refund) may be due to a dissatisfied client if:

the DMC has promised more than it can deliver. This may be the case evenwhere the DMC's contract is appropriately worded, if (for example) its written ororal marketing is over-optimistic or

the DMC has failed to conduct negotiations with the reasonable care and skillrequired by section x of the Supply of Goods and Services Act or

there has been a total failure of consideration.

The contract should allow the client to withdraw from the contract where, followingsigning of the contract the total fee differs significantly from the estimate given prior tothe contract (for example, because a full investigation of the customers circumstancesreveals that the monthly payment must be larger than first thought).

Include section on 8standard cooling off period-

4. HANDLING MONEY

Any monies held on behalf of consumers must be kept in a client account not usable by

the DMC for the purposes of its own business. This includes, in particular, any depositwhich under the contract may be returned to the client at any date in the future and anymonies received by the company for payment to creditors. Any interest earned on thisaccount should accrue to the benefit of the client, not the company.

8 It the practice to allow for a 14 day cooling of period, during which the consumer may terminate the agreement. However as work may

have commenced on processing their plan and DMCs refund the initial fee less their reasonable costs. This issue has proved contentious

with some DMCs retaining the full initial payments.


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The company must ensure that it holds indemnity/fidelity insurance against fraud of theftof customers money at a minimum of9(x) times the monthly turnover.

The contract must specify a period within which payments received from the customerwill normally be passed on which must not be greater than five working days. Delay thatadversely affects the individual consumer's financial position and which exceeds five

working days from receipt of cleared funds is unacceptable.

If the DMC fails to disburse payments to creditors in accordance with the contract, itshould accept responsibility and inform the customer of the delay, together with thereason for it. The law does not impose liability where the reason for delay is beyond thecontrol of the supplier. But where the delay is not beyond its control the DMC shouldtake appropriate action to put the consumer in the position they would have been hadthe contract been fulfilled. This includes, for example making good any additionalinterest which has accrued and any default charges that have been applied to theaccount as a result of the delay. In this respect, the DMC must have appropriatesystems in place to deal with foreseeable problems and to minimise delays, even whenthe initial cause is not its fault. As the consumer relies on the DMC to be made aware of

any delay, DMCs should take reasonable steps to anticipate delays and make goodlosses.

A DMC must not accept consumers monies before they have received andacknowledged in writing the Terms and Conditions of the DMC.

DMCs must demonstrate, by annual audit certificates from an independent externalauditor, that customers funds are held in a separate client bank account that would notbe at risk in the event of a DMC ceasing to trade, and is not usable by the DMC for thepurposes of its own business. Any interest earned on the account should accrue to thebenefit of the client and not the DMC.

If customers withdraw from debt management programmes, DMCs must refund anymonies held, excluding any reasonable administration fees due.

5. OTHER TERMS

Contracts must not prohibit consumers from corresponding with, or responding to writtenor oral communications from creditors or others acting on behalf of creditors.

However, in order to avoid duplicate or contradictory action, contracts may reasonably

require the customer to send to the DMC a copy of any communication from a creditor.

Where the contract requires or suggests that the customer should send suchcorrespondence to the DMC, it must deal with it appropriately and promptly.

9To be developed


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The DMC must send to the customer a copy of any written communication it sends to orreceives from the creditor, and (unless the creditor itself sends a copy to the customer)must keep the customer informed of other communications.

Contracts must not include declarations such as 'I fully understand the requirements ofthe contract' or confirmation that certain provisions have been explained.

6. KNOWING THE CONSUMER

All advice given should be in the best interests of the consumer. Debt managementprogrammes are not suitable for all consumer debtors, and DMCs must exercise all duediscretion, in the best interests of the consumer, in deciding whether or not take aconsumer as a customer.

7. SUITABILITY

A DMC must exercise all due discretion, in the best interests of the consumer , indeciding whether or not to accept a consumer on to a debt management programme,and must bear in mind that debt management programmes are not suitable for allconsumers. A realistic assessment of the financial circumstances of the customer mustbe made

A DMC must ensure that, having regard to the facts disclosed by the consumer andother relevant facts about that consumer of which the DMC is aware, any product orservice offered to a consumer is suitable to that consumer.

8. FINANCIAL POSITION

Before providing a product or service to a consumer, a DMC must gather and recordsufficient information from the consumer to enable it to provide a recommendation or aproduct or service appropriate to that consumer. The level of information gatheredshould be appropriate to the nature and complexity of the product or service beingsought by the consumer, but must be to a level that allows the DMC to provide aprofessional service.

