Money and Debt

AdviceUK Consulting can help advice organisations that provide financial advice to be fully equiped to help their clients and be FCA compliant. In addition to this and to the free telephone and e-mail support provided by AdviceUK’s National Money Advice Coordinator, AdviceUK can provide more intensive support on a wide range of issues related to provision of money advice, including Financial Conduct Authority regulation, Debt Relief Orders, Money Advice Service requirements and service polices and procedures.Our money and debt services include:

Money Advice Service Quality Framework

AdviceUK’s National Money Advice Co-ordinator provides a money advice social policy and consultancy to support members of the AdviceUK network. This service is available as a by telephone and email.

The consultancy and support service deals with a wide range of enquries from members. Topics covered include: funding sources, Data Protection Act, Consumer Credit Licences, creditor liaison, and access to money advice resources and research materials. This list is not exhaustive.

Financial Conduct Authority Regulation

On 1 April 2014 the Financial Conduct Authority (FCA) became responsible for the regulation of consumer credit in the UK.

From that date any firm or individual that provides debt counselling to consumers must be authorised by the FCA. Unauthorised debt counselling is in breach of section 19 of the Financial Services and Markets Act 2000 (FSMA). This is a criminal offence carrying a maximum prison sentence of two years, a fine, or both. Please note that the FCA’s definition of ‘firm’ includes not for profit organisations providing free debt advice.

What does being regulated by the FCA mean?

The FCA has published a guide for consumer credit firms that are new to FCA regulation. This can be found at: Consumer credit – Being regulated – Guide

Regulated firms are expected to meet the standards set out in the FCA’s Handbook of Rules and Guidance. Its detailed conduct standards for firms carrying out consumer credit activities are set out in its Consumer Credit Sourcebook (known as CONC). The relevant section for debt advice is CONC 8, which can be found at Handbook – CONC 8. Advisers who are familiar with the Office of Fair Trading’s (OFT) Debt Management Guidance will see that they are similar in many ways.  The FCA expects that firms will ensure that all employees (this includes both paid staff and volunteers) comply with CONC.

Firms are also expected to meet the FCA’s high level standards, including its Principles for Businesses (PRIN). Firms must comply with PRIN at all times.

Complaints

From 1 April 2014 firms regulated by the FCA are also subject to the jurisdiction of the Financial Ombudsman Service (FOS). This means that if a consumer has a complaint about the way in which a consumer credit matter has been handled by a firm, they have the right to pursue their complaint to FOS. The Disputes Resolution: Complaints (known as DISP) section of the FCA Handbook sets out the detailed requirements for handling complaints and the FOS arrangements. You will find a useful guide for small firms on the FOS website via the link.  FOS also has a technical advice desk. This can give informal guidance on how the ombudsman might approach a particular complaint, or answer more general questions about its rules and how it works. Click here for contact details for the technical advice desk.

Where can I get help or further information?

AdviceUK cannot apply for FCA authorisation on behalf of members. However, if you have any questions about either FCA regulation or FOS jurisdiction, please email David Hawkes, AdviceUK’s National Money Advice Co-ordinator, at david.hawkes@adviceuk.org.uk.

More information can also be found in the members’ section on our FCA Frequently Asked Questions page and on the FCA Resources page in the For Members area of our website.

FCA Authorisation FAQs

How do I find out if my organisation is regulated by the FCA?

All AdviceUK members that were covered by our Group Debt Licence with the OFT and who completed and returned their FCA authorisation information form to AdviceUK by 26 March 2014 will have been automatically transferred to FCA regulation on 1 April 2014. This is what the FCA described as ‘grandfathering’. AdviceUK members providing debt advice who had their own Consumer Credit Licence with the OFT were required to apply directly to the FCA for what is known as ‘interim permissions’. You can find out if your organisation is authorised by the FCA by searching the FCA register. (Please note that the FSA website address is not an error. This is because the register includes firms regulated by the Prudential Regulation Authority as well as those regulated by the FCA.) Searching the register will also enable you to find your FCA authorisation number. We understand that the FCA will not be advising you separately of your authorisation number so you will need to do a search to find it.

