‘So what do you think I should do?’

Debt advisers, do you recognise this scenario?

Client walks in to your first meeting with a laptop, sets it down and proceeds to tell you exactly how much debt they have, exactly how much disposable income they have, the names of each and every one of their 24 creditors, up to date balances for each (even the DWP debts), that they’ve spent time researching options and know exactly what they want you to help them with.

Or is this more familiar?

Client walks in with some envelopes stuffed in a bag, isn’t 100% sure on the household income or expenses but can have a look on their banking app for clues, knows the balance of the one or two debts causing the sleepless nights (Council Tax/rent or mortgage usually), hasn’t got a clue about the others, what solutions exist or how to go about getting them, but desperately hopes you’ve got some medicinal debt advice cure because they’re right at the edge of their sanity, given the terrible 3 years they’ve just had, and they haven’t had a decent night’s sleep in months.

In my experience, the former is rare and the latter is, pretty much, Everyclient.

It’s important to acknowledge just how much of a vulnerable position every person seeking debt advice is in, whether they personally have additional vulnerabilities or not.

No client ever asks to see my qualifications. They don’t ask how long I’ve been a debt adviser, nor whether I’ve obtained my 16 CPD points this year. They know, and I know, that in this situation, at least in the beginning, I have all the power in this burgeoning relationship – because knowledge absolutely is power. The client is likely to trust implicitly what I (and others in the position of being a debt adviser) say with the same level of faith as they would the diagnosis of an illness from a doctor.

Similarities can be seen. Symptoms, side-effects, treatments, cures – they also exist in debt advice under different names. We might call them defecit budgets, poor credit scores, bailiffs, evictions, insolvency solutions, etc.

The first mission as a debt adviser, therefore, is to balance out the power dynamic as swiftly as possible by sharing the knowledge – about the powers of the various creditors, about the legal obligations they have, the power the client has, (that they often don’t know they have), and their obligations too. It’s a journey through a maze of ‘what ifs?’ and worst-case scenarios, empowering the client to be equipped with a better understanding of their situation. And then we map ways out of the maze by looking at options and solutions – go left and do this, or go right and do that, or go straight on and do nothing, or take one of these, three times a day on a empty stomach. (Scratch that last one).

Yet, this is a precarious place for a client to be – I’m still in full control as I guide them through the options, and at any time I could lead them to a dead end, make them think that this option or that option isn’t right for them. Close it down and push them down a route of my choosing. They wouldn’t be aware of this manipulation nor the possible reasons why I might be doing this.

I may engineer our route to make it seem as though there’s only one way to exit the maze. They will believe me because they also believe I’m going to help them and they desperately want that help. They may have contacted me because they saw a promoted result on Google that promised that I had the key to unlock that little known about, secret, government-backed solution that would wipe [up to] 84.6% of their debts clean off. They will follow.

I don’t do this, of course, because it isn’t in the client’s best interest to have anything less than impartial and accurate information about their options. It isn’t in my interest either, because I have no investment in any of the debt solutions, I just want to help the client get back in control of their lives and stop feeling quite so miserable and hopeless. I don’t sell snake oil and I don’t perform on TikTok in poses with my arms spread, deity-style, to a soundtrack of Wind Beneath My Wings. I would soon be out of a job if I did, because my professional body would take a dim view of such behaviour (and rightly so).

We accept that debt advice can be confusing and overwhelming for clients and complex information isn’t always accepted by a brain that has been overwrought with worry and stress for months. So it’s no surprise if after all the discussion and explanation the client looks blankly at me and says:

So what do you think I should do?

And this has happened very recently. No perfect solution without an element of risk, but the potential for a great outcome for a particular client. Welcome to the danger-zone. I could see this is a failure of my advice – if I’ve explained things well, then the viable options should separate themselves out and make themselves known, but of course, it isn’t always that simple. Each option will have its disadvantages and sometimes it’s a matter of choosing the path of least resistance. Let’s face it, more often than not these days, there are no easy options. Even if there is a solution to the debt problem there may still be the pressing matter of what to do about the rent/mortgage/energy arrears guaranteed to amass again within the month. The ‘fresh start’ that goes mouldy by next week.

As an advocate, I aim to help my clients identify the option that’s best for them by clarifying any points of confusion, and if a debt solution does exist for them, then I will help them to access it, be it a Debt Relief Order or bankruptcy or something else. If the best option is an IVA (though it rarely is) I will of course point the client in the direction of the very few charities that exist to accommodate this – Money Advice Trust for example. But it has to be the client’s decision, not mine, and it has to be an informed, fully powered-up decision, made only when the client is ready.

Why does all of this matter? I had a complaint in with the Insolvency Practitioners Association recently, in which they concluded that the IP bore no blame for the client being forced to seek emergency debt advice to prevent an eviction 2 months into an IVA, due to accumulated rent arrears of around £6000. They said the client hadn’t made the IP aware of her vulnerability (or her rent arrears apparently). It was her fault. Quote:

Whilst I appreciate your comments regarding a client’s vulnerability, she did not mention this on the initial call with the agent.

All IVA firms have their own debtor vulnerability policy which can be provided to the client once this has been disclosed.

So, vulnerable clients who are stepping into the maze without a clue of all the options available, it’s on you to know that the labrynth is full of hungry tigers and that if you don’t openly out yourself as vulnerable (because you may not think you are) then it won’t be the IP’s fault if you blindly accept guidance from a TikTok guru whose next set of dental implants depends on you swallowing his guff hook, line and sinker.

Why don’t IP’s start with an assumption that anyone responding to a lead generator’s advert on Google is vulnerable? Anyone with out-of-control debt is vulnerable. Don’t they know this? Anyone about to lose the roof over their heads is clearly vulnerable, and therefore, the onus should be on the IP to ask the right questions, rather than relying on a lead gen, fresh from shooting his latest selfies for Insta, to have imparted all of the key information that the client needed to be aware of.

In fact, anyone placing themselves in the hands of an ‘expert’ who may turn out to be nothing more than a snake oil salesperson is in an extremely vulnerable position, even if they are normally quite robust. Start with that – do all the checks. When the IP is running through the Statement of Insolvency Practice 3.1 (SIP 3.1) checks and the client states that they don’t want a DRO or bankruptcy because they ‘want to pay their creditors something back’, ask them whether they were told to say that! Ask them why they think that is a better option than a fresh start DRO? It’s called ‘due diligence’. Stop hiding behind a shield of ignorance about your lead generators and debt packagers’ behaviours and actually earn your fees!

My response to the IPA was:

If the rules to curb this imbalance of power do not exist, then that is by design to ensure that IPs can continue to profit from desperate people in debt.

It’s all about power and trust, and no trust is easier to abuse than that which a desperate person who needs help places in a person who implies they have the capacity to give it.

One bad apple in debt advice may be unlucky, but a whole industry purporting to offer ‘advice’ while profiting from half-truths and abuse of power damages all of us, and our clients.