Code of Conduct
The Debt Standard is an independently awarded quality mark established in 2008.
The scheme is available to providers of debt solutions including Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) and Trust Deeds (TDs) in the UK. These organisations advise over-indebted consumers and where appropriate recommend a debt solution that will enable the individual to repay his creditors in the best and most sustainable manner. The Debt Standard is available to all providers of debt solutions and therefore the consumer may be directly charged by the provider for the services received.
The purpose of The Debt Standard is to:
- Provide the over-indebted UK consumer with a recognisable sign of ethical trading and appropriate advice.
- Demonstrate to creditors that the firm participating in the scheme operates to the highest of standards and fairly balance the needs of consumer and creditor.
The scheme is designed and managed by an independent organisation with independent direction from major UK creditors to ensure that it meets their needs for “Treating Customer’s Fairly”. The Debt Standard will provide a robust and secure mechanism for ensuring that the over-indebted find the debt solution providers best able to help them and that such providers have arrangements in place which enable them to refer consumers to appropriate providers of advice on issues arising out of their indebtedness.
Availability
Scheme members will provide a copy of this Code of Practice to consumers free of charge upon request. A copy can also be downloaded here.
Membership
Membership will be available to providers that undergo a rigorous and regular assessment of their business and agree this Code of Practice. Scheme members will operate to the highest standards and their commitment will be constantly monitored and measured.
Providers will adhere to all regulation and legislation relevant to their business in the discharge of their services. These will include but will not be exclusive to the Insolvency Act 1986, Bankruptcy (Scotland) Act 1985, Bankruptcy and Diligence etc (Scotland) Act 2007, Debtors (Scotland) Act 1987, Debt Arrangement and Attachment (Scotland) Act 2002, Enterprise Act 2002, Data Protection Act 1998, Unfair Contract Terms Act 1977, Unfair Terms in Consumer Contracts Regulations 1999, Supply of Goods and Services Act 1982, Consumer Protection Act 1987, Financial Services (Distance Marketing) Regulations 2004.
The provider will be expected to comply with the requirements for license placed upon them by the Office of Fair Trading. This also includes the “Debt Management Guidance” published by the OFT in 2001 and any extension, revision or replacement of this.
The provider will keep information confidential and will maintain full compliance with the Data Protection Act 1998. Consumer and creditor authorities to release information will be sought as required.
In all cases, failure to comply with the above and other required legislation, regulation and guidelines will constitute a breach of The Debt Standard. Disciplinary action for breach may include suspension or termination of membership to the scheme depending upon the seriousness of the failure.
Fairness to consumers and creditors
The Code recognises that consumers are better served when their needs are balanced fairly with those of their creditors. This ensures that all the stakeholders remain confident in the service being offered by the provider. Fairness to all stakeholders will always remain a central requirement of adherence to the Code.
Extent and scope of ethical practice
The provider shall fairly balance the needs of consumer and creditor and show impartiality and objectivity in the advice given. The provider will clearly demonstrate appropriate advice.
The provider will use all best endeavours to ensure that third parties that refer new business to them adhere to the same standards as the provider. The provider will take reasonable measures to ensure that where such agreements exist, they are monitored and tested regularly. A provider’s suitability for The Debt Standard will also be assessed against their controls of external business relationships for the referral of consumers.
Provider support of the Code
The Debt Standard provides a mechanism to constantly monitor the service being provided to the consumer.
The provider will be required to invest, train and resource as needed in order to meet his duties to the consumer and creditor. This will ensure that the provider remains responsive to the needs of the stakeholders and delivers the best possible service in a quickly developing industry.
Training
The provider will ensure that staff are trained to deliver appropriate and complete advice to consumers. The provider will provide training in all areas of operation, as required, to ensure that the consumer and creditors receive a high standard of service throughout any offered product lifecycle.
The Debt Standard does not prescribe or set training plans, but is a test of staff capability and expects the highest standards of advice, service and support to be offered by the provider no matter the size or organisational structure of the business.
Advertising and PR activities
It is expected that debt solutions providers may, from time to time, advertise their services to the consumer. Where this takes place the provider is expected to maintain a high level of ethical standards and that any activity is accurate and truthful.
The provider must always adhere to the relevant advertising legislation, regulation, code or protocol.
Breaches of standard will include…
- Knowingly misrepresenting or exaggerating the service being offered or the level of success achieved
- Other inaccurate statements and / or advertisements in contravention of the OFT, Advertising Standards Authority, Radio Authority Code of Advertising Standards and Practice, relevant industry body guidelines and / or protocols
- Misleading the consumer either implicitly or explicitly
Indemnity
The provider will carry the necessary levels of indemnity insurance to reflect the size of the organisation, consumer exposure and services offered.
Advice
The provider will always offer appropriate, impartial and objective advice to the consumer regardless of the range of services offered by that organisation and the level of fee available from internal and external solutions.
