2014 has seen a new day in debt management with welcome changes to regulations in the industry. With the enlightening insights of the Financial Ombudsman Service’s latest annual review, a positive trending decrease in complaints and a turning of the tide, with The Financial Ombudsman Service (FOS) publishing its annual review for financial year 2013/14.
The FOS was set up under the Financial Services and Markets Act 2000 to resolve disputes between consumers and financial businesses. Their annual report, 2013/14, revealed total new cases were up 1% to 512,167. With around 1 million households in a debt management plan or an Individual Voluntary Arrangement (IVA), the number of complaints relating to debt counselling in the year fell 25% to 95 or 0.02% of total complaints.
In the second half of 2013, customers made 2.5 million complaints against financial companies. At Harrington Brooks, the level of redress was 0.0023% of turnover. This compares favourably to most companies that typically have rates of 7-8%.
78% of new cases concerned the sale of payment protection insurance, with the number of PPI complaints rising 6% to 399,939.
Change in the interest of customers
The FOS’s report follows new governance in the debt management industry, with the Financial Conduct Authority (FCA) taking over from the Office of Fair Trading, instating service-changing regulations for around 50,000 consumer credit firms, including Harrington Brooks. With the interests of the customer as the focus of the FCA’s new regulations, the new rules have begun to result in changes for how payday lenders and debt management companies treat their customers. The new regulations affect anyone who has taken out a loan, used a credit card, had difficulties repaying debts or looked for advice on debt problems, promoting consumer interests beyond the basic requirements of the law and mirror Harrington Brooks’ own ethos which is about “putting the customer first” and “at the heart of everything we do.”
It is with such changes, including the FCA’s fee changes, that the debt management industry is striving forwards with customer’s interests increasing and a correlating decrease in complaints with the promotion of transparency, advice, support, and the information customers need to make the most suitable decisions with their finances. This latter point is to be addressed with the Government’s announcement of Financial Education forming a part of the compulsory national curriculum for 11-16 year olds.
With such initiatives in place, the industry is surely seeing a turning of the tide. As the FOS say:
“Everyone can learn something from complaints – so that what’s gone wrong in the past need not happen again. This is why we have a crucial role in sharing what we see – to help prevent future problems and build confidence.”
Matthew Cheetham, CEO of Harrington Brooks, one of the largest and leading commercial financial management companies commented:
“While any complaint is regretted, the number of complaints relating to debt counselling at just 95, when there are 1 million consumers in a DMP or IVA is a very low % and I welcome the 25% reduction year on year. Levels of consumer satisfaction with personal insolvency solutions are generally very high across all companies on independent consumer web sites like Trust Pilot and Review Centre.
“There is still more to be done to help vulnerable, overly indebted consumers and we welcome the Government’s policy of improving financial education, particularly in schools.”
As for the proverbial light Harrington Brooks customers speak of at the end of the tunnel, the path to financial stability itself is looking that much brighter.
Harrington Brooks are proud members of DEMSA. Should you have a query regarding financial management or mis-sold PPI, do not hesitate to contact Harrington Brooks’ Customer Services Team on 0844 871 2595 today.