Advice News

Year one of Save Xmas has now been independently evaluated by IPSOS-MORI.  The full evaluation report can be found at www.oft.gov.uk.

The OFT would like to thank CAB advisers for their support during the first year of the campaign. We look forward to working with you in year two. Should you have any questions, please do not hesitate to contact the campaign manager, Dilys Alam at dilys.alam@oft.gsi.gov.uk

The good news is that HM Treasury has allocated an additional £2million for 2008 – 2011 to take the campaign further. We will continue to use the same model and this approach has been endorsed by the Financial Inclusion Taskforce. 

Fourteen regional events across England and Wales will be held in October to induct and train partners who would like to deliver the presentations. If you wish to attend one of the events please contact Sally Causer at sallycauser@tiscali.co.uk.  The Office of Fair Trading will have a stand at the Citizen Advice conference in York on the 23^rd and 24^th September; please feel free to drop by and ask any questions
 
 

The OFT is calling on businesses to take the necessary steps to be ready for changes to the consumer credit licensing regime that come into force in the autumn.

From 1 October 2008, businesses offering debt administration or credit information services (which may include credit repair) will need to be appropriately licensed by the OFT.

The new debt administration licence category is required by those businesses wishing to administer debts under consumer credit or consumer hire agreements on behalf of the creditor.

There are also three new categories available to those wishing to provide credit information services and businesses need to ensure that they select the correct category. The new categories apply to businesses wishing to:

• obtain information from credit reference agencies on behalf of other people, offer advice about the information obtained and to be able to secure corrections or amendments to such information, on a commercial basis
• obtain information from credit reference agencies on behalf of other people and offer advice about the information obtained on a commercial basis, but without being able to secure corrections or amendments to such information, and
• obtain information from credit reference agencies on behalf of other people, offer advice about the information obtained and to be able to secure corrections or amendments to such information, but providing these services on a non-commercial basis only.

The OFT considers aspects of both debt administration and credit information services, in particular credit repair services offered on a 'commercial' basis, to constitute high risk credit activities. Consequently, businesses applying for these licence categories are likely to be subject to additional scrutiny at the application stage and may be subject to on-site inspections to assess their competence to engage in these activities.

Any business carrying out these activities from 1 October onwards, without an appropriate licence, is likely to be committing a criminal offence and could face prosecution. Businesses are encouraged to apply early for any new licence categories they may need in order to ensure that their applications can be processed before the 1 October deadline.

David Philpott, OFT Deputy Director of Consumer Credit, said: 

'The requirement for businesses that wish to provide these services to be licensed by the OFT is an important part of the Government's reforms to further strengthen the regulation of credit markets. Businesses wishing to provide these services from 1 October onwards will need to satisfy the OFT that they are fit to do so.'

NOTES

1. The Consumer Credit Act 1974 (the Act) requires most businesses that offer goods or services on credit or for hire, or that lend money to consumers, to be licensed by the Office of Fair Trading (OFT). Some small businesses count as consumers for these purposes.

2. The Consumer Credit Act 2006 strengthened the Act and many of the reforms aimed at updating key licensing provisions came in to force on 6 April 2008. The remaining reforms are due to come into force on 1 October 2008 and will expand the scope of categories of ancillary credit business for which consumer credit licences are required.

3. The new categories of licence are:

• Debt administration (Category G). (This does not include collecting debts, which would require the separate licence category F to cover debt collecting)
• Credit information services excluding credit repair (Category H)
• Credit information services including credit repair (Category H1)
• Non-commercial credit information services including non-commercial credit repair (Category H3)

4. Businesses will need 'commercial' rather than non-commercial categories if they or their associates charge a fee or otherwise receive remuneration in connection with the provision of such services and/or in the course of carrying on any consumer credit or ancillary credit activities. The only types of organisation that are likely to require non-commercial categories are non-fee charging charities or similarly altruistic organisations.

