1This chapter applies, unless otherwise stated in or in relation to a rule to every firm with respect to:

1. (1)

   debt counselling;

2. (2)

   debt adjusting; and

3. (3)

   to the extent of giving the advice referred to in article 89A(2) of the Regulated Activities Order, providing credit information services.

3 CONC 8.3.1R(14) does not apply to a firm with respect to providing credit information services.

A debt management firm must prominently include:

1. (1)

   in its first written or oral communication with the customer a statement that free debt counselling, debt adjusting and providing of credit information services is available to customers and that the customer can find out more by contacting MoneyHelper2; and

   1
2. (2)

   on its web-site the following link to the MoneyHelper2 web-site (https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/use-our-debt-advice-locator2).

   [Note: paragraph 1.7 of Debt Management Protocol]

   1

A firm's communications to lenders (or to lenders' representatives) on behalf of its customers must be transparent so as to ensure a firm'scustomer's interests are not adversely affected.

Where entry into a debt solution will lead to a period when payments to lenders (in part or in whole) are not made or are retained by the firm, the firm must, as soon as possible after the customer enters into the debt solution, notify the customer'slenders of the reason payments are not to be made to the lender and the period during which that will be the case.

A firm must establish and implement clear and effective policies and procedures to identify particularly vulnerable customers and to deal with such customers appropriately.

A firm must (except where the contract is a credit agreement to which the disclosure regulations apply) provide sufficient information, in1 a durable medium, when the customer first enquires about the firm's services, about the following matters to enable the customer to make a reasonable decision:

1. (1)

   the nature of the firm's service offered in the contract to the customer;

   [Note: paragraph 3.38b of DMG]

2. (2)

   the duration of the contract;

   [Note: paragraph 3.38c of DMG]

3. (3)

   the total cost of the firm's service or, where it is not possible to state the total cost, the formula the firm uses for calculating its fees or charges or an estimate of the anticipated likely total cost may be given;

   [Note: paragraph 3.40c of DMG]

4. (4)

   any fee or deposit, such as an arrangement fee, a periodic fee, a management fee, or an administrative fee;

   [Note: paragraph 3.38c of DMG]

5. (5)

   any fee or charge which can be imposed on the customer in relation to cancellation of the contract;

   [Note: paragraph 3.38c of DMG]

6. (6)

   any other costs likely to be incurred under the contract and the circumstances in which these would be payable;

   [Note: paragraph 3.38c of DMG]

7. (7)

   where the firm bases its fees or charges on some percentage or an hourly rate or some other formula, an explanation of how the fees or charges are calculated;

   [Note: paragraph 3.9c of DMG]

8. (8)

   the elements of the service that the fees cover;

   [Note: paragraph 3.38c of DMG]

9. (9)

   the circumstances in which a customer may terminate the contract and receive a refund in accordance with relevant law and any fees or charges the customer may be required to pay in that case;

   [Note: paragraph 3.40d of DMG]

10. (10)

    the consequences on the customer's credit rating, including how long the matter will show on the customer's credit file and that the customer may not be able to obtain credit or other financial services in the future;

    [Note: paragraph 3.38e of DMG]

11. (11)

    whether a right to cancel applies and, if so, the period and any conditions for exercising the right to cancel the contract and any amount the customer may be required to pay;

    [Note: paragraph 3.38h of DMG]

12. (12)

    how payments will be allocated to lenders and when payments will be made; and

    [Note: paragraph 3.38k of DMG]

13. (13)

    the period of time between payments being received from the customer and payments being made to lenders, including the date when the first payment will be made to lenders.

    [Note: paragraph 3.38l of DMG]

14. (14)

    4an explanation that compensation might be available from the compensation scheme if there is a shortfall in client money held by the firm for that customer.