Advice will be clearly given to the consumer and reasons for the solution(s) offered shall be documented by the provider.
Verification of information
The provider will show a true and honest representation of a consumer’s financial circumstances. Evidence shall be taken and verified as far as practicably possible given the solution undertaken.
Scope of Service
The provider will guide the consumer toward an appropriate debt solution either directly or via arrangements with alternative service providers.
The provider will use all reasonable endeavours to ensure that where any external partnerships of this nature exist, the partner will also uphold a strong level of service and appropriate advice.
The provider will maintain a responsibility to assist and support the consumer for the lifetime of the service being offered by the provider.
Fees and Charges
Participants of the Scheme will comply with the requirements and guidelines issued by the Office of Fair Trading and the Advertising Standards Authority.
Participants of the scheme will provide free initial advice to the consumer, but may charge for work carried out on the consumer’s behalf where that work is required to enable the Participant to put in place an appropriate debt solution including, without limitation, verification work, nominee’s fees and completion of documents required to put the debt solution in place.
The participant shall:
- Provide advice on debt solutions most appropriate to the consumer’s individual circumstances and with full impartiality
- Provide this advice and recommend the most appropriate solution whether it is provided by the participant or not
- Fully disclose all applicable fees and charges to the consumer in relation to the advice and proposed solution. Disclosure will also include the timing and source of such fees
Participants will ensure that information about fee values and structures for such solutions are made readily available to the consumer.
Correspondence, Communications and Complaints
Correspondence and communications from the consumer and creditor will be dealt with in a timely manner.
The scheme participant will ensure that a complete and proper complaints process is in place. Acknowledgements, updates, final responses and any other return communication shall be dealt with promptly and fairly.
The consumer will be made fully aware that a complaints procedure is in place and how the process should be followed.
The provider will assist with any investigation the regulator, legislative body, creditor or agent requires in order to fully answer the complaint.
The provider will not bring The Debt Standard scheme into disrepute and where this occurs it will be dealt with in accordance with the scheme’s disciplinary procedures.
Case reviews
For solutions that require on-going monitoring on behalf of creditors, for example debt management plans and voluntary arrangements, the provider will regularly review the consumer’s financial circumstances.
Consumer notification
The provider must always provide clear and unambiguous information about the nature of their services, cost and implications of their use.
In particular the provider must advise the consumer:
- The full fee structures applicable to the service and any additional costs that may be charged
- Where a proportion of the consumer’s contribution is claimed by the provider for the service. This should include the impact of the reduced or non-payment to the creditor
- Any contractual terms in place and the actions faced by the consumer following breach of contract
- Cancellation rights of the consumer
- The possible and / or likely outcomes by creditors upon submission of the arrangement including priority and non-priority debts
- The impact upon the consumer’s credit rating and the likely affect on future suitability for credit or financial services
- Why a particular service has been recommended and where a third party is involved, the link and steps involved in progressing the solution
In addition and where the service is a formal solution (for example an IVA or TD) the provider will be fully bound under the notification requirements of the relevant legislation and protocol.
Vulnerable consumers
The provider will offer its advice and services (where appropriate) to all consumer circumstances. To this end the provider will ensure that it has the infrastructure and training in place to provide support for vulnerable consumers.
Consumer contracts
Where used, consumer contracts must be fair and written in a clear manner.
The contract must clearly set out the terms of the service being offered including term, cost (or best estimate of cost), debts included and excluded, assumptions, withdrawal and termination rights of either party and distribution of funds to required guidelines.
The contract must not seek to unfairly disadvantage the consumer or limit the obligations and redress of the provider. Consumers within an informal solution, for example a DMP, must not be prohibited from contacting or dealing with their creditors or agents.
Agreement terms shall adhere to all relevant legislation and best practice as listed earlier in this Code.
Financial management
The provider will maintain a full and clear record of each consumer case held, in accordance with Data Protection Act 1998, including the financial particulars of that case.
All client funds held by the provider shall be ring-fenced and held separately to other business accounts.
Any interest earned by the provider from holding consumer funds must be paid to the benefit of the consumer. Upon withdrawal from a service the provider must reimburse funds as per the contract and arrangement agreed with the consumer.
All relevant legislation, guidelines and protocols must be adhered to by the provider in exercising his financial management responsibilities.
Creditor engagement
The provider understands that the creditor is a key stakeholder in any debt solution and will fairly balance the needs of consumer and creditor when offering advice or managing a debt solution.
The provider will provide clear and unambiguous information to the creditor on debt solution cases (where the creditor has an interest in the debt solution) in accordance with the regulatory requirements where applicable to the particular debt solution and (so far as IVA’s are concerned) as agreed at the recently formed IVA Forum.
The provider will strive to minimise delinquency and plan breakage.