A realistic assessment of the financial circumstances of the consumer, including bothincome and outgoings, must be made before advice is given.

Consumer income must be verified by appropriate means, such as pay slips and copies

retained on file

Reasonable steps must also be taken to verify regular outgoings. Estimates ofexpenditure on certain items are permitted, but only if precise figures are not available.Standard expenditure guidelines may be used where there is no better indication of theclient's outgoings provided that there is nothing to suggest that they are inappropriate. Acopy of any financial statement sent to creditors must also be sent to the client.


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9. PAYMENTS TO CREDITORS

Any advice given to the client to cancel direct debits or standing orders prior to therepayment plan being agreed with creditors must be demonstrably in the best interestsof the client. It is not a step which should be undertaken lightly. DMC's must clearly warn

clients of the risks and consequences of this course of action if they advise it. Where thiscourse is taken, it is normally expected that regular payments to creditors (even if lowerthan the contractual ones) should continue to be made wherever possible.

The difficulties associated with stopping contractual payments are especially acute whenthey are accompanied by a period in which no payments at all are made (for example,because the DMC takes the first payment under the plan as a deposit or up front fee orbecause there is a delay in distributing payments to creditors). If this will, or is likely to,happen under the plan the consumer must be clearly informed and warned of theconsequences. It is not sufficient for this purpose that there be a statement to this effectin the small print of the terms and conditions.

Customers should not be advised to make payments to accounts at a rate lower than therate at which any interest and other charges are accruing or may accrue, unless this isdemonstrably in their best interests. In such a case, a clear explanation must be given tothe client as to why this course is necessary and its implications.

If, following advice to cancel direct debits or reduce the level of contractual payments, itbecomes clear that the course of action is not producing results in the customersinterest, (for example, because creditors are not agreeing to freeze interest), then thecustomer must be informed immediately so that he/she may be advised appropriatelyand take whatever action is in his best interests (including the possibility of withdrawingfrom the plan).

Customers must be advised of the importance of meeting debts such as mortgages, rentand utility payments. More generally it should not be assumed that it is always in thecustomers best interests simply to divide available income between debts in proportionto their size. For example advice should take into account the fact that some loans maylose the benefit of a reduced rate of interest if payments are missed, or that there maybe a benefit in settling a loan with a higher rate of interest sooner than one with a lowerrate of interest.

10. REASONS WHY STATEMENT

Before providing a product or service to a consumer, a DMC must prepare a writtenstatement setting out:

a) the reasons why a product or service offered to a consumer is considered to besuitable to that consumer;

b) the reasons why each of a selection of product options offered to a consumer areconsidered to be suitable to that consumer; or


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c) the reasons why a recommended product is considered to be the most suitableproduct for that consumer.

The DMC must give a copy of this written statement to the consumer and retain a copy.

11. OTHER POINTS

Customers must be advised not to ignore correspondence or other contact fromcreditors or those acting on behalf of creditors.

Customers should not be advised to close or switch their main banking account unlessthere is a compelling reason for doing so. The consequences of switching providershould be fully explained. A debt manager should not offer to or arrange to switch bankaccounts.

A DMC must gather and record details of any material changes to a consumers

circumstances before providing that consumer with a subsequent product or service.

A DMC must ensure that, where a consumer refuses to provide information sought incompliance with this Code, the refusal is noted on that consumers records.

A DMC must maintain a list of its customers who are consumers and the subject of thisCode.

A DMC must endeavor to have the consumer certify the accuracy of the informationhe/she has provided to the DMC Where the consumer declines to do so, the DMC mustnote this on the consumers records.

12. DEBT MANAGEMENT PLAN ADMINISTRATION

DMCs must inform the consumer of the outcome of negotiations with creditors. This isnot limited to the situation when creditors have refused to deal with the DMC, or refusedto freeze interest. But it is especially important in those cases.

Customers must be kept informed of any developments in the relationship with creditors,in particular the issue of default notices or the threat of issue of legal proceedings

Where the service provided by the DMC includes debt repayment, the DMC must

take full account of debts such as mortgage payments, rent, utility paymentsetc including any arrears already incurred on those debts, in setting monthlyrepayments, and

reassess the payment plan and consider any necessary changes (includingbringing the plan to an end) to ensure it remains in the consumers bestinterests, as soon as it becomes aware of material change in the consumersfinancial position. The customer should be advised of any recommended


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changes without delay. Repayment plans should in any event be re-assessedon at least an annual basis and the client informed of the outcome of thereassessment.