Will my organisation get a certificate from the Financial Conduct Authority confirming that we are authorised?

No. The FCA does not issue certificates. You can get your authorisation number by looking up your entry on the FCA register – see the separate FAQ “How do I find out if my organisation is regulated by the FCA?” above for details on how to do this.

Should my organisation say that we are authorised by the FCA on our letterheads and website?

Yes. We recommend that you use the following form of words: “Authorised by the Financial Conduct Authority. Authorisation number [insert number].”

My organisation is not regulated by the FCA. How do I apply for authorisation?

You will need to apply directly to the FCA for authorisation using its online system. Please note that you will need to register as a new user before you can apply. Because of the large number of firms applying for authorisation, we understand that it may take up to six months for your organisation to be authorised. However, the FCA has said that it will try and prioritise applications from charities. Please remember that it is a criminal offence to give debt advice before your organisation is authorised.

I’ve received a letter about registering for CONNECT and GABRIEL. What are they and do I need to register for both of them?

CONNECT is the IT system that the FCA uses for online applications for authorisation. It is also the system that you will need to use if you want to change your details (e.g. you have moved to a new address) or vary your permissions (e.g. you intend to engage in another regulated activity). GABRIEL is the IT system that the FCA uses for online reporting. All authorised firms (including not for profit organisations with limited permissions) must submit an annual return within 10 months of their accounting reference date (i.e. financial year end).

If you are an AdviceUK member who is authorised by the FCA you will therefore need to register for both CONNECT and GABRIEL. For guidance on how to complete your FCA annual return using GABRIEL please go the FCA Resources page in the For Members area of our website.

My organisation was covered by AdviceUK’s Group Debt Licence. Do I still need to apply to the FCA?

Yes. The OFT ceased to exist after 31 March 2014 and AdviceUK’s Group Debt Licence expired on that date.

Does giving budgeting advice require FCA authorisation?

Money management and budgeting advice do not fall within the definition of debt advice and do not therefore require authorisation. The FCA has published perimeter guidance on debt counselling. If your activities fall within the perimeter then you must be authorised. The FCA has a Perimeter Enquiries Team who can provide general assistance and guidance about the scope of FCA regulation. Enquiries of this kind may be made either to the Consumer Contact Centre (email ccc@fca.org.uk or call 0800 111 6768) or to the Perimeter Enquiries Team (email authorisationenquiries@fca.org.uk).

Debt Relief Orders

AdviceUK has been designated by the Secretary of State as a Competent Authority under Regulation 3 of The Debt Relief Orders (Designation of Competent Authorities) Regulations 2009. This means that advisers working for members of the AdviceUK network can apply to AdviceUK to become an Approved Intermediary under the scheme. As a Competent Authority AdviceUK has the power to approve or decline applications and to continue to assess the suitability of applicants as intermediaries under the scheme.

Only advisers working for organisations that are fully paid-up members of the AdviceUK network can apply to AdviceUK to become an Approved Intermediary under the DRO scheme. Both paid workers and volunteers are eligible to apply.

If you work for an organisation that is not currently a member but is interested in joining the AdviceUK network follow this link to the Become a member page of this website.

Background Information

Debt Relief Orders (DROs) were introduced on 6 April 2009 as a remedy for debtors whose debts total less than £15,000 and who have little or no disposable income and assets.

Unlike other formal remedies for debt relief such as bankruptcy, DROs are delivered in partnerhip with money advisers, mainly from the free money advice sector. Advisers act as ‘intermediaries’ and assist debtors in making an online application for a DRO to the Insolvency Service. DROs are therefore not available through the court system. The orders are made instead by an Official Receiver, and a special unit has been set up for this purpose at the Official Receiver’s Office in Plymouth.