A firm must ensure that:

1. (1)

   all advice given and action taken by the firm or its agent or its appointed representative:

   1. (a)

      has regard to the best interests of the customer;

   2. (b)

      is appropriate to the individual circumstances of the customer; and

   3. (c)

      is based on a sufficiently full assessment of the financial circumstances of the customer;

   [Note: paragraph 2.6a of DMG]

2. (2)

   customers receive sufficient information about the available options identified as suitable for the customers' needs; and

   [Note: paragraph 2.6b of DMG]

3. (3)

   it explains the reasons why the firm considers the available options suitable and other options unsuitable.

   [Note: paragraph 2.6b of DMG]

A firm must ensure that advice provided to a customer, whether before the firm has entered into contract with the customer or after, is provided in a durable medium and:

1. (1)

   makes clear which debts will be included in any debt solution and which debts will be excluded from any debt solution;

   [Note: paragraph 3.38j of DMG]

2. (2)

   makes clear the actual or potential advantages, disadvantages, costs and risks of each option available to the customer, with any conditions that apply for entry into each option and which debts may be covered by each option;

   [Note: paragraphs 3.23a and 3.38b of DMG]

3. (3)

   warns the customer:

   1. (a)

      of the actual or potential consequences of failing to continue to pay taxes, fines, child support payments and debts which could result in loss of access to essential goods or services or repossession of, or eviction from, the customer's home;

      [Note: paragraph 3.38m of DMG]

   2. (b)

      of the actual or potential consequences of not continuing to make repayments under credit agreements or consumer hire agreements;

      [Note: paragraph 3.26k of DMG]

   3. (c)

      of the actual or potential consequences of ignoring correspondence or other contact from lenders and those acting on behalf of lenders;

      [Note: paragraph 3.38n of DMG]

   4. (d)

      that action to recover debts may be commenced, which may involve further cost to the customer; and

      [Note: paragraph 3.38q of DMG]

   5. (e)

      that by entering into a debt management plan or another non-statutory repayment plan there is no guarantee that any current recovery or legal action will be suspended or withdrawn;

      [Note: paragraph 3.38r of DMG]

4. (4)

   where relevant to the debt solution, makes clear the risks, including the following risks:

   1. (a)

      if the arrangement or deed fails, the risk of bankruptcy;

   2. (b)

      homeowners may need to release equity from the value of their homes to pay off debts; and that a remortgage may attract higher interest rates or that if no remortgage is available, an individual voluntary arrangement may be extended for 12 months;

   3. (c)

      there are restrictions on the expenditure of a person who enters into an individual voluntary arrangement or protected trust deed;

   4. (d)

      the customer'slenders may not approve the individual voluntary arrangement or protected trust deed; and

   5. (e)

      only unsecured debts included within the individual voluntary arrangement or protected trust deed may be discharged at the end of the period and unsecured debts not included remain outstanding;

   [Note: paragraph 3.38s of DMG]

5. (5)

   takes proper account of the individual needs of, and any requests made by, a customer; and

   [Note: paragraph 3.23f of DMG]

6. (6)

   where relevant, explains the nature of an insolvency procedure and the role of the firm.

   [Note: paragraph 3.23o of DMG]

1. (1)

   2If a firm has not entered into a contract with a customer, and is satisfied on reasonable grounds that it is unlikely to do so, CONC 8.3.4R applies in relation to that customer as if the words “is provided in a durable medium and” were omitted.

2. (2)

   The firm must keep a record of the grounds in (1).

A firm must:

1. (1)

   provide the customer with a source of impartial information on the range of debt solutions available to the customer in the relevant country of the UK;

   [Note: paragraph 3.23b of DMG]

2. (2)

   before giving any advice or any recommendation on a particular course of action in relation to the customer'sdebts, carry out a reasonable and reliable assessment of:

   1. (a)

      the customer's financial position (including the customer's income, capital and expenditure);

   2. (b)

      the customer's personal circumstances (including the reasons for the financial difficulty, whether it is temporary or longer term and whether the customer has entered into a debt solution previously and, if it failed, the reason for its failure); and

   3. (c)

      any other relevant factors (including any known or reasonably foreseeable changes in the customer's circumstances such as a change in employment status);