5. There are other licensing changes taking place which relate to those engaging in debt collection and debt purchasing. If a business collects debts due to others, arising from consumer credit or hire agreements (whether regulated or exempt), it is likely to require licence category F to cover debt collection. From 1 October 2008, a business does not need Category F if:

• it is collecting debts that have been assigned to it, so that in effect the business becomes the creditor, and
• it purchases debts – and again in effect becomes the creditor.

However, as creditors, such businesses will be engaged in 'consumer credit business' for the purposes of the Consumer Credit Act 1974, and as such are likely to require Category A licences. If a debt purchasing business also engages in debt collection on behalf of other creditors, that business will require a licence covering both Category A and Category F.

6. For further information on licence categories see the OFT guidance Do you need a credit licence? (pdf 205 kb). The information contained both in this guidance document and in this press notice should not be taken to be a complete statement of the law. The range of credit business is very wide and the law can often be complex. If you are unsure about how your business might be affected, you should refer to the Consumer Credit Act 1974 and, if necessary, consider seeking professional legal advice.

7. The OFT issued guidance for providers of debt management services in 2001. The Debt Management Guidance (DMG) sets out minimum standards of behaviour expected of licence holders who seek to re-schedule customers' repayment of debt and charge for doing so. The spirit as much as the letter of the DMG would apply to businesses engaged in the provision of commercial credit information services, including, credit repair. The guidance is currently being updated to take into account the licensing reforms.

8. For information on the OFTs risk-based approach to consumer credit licensing see the OFT publication Consumer credit licensing: General guidance for licensees and applicants on fitness and requirements (pdf 262 kb).

 

The Office of Fair Trading (OFT) has launched an online version of its public register, making it quicker and easier for businesses and consumers to search information held on the Consumer Credit Register. 

View the Consumer Credit Register here.

The LSC and the National Offender Management Service (NOMS) invite tenders from organisations that have the experience, skills, and ability to provide a debt advice service to clients in prisons in Wales that is:

• accessible
• independent
• quality assured
• integrated
• face-to-face.

For full details on the invitation to tender and relating documents please click here to access the link

By Jeff Salway published the following on 8 July 2008:

A scheme aimed at helping households with financial difficulties was unveiled yesterday by the UK government.   The Financial Capability Action Plan, launched by the Treasury in conjunction with the Financial Services Authority (FSA), is designed to give families hit by rising household costs better access to financial support and information.

It features an overhaul of the FSA's existing Moneymadeclear website and helpline, which will be expanded and given a significant promotional push in the autumn. The service will be presented as a one-stop shop offering information on financial issues and directing consumers to specialist advice on matters such as debt, mortgages and utility bills.

Under the plan, new funding will be made available to promote personal finance education in schools, with emphasis on the financial decisions children face from when they first encounter money until they leave school.

In addition, a pilot of the "Pathfinder" money guidance service will be rolled out, offering free generic financial advice by phone, over the internet and face-to-face.

The initiative was welcomed by Otto Thoresen, Aegon chief executive and author of the Thoresen Review of Generic Financial Advice, which proposed the Pathfinder initiative.

He said: "The action plan represents an important step forward in helping people in the UK have a better understanding of money issues and therefore encouraging them to make the right decisions and take responsibility for their financial futures."

The Financial Services Authority (FSA), the UK's main financial regulator, has launched a new information website aimed at young adults.

Described as a "one-stop shop" for information about money, it aims to give guidance about obtaining, saving and spending money.

The FSA said its research had shown that two-thirds of young people were not planning ahead financially. Other research has shown that 80% of people are in debt by the age of 21.

"The What About Money website has been designed with the help of young adults, specifically for young adults, and focuses on the money issues that they themselves have told us they are most interested in," said Chris Pond, the FSA's director for financial capability.

"What About Money will ultimately help younger people to become more financially capable, both now and when they plan for what they want in the future."

To access the link to the site click here.

The Save Xmas toolkit - everything you need to lead groups or individuals through the issues involved in choosing how to save for Christmas.  The skills the toolkit develops are transferable and can be applied to saving for other expensive events.  Click here to download.
You will also find this toolkit permanently sited under the Toolkit/Factsheet section of our website.  