Customers should at the outset be given a statement of how their money is beingdisbursed. In addition, where a plan has been agreed, the balance owed (or if anaccurate figure is not known the best estimate), the period of payment needed toclear the debts and the fee charged by the DMC must be included in thestatement. Customers must be kept informed of any material changes to thesearrangements at the time they occur. DMC's should meet any reasonable requestby a client for a statement of his or her position.

All correspondence, statements and other paperwork sent to or received fromthe customer or the customers creditors and which has not already beencopied to or returned to the client, should be retained by the DMC until suchtime as the contract is completed or terminated. On termination or completionof the contract, all retained paperwork should be returned to the customer

unless, at that time, the customer says that they do not want the paperwork.

13. UNSOLICITED CONTACT (COLDCALLING)When contacting a consumer other than an existing customer, a DMC may make anunsolicited contact to a consumer, who is an individual, by way of a personal visit ortelephone call, only if:

a) the consumer has signed a statement, within the previous 6 months, giving thedebt manager permission to make personal visits or telephone calls to him/her;

or

b) the consumer has a listing in the business listing section of the currenttelephone directory, classified telephone directory or in trade/professionaldirectories circulating in the State; or

c) the consumer is a director of a company, or a partner in a firm with an entry inone of the directories listed in b) above; or

d) the consumer is the subject of a referral, received from an entity authorised toprovide financial services in Ireland, another entity within the same group, asolicitor, a certified person or an existing customer.

In relation to d) above, such a referral must be followed up by an indication to theconsumer by the DMC that the referral has been made and asking for consent toproceed.

A DMC must ensure that, where it makes an unsolicited contact on foot of a referral, itretains a record of the referral.


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An unsolicited contact made to a consumer, other than an existing customer, may onlybe made between 9.00 a.m. and 9.00 p.m. Monday to Saturday (excluding bankholidays), unless otherwise requested by the consumer.

When making an unsolicited contact in accordance with this Code, the representative ofa DMC must immediately and in the following order:

a) identify himself or herself by name, the name of the DMC on whose behalf he/she iscalling and the commercial purpose of the contact;

b) inform the consumer that the call is being recorded, if this is the case;

c) disclose to the consumer, the source of the business lead or referral supporting thecontact; and

d) establish if the consumer wishes the call to proceed; if not, the caller must end thecontact immediately.

A DMC must abide by a request from a consumer not to make an unsolicited contact tohim/her again.

A DMC must not reach a binding agreement with a consumer on the basis of anunsolicited contact alone, except in the circumstances permitted under the EuropeanCommunities (Distance Marketing of Consumer Financial Services) Regulations 2004.

14. DISCLOSURE REQUIREMENTS

A DMC must include its 10regulatory disclosure statement:

a) on its business stationery (including DMC agreements);

b) in all advertisements;

c) in all catalogues, brochures etc; and

d) on all electronic communications with consumers including on the home pageof its website, if any.

The regulatory disclosure statement must take the following form:[Full legal name of DMC (and trading name(s), if applicable)] is required to comply withthe X Code of Conduct for Debt Managers.

A DMC must not use the disclosure statement on any business stationery,advertisement, catalogue, brochure or electronic communication in connection with aproduct or service for which the DMC is not (regulated) by the Financial Regulator.

10 Requires a statement pending regulations or licensing requirements


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The disclosure statement must not be presented in such a way as to appear to be anendorsement by the (Financial Regulator/NCA) of the DMC or its products or services.

A DMC must:

a) speedily, efficiently and fairly, correct an error in any charge or price levied on, orquoted to, a consumer in respect of any product or service the subject of this Code;

b) where it considers that there may have been a material charging or pricing error,without delay, inform the Financial Regulator of its proposals for correcting any sucherror as may have occurred in accordance with paragraph a) above (if any suchinformation is provided verbally in the first instance, it must be provided to the FinancialRegulator in writing on the next business day); and

c) notify all affected consumers, both current and former, in a timely manner and in suchform as may be agreed with the Financial Regulator, of any material charging or pricingerror that impacted negatively on the cost of the service or the value of the product

provided.


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15. FEES AND CHARGES

It is the practice of some DMCs to assess charges based on a % of the amount to be

paid to creditors. This practice is inimical to consumers interests as the greater theamount paid the higher the charges.