      [Note: paragraph 3.23c of DMG]

3. (3)

   refer a customer to an appropriate not-for-profit debt advice body in circumstances where the customer:

   1. (a)

      has problems related to debt requiring immediate attention with which the firm is unable or unwilling to assist the customer; or

      [Note: paragraph 3.23gi of DMG]

   2. (b)

      does not have enough disposable income to pay the firm's fees;

      [Note: paragraph 3.23gii of DMG]

4. (4)

   refer a customer to, or provide contact details for, another debt advice provider in circumstances where the firm is unable to provide appropriate advice or provide an appropriate debt solution for the customer; and

   [Note: paragraph 3.23h of DMG]

5. (5)

   seek to ensure that a customer understands the options available and the implications and consequences for the customer of the firm's recommended course of action.

   [Note: paragraph 3.23i of DMG]

A firm must provide a customer with a written contract setting out its terms and conditions for the provision of its services.

A firm must include in its written contract (other than a credit agreement to which the Consumer Credit (Agreements) Regulations 2010 apply) the following matters:

1. (1)

   the nature of the service to be provided by the firm, including the specific debt solution to be offered to the customer;

   [Note: paragraph 3.40b of DMG]

2. (2)

   the duration of the contract;

   [Note: paragraph 3.40c of DMG]

3. (3)

   the total cost of the firm's service or, where it is not possible to state the total cost, the formula the firm uses for calculating its fees or charges or an estimate of the anticipated likely total cost may be given;

   [Note: paragraph 3.40c of DMG]

4. (4)

   the circumstances in which a customer may terminate the contract and receive a refund in accordance with relevant law and any fees or charges the customer may be required to pay in that case; and

   [Note: paragraph 3.40d of DMG]

5. (5)

   set out the duration and conditions for exercise of any right to cancel that may apply and any fees or charges the customer may be required to pay.

   [Note: paragraph 3.40e of DMG]

A firm must not include the following terms in a contract with a customer:

1. (1)

   a term requiring the customer to sign a declaration stating in any way that the customer understands the requirements of the contract;

   [Note: paragraph 3.41a of DMG]

2. (2)

   a term restricting or prohibiting the customer from corresponding with or responding to a lender or with any person acting on behalf of a lender;

   [Note: paragraph 3.41b of DMG]

3. (3)

   a term which states or implies the firm has no liability to the customer; or

   [Note: paragraph 3.41c of DMG]

4. (4)

   a term which states or implies that there are no circumstances in which a customer is entitled to a refund.

   [Note: paragraph 3.41d of DMG]

A firm must ensure that a financial statement sent to a lender on behalf of a customer:

1. (1)

   is accurate and realistic and must present a sufficiently clear and complete account of the customer's income and expenditure, debts and the availability of surplus income;

   [Note: paragraph 3.24 of DMG]

2. (2)

   state any fees or charges being made by the firm;

3. (3)

   is sent only after having obtained the customer's consent to send the statement and the customer's confirmation as to the accuracy of the statement;

   [Note: paragraph 3.26f and g of DMG]

4. (4)

   is provided to the customer'slenders as soon as practicable after the customer has confirmed its accuracy; and

   [Note: paragraph 3.26e of DMG]

5. (5)

   is also sent to the customer, together with any accompanying correspondence.

   [Note: paragraph 3.26h of DMG]

A firm must:

1. (1)

   take reasonable steps to verify the customer's identity, income and outgoings;

   [Note: paragraph 3.26a of DMG]

2. (2)

   seek explanations if a customer indicates expenditure which is particularly high or low; and

   [Note: paragraph 3.26b of DMG]

3. (3)

   where applicable, notify a customer that a particular lender will not deal with the firm (for whatever reason), as soon as possible after the firm becomes aware that the customer owes a debt to that lender.

   [Note: paragraph 3.26l of DMG]

1. (1)

   Where a firm gives advice to a customer not to make a contractual repayment or to cancel any means of making such a repayment before any debt solution is agreed or entered into, the firm must be able to demonstrate the advice is in the customer's best interests.