Do your clients get into debt,  there is another source of funding available to your clients and one that they don’t have to repay.  Advisors can readily access this funding and it is available from occupational and benevolent charities, there are literally millions of pounds waiting to be awarded to those who need it, your clients.
 
The charities can also often provide other support as well as one off grants and ongoing financial support, such as benefit, housing, employment, debt and money advice. 
 
A quick way to access this support network is to ask the client their past and current employment history and go to www.joblinks.org.uk this provides all details and often direct access to the concerned charities web site.  There are other sources to access information, but this one does have extensive information on occupational and benevolent charities.
 
Perennial is an occupational charity and provides extensive support and funding.  It also provides free workshops to agencies, with extensive information and advice on how to access all the funds available to get the best result for the client. 01757 229474
www.perennial.org.uk click here to access Perennial guide for agencies.  
 
The above information has been provided by Helen Waddington, Senior Caseworker North of England and North Wales, Perennial.  Tel No: 01757 229474.  
  

  
  
  
  
  
  
  
  
  
 

This is a straightforward introduction to the types of financial products and services that are widely available – bank accounts, savings, loans, pensions, insurance and so on. The information is factual, non-biased and non-brand specific. The Handbook clearly explains: why financial planning is important, and how to go about it when you might need a particular product or service, and the types of provider what costs might be involved, the small print, and how to protect yourself from fraud or mis-selling your rights and responsibilities as a consumer where to get further advice and help, and how to complain if necessary.

The Personal Finance Handbook is for you if you are:

• advising people on low to moderate incomes who may be having difficulty accessing everyday financial products that could help them – for example, a bank account to receive direct payments
• participating in financial literacy projects, or providing education or training in financial literacy.

This guide is geared to the needs of general advisers and trainers. It is not for registered financial advisers; neither is it primarily aimed at the consumer (although many individuals will find it useful).

For further information and to view the handbook visit the Child Poverty Action Group (CPAG) site.

 

 

 
www.TheSite.org  – A Case Study of Financial Support for Young People
 
Pages of non-judgemental information on all aspects of money management, expert advice from an archive of young people’s money questions, a confidential Q&A service, peer support through moderated discussion boards and signposting to a range of organizations that can help with money matters inspires thousands young people (16-25) to seek support from on-line charity YouthNet.
 
Mark, aged 22, is one example of a young adult whose debt inspired him to contact the charity for information, options and signposting. He said: “I’ve got myself into quite a bit of debt and I really want to sort it out.  I would prefer to get one loan so I’m not dealing with all the creditors.  I have looked at adverts in papers but don’t want to get tied up with loan sharks.  I really need some help. My debts are up to £10000.  I don’t know what to do”.
 
In response, TheSite.org – managed by the pioneering charity YouthNet– ensured that Mark could access tools designed to inform, engage and inspire young people to improve their financial capability.
 
Over 50,000 people like Mark visit TheSite.org every month for confidential help and support on Home, Law & Money issues and the charity aims to reach more young people in the future.
 
Through personal testimony, on-line calculators, pod casts, quizzes and viral games, YouthNet  will create a greater depth of content and enable more young people to engage and learn about their cash in different ways. And the charity’s reach will extend to the hardest to reach groups - young people with a range of disabilities and those who are socio-economically disadvantaged - by making financial advice available through every young person’s ubiquitous friend, their mobile phone.
 
Our plans to make financial advice available through mobile phones will ensure that disadvantaged young people, who might not have access to the internet at home, can access vital support whenever and wherever they are.  TheSite.org is the first ever advice service to be provided on mobile… and a first for the voluntary sector… which will ensure that the debt and money worries that cause all sorts of anxieties will help YouthNet to continue to support young people like David (aged 19).
 
David says: “When I finally got help I felt like a whole new person. They (discussion board members on TheSite.org) didn’t judge or say how stupid I was to have got myself into it all. For the first time in months it wasn’t the first thing I thought about when I woke up in the morning. I could actually think about having a life again.”
 
For more information please contact:
 
Lucja Wisniewska
Communications Manager
Youthnet UK
www.youthnet.org
020 7288 7309