The schedule for charges permitted by a DMC is a combination of:

(1) An initial set fee for setting up and negotiating the plan with creditors

(2) An administration fee charged on a scaled basis on the number of regularpayments made to creditors

It is the practice of DMCs to charge a fee for negotiating lump sum full and finalsettlements.

The schedule for negotiated lump sum full and final settlements is as follows:

A maximum of11(10%) of the lump sum amount or the amount agreed to be written offby the creditor(s) whichever is the lower but should be no more than (5000)

Note: Consider providing for one model as above

11The % and amount might be higher/lower but the principle maximises the benefit to the consumer

.


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16. HANDLING COMPLAINTS

A DMC must have in place a written procedure for the proper handling of complaints.

This procedure need not apply where the complaint has been resolved to thecomplainants satisfaction within 5 business days, provided however, that a record of thisfact is maintained.

At a minimum this procedure must provide that:

a) the DMC will acknowledge each complaint in writing within 5 business days of thecomplaint being received;

b) the DMC will provide the complainant with the name of one or more individuals

appointed by it to be the complainants point of contact in relation to the complaint untilthe complaint is resolved or cannot be processed any further;

c) the DMC will provide the complainant with a regular written update on the progress ofthe investigation of the complaint at intervals of not greater than 20 business days;

d) the DMC will attempt to investigate and resolve the complaint within 40 business daysof having received the complaint. Where the 40 business days have elapsed and thecomplaint is not resolved, the DMC will inform the complainant of the anticipatedtimeframe within which the moneylender hopes to resolve the complaint and of theconsumers right to refer the matter to the 12Financial Services Ombudsman and willprovide the consumer with the contact details of the Financial Services Ombudsman;and

e) the DMC will advise the complainant in writing, within 5 business days of thecompletion of the investigation of a complaint, of the outcome of the investigation and,where applicable, explain the terms of any offer or settlement being made. The DMC willalso inform the complainant of the right to refer the matter to the Financial ServicesOmbudsman and will provide the consumer with the contact details of the FinancialServices Ombudsman.

When a DMC receives a verbal complaint, it must offer the consumer the opportunity tohave the complaint treated as a written complaint.

A DMC must maintain an up-to-date record of all complaints subject to the complaintsprocedure. This record must contain the details of each complaint, a record of themoneylenders response(s), any other relevant correspondence or records and theaction taken to resolve each complaint.

12Only if DMCs are subject to the FSOs remit. If not then this section requires a complaints adjudicationand resolution procedure


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17. CONSUMER RECORDS

A DMC must maintain up-to-date consumer records containing at least the following:

a copy of all documents required for consumer identification and profile;

the consumers contact details;

all information and documents prepared in compliance with this Code;

details of products and services provided to the consumer;

all correspondence with the consumer and details of any other informationprovided to the consumer in relation to the product or service;

all documents or applications completed or signed by the consumer;

copies of all original documents submitted by the consumer in support of anapplication for the provision of a service or product; and

all other relevant information concerning the consumer.

all correspondence to and from the consumers creditors

Details of individual transactions must be retained for 6 years after the date of thetransaction. All other records required under a) to h) above, must be retained for 6 yearsfrom the date the relationship ends. Consumer records are not required to be kept in asingle location but must be complete and readily accessible.


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18. FEES, COMMISSIONS AND OTHER REWARDS

A DMC may pay a fee, commission, other reward or remuneration only to a person thatis:

a) a regulated entity;

b) a certified person;

c) an individual for whom a DMC has taken full and unconditional responsibility;

d) an entity specifically exempt by law from requiring authorisation;

e) an authorised credit intermediary (within the meaning of the Consumer Credit Act

1995); or

f) a financial services provider operating in the State in accordance with freedom ofservices or establishment provisions of EU law

DMC Agents are included for under (c) see following section:

19. DMC AGENTS

It is the practice of some DMCs to accept applications for debt management plans andother products and services from third parties.

Where a DMC has agreed with or licensed third parties to recommend and arrange thesale of its products and services to potential customers then it assumed the third party isacting as an agent of the DMC. In which case, this code applies to the agent.

DMCs must maintain a register of agents and provide them with letters confirming theirpermission to recommend and arrange for debt management plans.

It is the practice of DMCs to require a payment from the consumer on signing anapplication for a debt management plan. On no account should an agent acceptpayment from a customer of a DMC payable to the agent. All payments must be madepayable to the DMC. Where cash payments are made then the agent must produce aDMC receipt for the monies.

