TCF - Get it right first time to avoid future problems

He said “The debt advice business is still relatively new to the intermediary market. From the feedback we are getting from advisers, many have had their fingers burnt because they were not sure how to vet the competing claims of the growing number of debt advice companies and choose the right one.”

TCF Debt Solutions recommends that brokers check the following:

• Fee structure. No client should have to pay inflated fees. On DMPs (Debt Management Plans) a charge equal to more than 1month’s agreed repayments is unacceptable. Some companies are charging in excess of four months payments. For IVAs, there should be no charge of any sort to the client prior to the creditors’ meeting.

• Widest range of options. Your client should receive advice on both debt management plans (DMP) and IVAs and, if appropriate, bankruptcy as well. For businesses, there should be commercial advice on CVAs ( Company Voluntary Arrangements) and business restructuring. The important thing is that each case is different and few debt companies offer any choice which could lead to retrospective problems with client and regulator.

• Cross selling. Are you offered a no cross selling agreement? Some debt companies will either sell ancillary insurance products to your client and/or offer their own remortgage or loan facilities at the end of the IVA or DMP.

• Understand intermediaries. Are they dedicated to the intermediary market and offer marketing help in the form of free websites and written marketing material? Many companies are competing directly for business from your client base.

• Who is the adviser? Are you still responsible for the advice, even though you think you have only been an introducer? Make sure you have checked what the status is. Many firms say they offer a referral service when in fact the introducer is still liable for the advice. This can lead to future problems if the advice is wrong.

Andy Moody added “We will be expanding on the principles above on our website soon, so that brokers never have to stumble into the wrong relationships which could damage their clients and also their standing with the regulatory authority. I would urge all intermediaries to check thoroughly who they are dealing with. In this way, there will be fewer horror stories about how advisers and their clients have been abused.”