On Wednesday 12 October 2011 Consumer Affairs Minister, Ed Davey joined parliamentary members of the APPG on Debt and Personal Finance to discuss debt remedies and insolvency. At the meeting, chaired by Yvonne Fovargue MP, the members discussed the Government’s response to the Consumer Credit and Personal Insolvency Review conducted by the Department of Business Innovation and Skills and the Treasury, which was published in July.
The Chair pointed out that it takes the OFT two years to close down a credit provider or debt management company, even if they know they are causing widespread problems for consumers and there was a need for a tough regulator with the right tools and powers to stop rogue companies in their tracks.
One of the key outcomes of the review was the Government’s announcement that the Money Advice Service would conduct a review of debt advice funding. The Minister said his objectives for this review were to ensure that brand awareness of free debt advice providers should be very strong and the free debt advice sector should have enough capacity to provide advice to those who need it, when they need it. The Minister went on to say that he recognised and shared many of the concerns which had been raised about fee charging debt management companies providing poor quality advice and charging excessive fees. He pointed out that the Government would not move quickly to regulate any industry but he supported proposals to force fee charging companies to include information about how to access free advice in all of their advertising materials.
Frances Coulson, the President of R3, echoed the Ministers concerns about fee charging debt management companies saying they had been under regulated for too long. Teresa Perchard, Director of Policy and Advocacy at Citizens Advice welcomed the Government’s commitments to ensuring that there is sustainable funding for debt advice but said the Government’s response to the review was not critical enough of the way in which the system for regulating consumer credit and consumer debt solutions worked effectively.