Anyone can call themselves a debt adviser — we need professionalisation
Following my blog in August about Freeze Debt, I had a long conversation with the owner of the company, Harjit Moore, which left me with a lot to think about. Now I’ve had time to reflect on it — here are my conclusions, firstly about Freeze Debt, and then about debt advice in general.
Freeze Debt app
The conversation with Harjit Moore, CEO of Freeze Debt, started on an adversarial footing. Why had I written such a ‘biased’ blog in the first place? It seemed to Harjit that I had preconceived ideas, which he is apparently well used to from those in the free debt advice ‘sector’. Harjit says that Freeze Debt is a tech company first and then a debt advice company, which is bringing debt advice to the masses in a simple way. ‘We’ — the not for profit debt advisers — don’t like it because it’s new and fresh and we are mostly old and ‘jaded’. There may be some truth in the latter bit of that statement where I am concerned — I’m definitely old and a bit jaded, but I don’t think the overall argument is a strong one.
What is debt advice? What should it involve? I described sitting down with a client and talking face-to-face (it doesn’t have to be this way, but this is how I usually start) and listening to them; I listen to what they want, what they might need help with, point out where the law helps or hinders their aims, and identify possible strategies and solutions, if they exist. If they need it, I’ll help them through the process.
Harjit asked me why it had to be like that? Apparently, people don’t want to have to go through an hour of conversation — they want instant information and results quickly. He compared it to applying for a loan — just submit your bank details and your bank statements and wait for the money. As I pointed out, applying for a loan is not comparable to giving complex, legal advice that we have to make sure is appropriate to the client and correct. That can’t be one-way traffic because we need the client to be actively engaged — it’s their life after all, and they certainly shouldn’t be conceding control of it to someone else. Debt advice is about sharing knowledge and empowering the individual. Our professional body (the IMA) requires us to be rigorous and rightly so. Would you take advice about divorce and/or financial settlements from an app? Would you submit your bank statements and sit back and wait for the chips to fall as they may? Would you buy a house using an app with no interaction from surveyors or solicitors to make sure everything is legal and above board? Why is debt advice up for grabs for any Tom, Dick or Harjit?
What I thought were fundamental flaws in the app — getting vital information wrong and presenting unaffordable options — Harjit thought were merely typos and differences of opinion. For example, when I challenged the description of a Debt Relief Order as ‘an affordable payment proposal’ and stated this wasn’t correct, Harjit felt that this was a matter of opinion as to what Debt Relief Orders are, rather than a matter of fact. He suggested that I could write a better description for the app. I referred him to the government website — it’s all there. And here.
In response to my question about Freeze Debt not being FCA registered, Harjit countered that it was (?) and alluded to changes that will be taking place in the coming weeks/months when all will become clear with new owenrship. Someone should tell the FCA to update the records as it still clearly shows Freeze Debt as de-registered.
However, Harjit said Freeze Debt doesn’t need to be FCA registered anymore, as they aligned with an Insolvency Practitioner in 2021 so can provide advice legally that way. This is part of the problem faced by anyone looking for impartial debt advice — who can you trust? FCA registration has been reduced to a loophole that every lead generator can easily avoid. The Insolvency Practitioners’ regulators mark their own homework so the FCA closing down fees for referrals will be no more than a mild inconvenience for some. Deckchair rearranging has been going on for the past few months.
In regard to the app suggesting unaffordable solutions to my mystery shopper, Ima Testin, Harjit said that the app merely offers possible solutions, (not necessarily plausible solutions), and more information would normally be gathered from the user before any recommendations were made. As I didn’t provide more information, I didn’t get to experience the full advice service the app provides.
But what about the Freeze Debt adviser telling Ima that a Debt Relief Order is a ‘last resort’ option? That’s a training issue, according to Harjit. Even if they are very experienced and have been doing it for years. Ring Citizens Advice 10 times, Harjit challenged me, and you’re bound to get some wrong advice on occasion, but then he added — ‘that’s the problem with the free sector — you set the bar too high.’
That’s not a problem, in my opinion, it’s a really good thing for people in debt. In fact, it should be higher still — more on this below.
He invited me to revisit the app in due course, to see the improvements/corrections that have been made, which I confess I haven’t had chance to do. However, the app did send Ima a text message a few days ago:
Personally, I’m far from convinced that Freeze Debt is a progressive new way to help people with their debt problems. I’m not sure Harjit believes it either — he revealed that 93% of people who download the app delete it afterwards without accessing any of the solutions. He said that around 6% will be referred for a debt solution and just 0.3% go on to have an IVA.
So how do they make any money? They are ‘very well backed’ as a tech company and the app is built to sell, so they are comfortable making a loss for now, and Harjit is an experienced businessman, not without vital connections in the debt advice ‘industry’.
On that point, Harjit stated that Freeze Debt has a ‘close working relationship’ with Stepchange, and he told me that both Freeze Debt and Stepchange refer DRO clients to Money Wellness, the MaPS-funded arm of Financial Wellness Group (Gregory Pennington’s website is still ‘coming soon’.) Harjit told me that Money Wellness pays Freeze Debt £10 per DRO lead and between £800-£1200 per IVA lead.
Harjit also took issue with me alluding to the formulaic reviews left for Freeze Debt — he maintains that every single review is genuine and even offered to give me the contact details of everyone who had left a review to back this up. I declined this for obvious reasons, not least GDPR.