2. (2)

   Where a firm gives advice of the type in (1), the firm must advise the customer (C) that if C adopts the advice C should notify C's lenders without delay and explain that C is following the firm's advice to this effect.

   [Note: paragraph 3.27 of DMG]

If the effect of advice the firm gives (if adopted by the customer) is that contractual repayments are not made or are not made in full (for one or more repayments), the firm must warn the customer of the actual or potential consequences of taking that course of action.

A firm must only advise a customer to make repayments at a rate lower than the rate necessary to meet interest and charges accruing where it is in the customer's best interests.

Where a firm has advised a customer not to make contractual repayments (in full or in part) or to cancel the means of making such payments or not to make repayments necessary to meet interest and charges accruing, the firm must advise the customer if it becomes clear that that course of action is not producing effects in the customer's best interests to enable the customer to take action in the customer's best interests.

A firm must ensure that the obligations of the customer in relation to the amount, or the timing of payment, of its fees or charges:

1. (1)

   do not have the effect that the customer pays all, or substantially all, of those fees in priority to making repayments to lenders in accordance with the debt management plan; and

2. (2)

   do not undermine the customer's ability to make (through the firm acting on the customer's behalf) significant repayments to the customer'slenders throughout the duration of the debt management plan, starting with the first month of the plan; but

3. (3)

   paragraphs (1) and (2) do not prevent, to the extent the firm complies with all applicable rules, a firm operating a full and final settlement model, in which the firm holds money on behalf of the customer and does not distribute that money promptly, pending negotiating a settlement with the customer'slenders.

   [Note: paragraphs 5.3 and 5.4 of the Debt Management Protocol]

A firm must:

1. (1)

   in good time before entering into a contract with the customer, disclose the existence of any commission or incentive payments relevant to the service provided to the customer between the firm and any third party and at any time, if the customer requests, disclose the amount of any such commission or incentive payment;

   [Note: paragraph 3.34b and c of DMG]

2. (2)

   send a revised financial statement in the same format as that required under CONC 8.5.1 R to the customer'slenders where the firm's fees or charges alter during an arrangement and would affect the amount available for distribution to lenders;

   [Note: paragraph 3.34f (box) of DMG]

3. (3)

   at the earlier of, where the firm identifies or it is established that advice provided by the firm to the customer was incorrect or was not appropriate to the customer, refund or credit to the customer's account fees or charges imposed for that advice;

   [Note: paragraph 3.34m of DMG]

4. (4)

   make an appropriate refund of fees or charges paid where the whole or any part of the service as agreed with the customer has not been provided or not provided with a reasonable standard of skill and care.

   [Note: paragraph 3.34o of DMG]

A firm must not:

1. (1)

   without a reasonable justification, switch a customer from one debt solution to another while making a further charge for setting up or administering the new debt solution to the extent that some or all of that work has already been carried out by the firm;

   [Note: paragraphs 3.32 and 34k of DMG]

2. (2)

   switch a customer to a different debt solution, without obtaining the customer's consent after having fully explained to the customer the reason for the change;

   [Note: paragraph 3.34l of DMG]

3. (3)

   require or take any payment from a customer before the firm has entered into contract with the customer concerning a debt solution;

   [Note: paragraph 3.34d of DMG]

4. (4)

   request any payment from a customer's payment account,1 unless the customer has specifically authorised the firm to do so and has not cancelled that authorisation;

   [Note: paragraph 3.34d (box) of DMG]

5. (5)

   accept payment for fees or charges by credit card or another form of credit (excluding a payment where the firm does not know and cannot be expected to know that the customer's current account is in debit or would be taken into debit by the payment);

   [Note: paragraph 3.34e of DMG]

6. (6)

   impose cancellation charges that are unreasonable or disproportionate when compared to the actual costs necessarily incurred by the firm in reasonably providing its service;

   [Note: paragraph 3.34h of DMG]

7. (7)

   claim a fee or charge from a customer or take payment from a customer's account which is not provided for in the agreement with the customer, or where it is provided for but is, or is likely to be, unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (for contracts entered into before 1 October 2015) or the Consumer Rights Act 2015;3

   [Note: paragraph 3.34i of DMG]

8. (8)

   where the firm identifies that advice provided by the firm to the customer was incorrect or was not appropriate to the customer, charge an additional fee for further or revised advice; or

   [Note: paragraph 3.34m of DMG]

9. (9)

   request, suggest or instruct customers seeking to recover refunds of fees from the firm to make contact with the firm on a premium rate telephone number.