Once an order has been made creditors who are included in the DRO are prevented from taking any action to recover or enforce their debts against the debtor. In most cases, the debtor will be discharged from liability for those debts at the end of one year.

The Official Receiver will not routinely investigate the affairs of debtors subject to a DRO. However, the Official Receiver has significant powers of of enquiry and enforcement (ranging from revocation of the DRO to criminal and civil sanctions). This may be relevant where, e.g. creditors inform the Official Receiver of substantial assets or liabilities not disclosed in the DRO application, but equally investigation may be random and arbitrary.

DROs are intended to provide a cheaper and simpler method for people to seek relief from their debts. However, they are not an easy option. Debtors will still be subject to the same restrictions as bankrupts and will only be able to access a DRO once every six years. They will also affect the debtor’s credit rating.

Eligibility for a DRO

A debtor must satisfy strict qualifying conditions in order to be eligible for a DRO, including full disclosure of income and expenditure. The debtor’s liabilities must not exceed £20,000, their gross assets must be less than £1,000 and they must have a disposable income of less than £50 per month. Applicants will be allowed to have a vehicle with a value of less than £1,000. The Official Receiver will carry out checks to verify the information provided.

Payment

The fee for a DRO is £90.00. This covers the cost of the Official Receiver’s work in administering the application and making the order and has been set to cover the actual cost of the work involved. There is no remission of the fee. The DRO application can only be finally submitted when full payment of the fee has been received by the Insolvency Service.

Further information

Further information on DROs, including FAQs and a link to the primary and draft secondary legislation is available on the Insolvency Service website. The latest version of the Insolvency Service’s Intermediary Guidance Notes can be found at the bottom of this page.

Competent Authority

AdviceUK has been designated by the Secretary of State as a Competent Authority under Regulation 3 of The Debt Relief Orders (Designation of Competent Authorities) Regulations 2009. This means that advisers working for members of the AdviceUK network can apply to AdviceUK to become an Approved Intermediary under the scheme. As a Competent Authority AdviceUK has the power to approve or decline applications and to continue to assess the suitability of applicants as intermediaries under the scheme.

 Attached Documents

Applying to Become a DRO Intermediary

Who can apply to AdviceUK?

Only advisers working for organisations that are fully paid-up members of the AdviceUK network can apply to AdviceUK to become an Approved Intermediary under the DRO scheme. Both paid workers and volunteers are eligible to apply.

If you work for an organisation that is not currently a member but is interested in joining the AdviceUK network follow this link to the Become a member page of this website.

Regulations

The Insolvency Service has published statutory requirements which must be satisfied before a Competent Authority can approve an applicant to become an intermediary. AdviceUK is responsible for ensuring that these statutory requirements are met as well as applying our own assessment criteria to measure things such as experience, training and competence. The procedure used by AdviceUK to approve intermediaries can be found at the bottom of this page.

How to apply – the application process

If you are an adviser working for an organisation that is a member of the AdviceUK network and you want to become an Approved Intermediary under the DRO scheme, then you must complete the application form that can be found at the bottom of this page. Please make sure that all sections are completed in full and that all declarations are signed and dated. A hard copy of the completed form must be sent, together with the specified supporting documents, to AdviceUK. See the Contact us page on this website for our address details.

Complaints procedure

AdviceUK’s special complaints procedure for DRO intermediaries can be found at the bottom of this page.

Enquiries

If you have any enquiries about DRO intermediary status or the application process, please contact David Hawkes, AdviceUK’s National Money Advice Co-ordinator, for further information.

Contact David on 0300 777 0107 or consulting@adviceuk.org.uk

Attached documents

For more information contact our consultants by phone on 0300 777 0107 or 0300 777 0108. Email us at consulting@adviceuk.org.uk

If you need help in applying for a DRO, please contact our AdviceUK’s National Money Advice Co-ordinator is David Hawkes. You can contact him in the following ways:

Email: consulting@adviceuk.org.uk

Phone: 0300 777 0107 or 0300 777 0108

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