Helping consumers move from a fee charging to free DMP

23 August 2016

Many of you will be aware that the FCA are currently making decisions about which Debt Management firms should receive full authorisation.

It is estimated that there are over 400K consumers in a Debt Management Plan (DMP) and these decisions could leave many without a DMP provider going forward.

The largest firm to exit the market to date has been PDHL where 13,000 clients were impacted, all having to find a new provider or try and deal with multiple creditors independently, a very scary proposition through no fault of their own.  Feedback that we have received from creditors suggests that even now, several months after closure, 50% of PDHL clients are yet to resume payments or positively engage.

It is clear from the PDHL fallout that consumers need to be engaged earlier in the exit process and given swift direct access to free debt advice. By working with exiting firms PayPlan have devised a pro-active ‘rescue service’ that prevents clients ever becoming orphaned and in many cases delivers a smooth transition from a fee charging plan to free PayPlan DMP.

How does it work?

  • The exiting firm works with PayPlan for an agreed period of time (typically 3 months) BEFORE their permissions lapse
  • During that period the firm calls all of their clients informing them that they can no longer represent them and offer a hotkey referral over to PayPlan
  • PayPlan receive the referral and the client progresses through our advice process arriving at the appropriate solution
  • This gives the client ample time to set up a new arrangement prior to the firm closing which means no payments are missed to creditors

What do the results look like?

We have recently completed a rescue of Ashley Park and Express Debt (circa 2,300 clients).

  • 83% of clients agreed to be referred to PayPlan
  • 90% of those agreed to complete a full assessment
  • 73% of those assessments resulted in a DMP outcome (client moving from fee to free)
  • On average we achieved a 45% surplus uplift in DMP payments meaning the client will now become debt free quicker

We are delighted to be able to rescue these clients and hope to complete more rescue exercises in the coming months.

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