   [Note: paragraph 3.34n of DMG]

Firms should note the effect of the call charges rule in GEN 7.2

A firm in relation to a customer with whom it has entered into a debt management plan must:

1. (1)

   maintain contact with the customer;

   [Note: paragraph 3.44 of DMG]

2. (2)

   regularly monitor and review the financial position and circumstances of the customer;

   [Note: paragraph 3.44 of DMG]

3. (3)

   adapt the debt management plan to take into account relevant changes in the financial position and circumstances of the customer;

   [Note: paragraph 3.44 of DMG]

4. (4)

   inform the customer without delay of the outcome of negotiations with lenders, in particular, where the lender has:

   1. (a)

      refused to deal with the firm; or

   2. (b)

      returned payments to the firm; or

   3. (c)

      refused the debt repayment offer; or

   4. (d)

      refused to freeze interest or charges accruing;

      [Note: paragraph 3.45a of DMG]

5. (5)

   inform the customer of any material developments about the relationship between the customer and the customer'slenders;

   [Note: paragraph 3.45b of DMG]

6. (6)

   provide the customer with copies of correspondence or documentation relating to material developments relevant to the relationship between the customer and the customer'slenders;

   [Note: paragraph 3.45b of DMG]

7. (7)

   where the firm makes repayments on behalf of the customer:

   1. (a)

      monitor the customer'srepayments for evidence which suggests a change in the customer's financial circumstances;

   2. (b)

      review, and amend or terminate, where appropriate, the customer'sdebt management plan at the earlier of:

      1. (i)

         each anniversary of entering into the plan; or

      2. (ii)

         as soon as the firm becomes aware of a material change in the customer's circumstances; and

   3. (c)

      inform the customer of the outcome of any reassessment;

      [Note: paragraph 3.45c of DMG]

8. (8)

   provide a statement to the customer at the start of the debt management plan, and at least annually or at the customer's reasonable request, setting out:

   1. (a)

      a balance showing the amount owed by the customer, including any interest charges at the beginning of the statement period;

   2. (b)

      fees, charges and other costs applied over the period of the statement, including any upfront fee or deposit, such as an initial arrangement fee, an arrangement fee, any periodic or management or administrative fee, any cancellation fee and any other costs incurred under the contract;

   3. (c)

      a narrative explaining the type of fee applied, how the fee is calculated and to what it applies;

   4. (d)

      the duration or estimated duration of the contract;

   5. (e)

      the total cost of the firm's service over the duration or estimated duration of the contract; and

   6. (f)

      monthly or other periodic payments made to lenders;

   [Note: paragraphs 3.45cde of DMG]

9. (9)

   maintain adequate records relating to each debt management plan which the firm has administered for the customer until the contract between the customer and the firm is completed or terminated;

   [Note: paragraph 3.45i of DMG]

10. (10)

    check the accuracy of the details of the customer's accounts; and

    [Note: paragraph 3.45j of DMG]

11. (11)

    use reasonable endeavours not to send inaccurate information to lenders.

    [Note: paragraph 3.45j of DMG]

A firm must take reasonable steps before entering into an agreement to accept sales leads from a lead generator for debt counselling or debt adjusting or providing credit information services to ensure:

1. (1)

   that any of the lead generator's advice, any content of its website and advertising and any of its commercial practices comply with applicable legal requirements, including the Consumer Protection from Unfair Trading Regulations 2008;

2. (2)

   that the lead generator is registered with the Information Commissioner’s1 Office under data protection legislation1; and

3. (3)

   that the lead generator has processes in place to ensure it complies with that Act and with the Privacy and Electronic Communications (EC Directive) Regulations 2003.