DMC agents will be required to comply with minimum competency requirements.


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20. MINIMUM COMPETENCY REQUIREMENTS

It is the intention to consider a debt management plan as similar to a retail financialproduct in which case a DMC and their agents will be required to comply with theFinancial Regulators minimum competency requirements.

21. FIT AND PROPER

It is expected that any future DMC authorisation procedure will include for fitness andprobity tests. In the interim compliance with this code will require DMCs to comply withthe Fit and Proper Requirements for Directors and Senior Managers.


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22. ADVERTISING GENERAL REQUIREMENTS

A DMC must ensure that all its advertisements are fair and not misleading.

An advertisement must not influence a consumers attitude to the advertised product orservice of the DMC either by inaccuracy, ambiguity, exaggeration or omission.

The name of the DMC publishing an advertisement must be clearly shown in alladvertisements.

The nature or type of the advertised product or service must be clear and not disguisedin any way.

An advertisement must be designed and presented so that any reasonable consumerknows immediately that it is an advertisement.

The design and presentation of an advertisement must allow it to be clearly understood.Where small print or footnotes are used, they should be of sufficient size andprominence to be clearly legible. Where appropriate they should be linked to the relevantpart of the main copy.

Warnings and product specific information must be clear and must not be obscured ordisguised in any way by the content, design or format of the advertisement.

Any statement or promise contained in an advertisement must be true and notmisleading at the time it is made and any assumptions on which it is based must bereasonable and stated clearly.

Any recommendations or commendations quoted must be complete, fair, accurate andnot misleading at the time of issue, and relevant to the advertised product or service.

A recommendation or commendation may not be used without the consent of the authorand, if the author is an employee of the DMC or a connected party of the DMC or hasreceived any payment from the DMC or a connected party of the DMC for therecommendation or commendation, the advertisement must state that fact.

Comparisons or contrasts must be based either on facts verified by the DMC, or onreasonable assumptions stated within the advertisement and must be presented in a fairand balanced way; and not omit anything material to the comparison or contrast.Material differences between the products must be set out clearly.


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23. DMC ACTING AS AN AGENT FOR THE CONSUMERDEBTOR

Some creditors have a blanket policy of refusing to enter into negotiations with some

DMCs or even refusing to accept payments sent by DMCs on behalf of consumers.

Where a consumer appoints a representative to negotiate on their behalf, it is an unfairand improper business practice on the part of the creditor to operate a policy, withoutreason, of refusing to consider such requests.

Where a creditor wishes to refuse to negotiate with a particular representative, it mustmake its position known to the representative and also immediately inform anyconsumer on whose behalf the creditor is approached by that representative.

Where payments are tendered, not by the debtor personally, but by someone acting onhis/her behalf, it is a principle of law that creditors cannot refuse to accept those

payments. The practice of creditors returning payments, or not crediting payments toconsumers' accounts, purely because they are received through a DMC, therefore, is notacceptable. This is so even in circumstances where a creditor has indicated that it willnot negotiate with a DMC acting as a representative of a debtor.

24. REFERAL TO DMCsSome lenders, credit and mortgage brokers might want to refer consumers to DMCs aspotential clients. There is no objection to this provided it is done with the informed, prior

consent of the consumer. Referrals must not be made without this consent.


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25. COMPLIANCE WITH THIS CODE

A DMC must have adequate systems and controls in place to ensure compliance with

this Code.

Where the Financial Regulator requires a DMC to provide information in respect of theDMCs compliance with this Code, such DMC is thereby required to provide informationwhich is full, fair and accurate in all respects and not misleading and to do so in anyreasonable period of time or format that may be specified by the Financial Regulator.

Where the Financial Regulator requires information in respect of a DMCs compliancewith this Code, and the Financial Regulator is of the opinion that a meeting withpersonnel of the DMC is necessary in order to procure such information in a satisfactorymanner, the DMC must use its best endeavours to arrange for appropriate personnel toparticipate in such a meeting in order to provide the required information to the Financial

Regulator.

A DMC must, upon being required by the Financial Regulator to do so, provide to theFinancial Regulator records evidencing compliance with this Code for a period prior tosuch requirement as the Financial Regulator may specify (up to a maximum period of 6years).

Consumer Protection Code for Debt Managers

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Transcript of Consumer Protection Code for Debt Managers