Payplan welcomes OFT action

Payplan, one of the UK’s leading and oldest established free debt solutions providers, has welcomed today’s warning by the Office of Fair Trading (OFT) to 129 debt management firms to start complying or face losing their consumer credit licence.

The OFT has given the offending companies three months to comply to its Debt Management Guidance – if they don’t, they face losing their licence and the right to operate.

The news has received a welcome response from national provider Payplan and other compliant organisations in the sector.

“Consumers who run into financial problems and have debt issues to contend with come to companies like our own at a very vulnerable time. It is vital they receive the correct service,”

said John Fairhurst, managing director at Payplan.

“We operate standards of best practice in free debt management, we believe strongly that creditors should play a part in helping financial recovery. This is fundamental to our working model. What is frustrating is other companies purporting to do the same when it’s clearly evident they don’t.”

Key Findings

The OFT report highlighted the following significant areas of non-compliance:

misleading advertising, in particular not disclosing a fee and misrepresenting the services as being free when they are not.
frontline advisers lacking in competence and providing poor advice based on inadequate information.
lack of mention of the Financial Ombudsman Service (FOS) for resolving consumer complaints.

Today’s OFT report sets out a detailed action plan to improve standards across the industry, focusing on robust enforcement action against licensees that fail or refuse to change advertising and/or behaviour.

Commenting on the report, John Fairhurst added:

“We hope the OFT exercise will help create a level playing field which will mean complete transparency and, at the same time, safeguard consumers against poor advice and unfair practices.

“This is crucial. Our trained debt consultants deal with extremely harrowing cases of hardship on a daily basis. It is our duty as an industry to ensure we work with consumers and their creditors to provide the very best manageable solution possible. This isn’t a commodity or a peripheral service, it is people’s livelihoods at stake and they need to be receiving the best qualified advice and guidance at all times.”

About Payplan

Payplan has actively campaigned for the Government to regulate the debt management industry. Established in 1993, the company is one of the UK’s longest-serving providers, working with the Citizens Advice Bureau, National Debtline and the Institute of Money Advisers.

Payplan also partners with the credit industry, leading unions and employers – all with one combined desire – to provide totally free debt management services.

In its review of Payplan, the OFT did not raise any concerns or examples of non compliance with either the standards as set out in the Consumer Credit Act 1974 (the Act) or the OFT’s Debt Management Guidance.

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Payplan joins call for safeguards on payday loans

Research by Consumer Focus suggests that 1.2 million people are taking out a payday loan every year, borrowing a total of £1.2 billion. The number has quadrupled since 1996, according to the watchdog group despite some companies charging interest rates of more than 2,500% a year.

The group is now calling on the industry to bring in more safeguards to protect vulnerable borrowers – an initiative welcomed by some of the UK’s leading debt solution companies, including Payplan.

“Payday loans are a better alternative than turning to a loan shark but the eyewatering interest charges can mean borrowers end up owing more and more as payments spiral out of control,”

said John Fairhurst, Managing Director at Payplan which provides free debt management advice and planning.

“We agree more should be done to make people aware of the long-term consequences of a payday loan. It might appear to provide a short-term solution but we often see people drawn into repeatedly taking out these expensive loans to try and keep up with unaffordable repayments to other creditors. Instead of improving their situation people often find that use of these loans exacerbates an already serious debt problem.”

Payday loans have increased in popularity during the recession. They are quick ways of getting hold of short-term credit of up to £750 secured online or through the high street and repaid monthly, usually on a borrowers’ payday, hence the name.

Interest rates differ from one loan company to the next but Payplan quotes an average example of £25 interest paid for every £700 borrowed. If the interest isn’t paid, the loan will be rolled over. In many instances, Payplan says borrowers take out further payday loans to cover the payment and so the debt spirals.

“This is not the way to pay off debt or the type of loan for debt we would advise people take out”

added Mr Fairhurst.

“If people find themselves with financial worries or facing debt then the best action is to take some impartial advice from an expert.”

About Payplan

Payplan is a free debt advice and solutions service that provides impartial advice to people in financial distress. Payplan helps over 100,000 people every year and works closely with organisations in the field of money advice and consumer and employee welfare.

If you are struggling to manage your monthly outgoings then contact Payplan for free debt advice online or simply call 0800 280 2816.

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‘Shopaholic’ epidemic hits Britain

One in six of the adult population are shopaholics

Four million British women and three million British men have become addicted to shopping, using credit cards, store cards and loans to supply their obsession.

The British Retail Consortium (BRC) released a report showing that women tend to spend the most on high street clothes, whereas men spend circa £600 a year on designer clothing, nearly double what female shoppers spend on designer goods.

Skincare and cosmetic products, traditionally bought by women, are now attracting the average shopaholic male, who will spend £338 a year on these types of products; while females will spend nearly £200.

Ann Robinson, a director at uSwitch, said:

In today’s celebrity obsessed society, any lessons learnt from the recession have been airbrushed out of the picture. Despite the financial constraints, women have carried on copying the lifestyles and shopping habits of their idols and ignoring the debt they are racking up in the process.

This spend-emic has spread and it’s clear that men too have caught on to the joys and perils of shopping.

Payplan

If you are worried or struggling with your unsecured debt, or are behind with your priority costs due to spiralling monthly debt bills, then contact Payplan for free debt advice on 0800 280 2816.

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