A firm must take reasonable steps, where it has agreed to accept sales leads from a lead generator for debt counselling or debt adjusting or providing credit information services, to ensure that the lead generator:

1. (1)

   where it does not have a Part 4A permission for debt counselling and is not an appointed representative of a firm with such permission, does not carry on debt counselling in obtaining or passing on sales leads to the firm;

2. (2)

   where it carries on debt counselling, has and continues to have a Part 4A permission for debt counselling or is an appointed representative of a firm with such permission;

3. (3)

   where it does not have a Part 4A permission covering the relevant activity, does not claim to or imply that it provides debt counselling or debt adjusting or that it is providing credit information services;

   [Note: paragraph 3.12 of DMG]

4. (4)

   complies with applicable legal requirements, including the Consumer Protection from Unfair Trading Regulations 2008 in relation to any of its advice, any content of its website, any of its advertising and any of its commercial practices;

   [Note: paragraph 3.9a DMG]

5. (5)

   makes the true nature of its services clear to customers, through any means of communication or promotion it uses;

   [Note: paragraph 3.12 of DMG]

6. (6)

   where it seeks a customer's personal data to pass on to a firm for a fee, it makes clear to the customer that the customer's personal data will be passed on to the firm;

   [Note: paragraph 3.12c of DMG]

7. (7)

   makes clear to a customer any financial interest it has in passing on a sales lead to the firm;

   [Note: paragraph 3.12d of DMG]

8. (8)

   makes clear, if asked by a customer, the nature of its relationship with the firm;

   [Note: paragraph 3.12e of DMG]

9. (9)

   does not falsely claim or imply in any way that it is or represents a charitable or not-for-profit body or government or local government organisation;

   [Note: paragraph 3.12f of DMG]

10. (10)

    communicates with customers consistent with, and promotes, services the firm is able to provide;

    [Note: paragraph 3.12h of DMG]

11. (11)

    complies with the Privacy and Electronic Communications (EC Directive) Regulations 2003 and data protection legislation1;

    [Note: paragraph 3.11 of DMG]

12. (12)

    does not send, or cause to be sent, an electronic communication to a customer (C) unless C has previously notified the lead generator that C consents for the time being to such communications being sent or caused to be sent by the lead generator;

    [Note: paragraph 3.12j of DMG]

13. (13)

    does not make or cause to be made by means of an automated calling system (which is capable of automatically initiating a sequence of calls to more than one destination in accordance with instructions stored in that system, and transmitting sounds which are not live speech for reception by persons at some or all of the destinations so called) a call to a customer (C), unless C has previously notified the caller that for the time being C consents to such communications being made by or caused to be made by the caller on the line in question; and

    [Note: paragraph 3.12j of DMG]

14. (14)

    enables customers to cancel using a clear and easy method their consent to be called or sent any communication.

    [Note: paragraph 3.12m of DMG]

[Note: paragraphs 3.7 and 3.8 of DMG]

This section applies to:

1. (1)

   a firm with respect to providing credit information services in relation to information relevant to the financial standing of an individual;

2. (2)

   a firm with respect to the activities set out in article 36H(3)(e) to (h) of the Regulated Activities Order (Operating an electronic system in relation to lending) in relation to a borrower under a P2P agreement.

A firm must not:

1. (1)

   claim to be able to remove negative but accurate information from a customer's credit file, including entries concerning adverse credit information and court judgments; or

   [Note: paragraph 3.47ai of DMG]

2. (2)

   mislead a customer about the length of time that negative information is held on the customer's credit file or any official register; or

   [Note: paragraph 3.47aii of DMG]

3. (3)

   claim that a new credit file can be created, such as by the customer changing address.

   [Note: paragraph 3.47aiii of DMG]