Debt Consolidation Warning

[Sc00by143]

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I have been an Affiliate for eight years supplying various lead types including finance. The volatility of the Finance Market is going to cause opportunities and threats for all of us. However, I would like to share what has just happened to me. Several Debt Management Companies are buying Debt Consolidation loan leads for the sole purpose of selling the applicant a Debt Management Plan or Product without having the ability to provide a loan. Some of my leads ended up being worked by such a Debt Company and I have just had a visit by Trading Standards and have been threatened with a Criminal Investigation. I have been told that having a Debt Management Company work a Debt Consolidation lead amounts to misuse of personal data and an act of fraud may have been committed on the Applicant. I contacted the Debt Management Company who have told me that it is nothing to do with them. Suprise suprise. Has anyone else had this experience as Trading Standards have told me that they are carrying out checks on other Introducers? I have been told that my Consumer Credit Licence may be revoked.

[co-co nut]

Sc00by143,
The basics of the DPA state that the personal information should not be used in anyway without that individuals understanding and agreement. So for instance if the individual has expressed an interest in a Consolidation Loan and no other service or alternative solution, by passing this client on for Debt Management, in theory, breaks the law & can indeed be subject to a criminal investigation. Having said that, I believe there are a number of LARGE debt management companies that are approaching customers from such data. Hope this helps?? (Probably not what you wanted to hear though!)

[helpinhand]

plenty of DM companies buy declines or apps for debt con to try and convince the applicant this is the way forward and all of them have declines from different places every day. not many just buy DM leads as they are so expensive

[monkeyprojects]

I think you've hit unlucky by being in the unfortunate position of someone being able to pin down the lead to yourself.

Considering that many people in the finance sector seem to be willing to resell leads multiple times to simply try and recover costs I don't know what else to say. Other than be very careful who you pass the information on to.

[russell cpanuk]

Buying consolidation loan leads to sell Debt Management is NOT within the guidelines. However, my understanding is that the Debt Management Company, need to make sure any client that is referred to them, know why they are being referred. (You will find that it was the DMC that they were after, not you, but they have tried to pass the book. The DMC will be in the frame also, you will not be alone.)

The OFT will, and are, coming down on this practice, this is the first time I have heard that a lead supply has been targeted. The OFT are like a sleeping loin, but once awake, watch out, they do bite.

Take a look at the rules

The Office of Fair Trading: Debt management guidance (December 2001)

Knowing it was the DMC that they are after, try and dig out your e-mails/contact with the DMC, and pass the book back.

[yvee-gf]

However, my understanding is that the Debt Management Company, need to make sure any client that is referred to them, know why they are being referred.

Can you clarify that sentence please Russell? Do you mean at the time of initial contact ie in the T&C's of the lead generator? Or when the DMC call the customer up?

thanks

--
Yvonne - G-Finance

[KerryG]

Hi All.

We are a small debt solutions company who pride themselves on giving impartial advice to the clients & if this means a loan then we have arrangements in place to provide them with a loan providing they are eligable, we would explain to the client that if they were unsuccessful with their loan & they were struggling with the monthly payments then D/M would be one of the only options left available to them & they then have an informed choice as to which way they want to proceed.

As Russell rightly states the OFT Guidelines on D/M do state this:

'DMC's must not accept referrals from credit brokers or lenders unless the consumer has given informed prior consent to the credit broker or lender for such a referral'.

Debt Management isn't always the right option for the client & a good advisor & good D/M company should have the wear with all to realise that.

In an ideal world all clients would have agreed to third party contact, which would then allow the contact from D/M co's, but this is more than often not the case.

Perhaps all brokers/lenders need to ask clients if they are unsuccessful for their loan would they be willing to speak to a company that would offer them alternative solutions.

Just a thought.

[russell cpanuk]

What the white papers mean, is if an applicant has applied for a loan (unsecured/secured) and are rejected then, the client must not be passed over to a DM company, without first asking them if they agree to it. (It must be explained without a shadow of doubt, that they are being referred for DM) saying we can’t help you, but this company may! Won’t wash.

So just putting it in your T&C is not enough.

This is pretty much confirming what KerryG has said.

Most D/M companies will have a small credit broker-ship within their operation to combat this, however it does have to be separately licensed. This is how they get around the same sort of rules, in the Mortgage industry.