There was some discussion on the debt advisers who work for Freeze Debt — I described them as young-looking which Harjit thought was ageist of me. I’m inclined to agree and I apologise for this. It doesn’t matter what age they are — but there is a need to say something about ‘highly experienced’ debt advisers whose advice their own website warns should not be relied upon under any circumstances. Harjit said this was merely something ‘compliance’ had required to be on the website and maintained that the advisers do give good advice. So that’s OK then — legal disclaimers can be disregarded when things go wrong?
Things got more interesting when we discussed debt advice in general — who can be a debt adviser — or say they are a debt adviser, how debt advisers are paid, what qualifications you need to have, and, of course, how debt advice is funded. There were some surprising areas of agreement…
The fact is, you don’t need ANY qualifications to be a debt adviser. If you have the Certificate in Money Advice Practice (Cert MAP) then this will stand you in good stead for a job with a debt advice charity or a local authority, but not having this qualification is not a bar to working with vulnerable people in debt.
Let’s think about that for a moment – if you were drowning in debt, and you wanted some help and advice, how do you know that the place you go to for that help is reputable, knowledgable, independent and to be trusted? Feefo? Trustpilot? Don’t make me laugh (I won’t because it really isn’t funny). There is no single measure of excellence in debt advice — no single portal to search to find your nearest trusted practitioner. It’s a game of chance at best.
Money Helper — a government website — aims to ‘put you in control with free, impartial guidance that’s backed by government, and to recommend further, trusted support if you need it’. I searched for my own organisation on there, and guess what, we don’t exist according to the search results. From what I can see, local authority debt advisers are not included on Money Helper’s database, yet they are qualified, experienced and independent too. But not backed by government. Nor FCA registered (they are exempt because complaints about local authorities are ultimately the purview of the Local Government and Social Care Ombudsman not the Financial Ombudsman).
What does any of this mean to someone in debt who just wants help and advice? Not much I imagine. The environment is a Wild West encompassing the Good, the Bad and the Ugly.
Harjit and I found some apparent common ground — we both dislike the IVA farms and the lead generators. I challenged Harjit that his app is no more than an AI Lead Generator but he argued that, that’s just my prejudice talking. Harjit says he likes the idea that he is helping people — not everyone needs a debt solution, some just need to offload and his company provides that release valve. I still think its primary function is making the quick buck by selling on details of prospective IVA leads, but Harjit refutes this. He talked about getting feedback from clients, and thank-yous, which was a new and rewarding experience for him.
He put it to me that debt advisers need to earn money, same as anyone. His app tries to make money, debt advisers are paid salaries, debt charities accept donations. If we are so skeptical about lead generators being paid for IVA leads, why are we not equally suspicious of any organisation who receives a ‘Fair Share Contribution’ (link to article from Credit Services Assocation) if they sign up someone to a Debt Management Plan?
I think that’s a reasonable question. Can the quality and independence of advice be affected by dependence on certain income streams? Of course it can, just look at the impact of targets and quality standards on Money and Pensions Service-funded advice agencies — the need for continued funding has meant compromising time spent with people in debt in favour of meeting targets and achieving quality standards that are far removed from what debt advice is about and so anally-retentive in terms of bureaucracy and box-ticking that each file review should come with a free box of Preparation H. Agencies which were once at the absolute ‘frontline’ of advice are now mining their clients for data, which is much more powerful, profitable and…influential. The giving of advice to people who need it just isn’t enough any more. We must influence or die.
Although many of the ‘Good’ are members of the Institute of Money Advisers (IMA), yours truly included, again I question what this means to the person on the Clapham omnibus. So what?
There is still no line to be drawn that lets people know that on this side there is knowledge, experience and some redress if things go wrong, while on that side…good luck.
Amongst ourselves, we know a good debt adviser when we see them. They are asking questions continually, researching legal precedents, drafting witness statements, completing insolvency applications, responding to consultations, sharing information, identifying worrying trends and highlighting good and bad practice for the greater good.
And we are not well paid and we do not profit. The charity sector in particular pay shameful wages to advisers, while policy and data personnel are on double our salaries.
We need to raise the bar higher and we need to stop being so fragmented. If we take the posturing and the egos and the empire builders out of debt advice and put people in debt first then we could have a profession to be proud of. Wherever you live, whoever you are, your access to good quality debt advice should be the same.
Qualifying debt advisers.
Some debt adviser vacancies look like this:
The government career’s website states that ‘Employers will set their own entry requirements.’
Shelter requires ‘experience of providing debt advice and advocacy and the ability to carry out casework related interviews, maintain detailed case records and deliver group workshops and presentations.’
I say it’s not enough. We need a standard that we must aspire to and achieve before we utter a single word of advice. And we should be subject to the same rigorous standards as any solicitor or legal professional and held accountable if we get it wrong. We’ve got to have trust and confidence in ourselves before we ask anyone to have the same in us. There needs to be a minimum standard before anyone can call themselves a debt adviser.
Otherwise, we get organisations like Consumer Debt Help… (I urge you to look them up on Companies House and draw your own conclusions — registration number 14021924.)
…which produces total and utter nonsense for distribution on Facebook and elsewhere of this very low calibre:
And this:
They have pages and pages of misinformation on Council Tax, Rent arrears, Klarna, Mortgage arrears, County Court Judgments —
We have to do something about the fact that anyone can be a debt adviser, because without the training and the experience, they can’t, and the infiltration into debt advice of companies who provide misinformation and unrealistic solutions is harming the very people who need the help the most.
