Consumer Protection Code For Debt Managers

DRAFT “STRAWMAN” FOR DISCUSSION PURPOSES ONLY
A DRAFT CONSUMER PROTECTION CODE

FOR COMMERCIAL DEBT MANAGERS
A SUBMISSION BY BILL HOBBS TO THE EXPERT GROUP ON CONSUMER

INDEBTEDNESS
8TH MARCH 2010
Readers please note it is a working document drawn from existing Financial Regulator codes and The
Office of Fair Trading (OFT) UK guidelines for debt managers. It includes some personal suggestions
designed to enhance consumer protection. It is intended to inform discussion on the appropriate
consumer protection framework for the commercial debt management sector.
FOREWORD
Preventing Consumer Harm – Regulating Commercial Debt Managers
Concerned that unregulated commercial debt managers pose a high risk of harming consumers, I have
written this document as a combined Guidance and Code of Business Conduct, which I hope may prove of
use to the expert group on consumer indebtedness and others concerned that consumers are protected
from harm. I have done so in a personal capacity as a consumerist.
Commercial debt managers are a relatively recent phenomenon and represent a new sector in the
consumer financial services marketplace in Ireland. In the UK, debt managers have existed since the late
90’s. Consequently UK experience is instructive in understanding how commercial debt management will
evolve here.
Unregulated firms operating in competitive markets are known to engage in practices that are harmful to
the consumer. This has been the consumer experience of the debt management sector in the UK. The
sector is coming under increasing scrutiny as consumer complaints rise and Office of Fair Trading (OFT)
compliance enforcement intervention increases. The OFT licenses and monitors debt managers fitness as
high risk consumer credit operations. Responding to public concern the UK Government is currently
considering regulating debt managers.
Similar to UK experience, there is a high risk that consumers in Ireland will be exposed to harmful
practices such as abusive marketing, predatory sales techniques and misleading claims. Indeed there is
evidence that some harmful practices are already a feature within this rapidly growing sector.
Debt manager’s core product is a debt management plan, through which on behalf of indebted
consumers they negotiate for reduced payments with their creditors. The consumer makes one payment
to the debt manager who disburses this to the creditors. Fees are charged typically to the consumer and
comprise an initial upfront fee and ongoing administration fee/charge. Various types of charges exist, the
most controversial being a charge based on a percentage of the amount the debtor agrees to pay. While
debt managers act for their customers in some cases the business model takes on aspects of debt
collection. For example when creditors pay debt managers a fee based on the amount paid to them in
certain models.
A question arises as to whether or not debt management plans are a financial product or service. I am of
the opinion that they are financial products and services. A debt manager acts on behalf of the consumer
and intermediates between a consumer and creditor, frequently a regulated credit institution or
regulated credit provider. They market, sell and charge for a distinct product – the debt management
plan- which involves the provision of financial planning advice, recommendation of suitability, provision of
negotiation services and the collection of and payment of monies through client accounts.
This draft draws on the Financial Regulator’s consumer protection and moneylender codes and also
reflects elements of OFT guidance. Properly implemented it would both protect consumers and provide
for a regulatory framework to underpin what may be a timely development in debt management services
to indebted consumers.
Bill Hobbs
LeaderSense Business Consulting
March 2010
Contents
FOREWORD...................................................................................................................2
PURPOSE OF THIS CODE ............................................................................................4
LICENSING AND AUTHORISATION PROCEDURES....................................................4
REASON FOR THIS CODE ............................................................................................4
AIMS OF THIS CODE.....................................................................................................5
KEY INFLUENCES .........................................................................................................7
WHAT IS A DEBT MANAGEMENT COMPANY (DMC)? .............................................7
CONCERNS OVER DMC’s .........................................................................................8
CONCERNS OVER CREDITORS ...............................................................................9
MANDATORY OR VOLUNTARY CODE OF CONDUCT?...........................................9
DMC’s AS FINANCIAL SERVICE PROVIDERS ........................................................10
DMC SERVICES COVERED UNDER THIS CODE ...................................................11
DEFINITIONS ...........................................................................................................12
GENERAL PRINCIPLES ..............................................................................................15
COMMON RULES FOR DEBT MANAGERS................................................................16
GENERAL .................................................................................................................16
1. PROVISION OF INFORMATION TO THE CONSUMER....................................16
2. PRESERVATION OF A CONSUMER’S RIGHTS ..............................................20
3. CONTRACT TERMS .........................................................................................20
4. HANDLING MONEY ..........................................................................................21
5. OTHER TERMS ................................................................................................22
6. KNOWING THE CONSUMER ...........................................................................23
7. SUITABILITY .....................................................................................................23
8. FINANCIAL POSITION......................................................................................23
9. PAYMENTS TO CREDITORS ...........................................................................24
10. REASONS WHY STATEMENT .....................................................................24
11. OTHER POINTS............................................................................................25
12. DEBT MANAGEMENT PLAN ADMINISTRATION .........................................25
13. UNSOLICITED CONTACT (COLDCALLING) ................................................26
14. DISCLOSURE REQUIREMENTS ..................................................................27
15. FEES AND CHARGES ..................................................................................29
16. HANDLING COMPLAINTS ............................................................................30
17. CONSUMER RECORDS ...............................................................................31
18. FEES, COMMISSIONS AND OTHER REWARDS .........................................32
19. DMC AGENTS...............................................................................................32
20. MINIMUM COMPETENCY REQUIREMENTS ...............................................33
21. FIT AND PROPER.........................................................................................33
22. ADVERTISING GENERAL REQUIREMENTS ...............................................34
23. DMC ACTING AS AN AGENT FOR THE CONSUMER DEBTOR..................35
24. REFERAL TO DMC’s.....................................................................................35
25. COMPLIANCE WITH THIS CODE.................................................................36
PURPOSE OF THIS CODE

The purpose of this code is to help consumers make informed financial decisions in a
safe and fair market and to foster a sound dynamic commercial debt advice and debt
management sector in Ireland.
This is done by helping consumers to make informed choices through the provision of
information to educate them and through developing and enforcing codes of
conduct/practice, which seek to ensure that commercial debt management, debt
counseling and debt advisory service providers act in a fair and transparent way.
LICENSING AND AUTHORISATION PROCEDURES

A Consumer Protection Code for Debt Managers will apply to all debt managers licensed
or regulated under the Consumer Credit Act or any other Act once enabling legislation
had been passed.
In the interim this code is being published by the National Consumer Agency under
section 90 of the Consumer Protection Act 2007 as a matter of consumer protection.
Administration and compliance with the code will be undertaken by the CBFSAI in
accordance with section 94 of the Act.
Please refer to the Definitions section for any term shown in bold and italics throughout
the text of the Code.
This code does not apply to the Money Advisory Budgeting Service, Citizens Advice
Bureau or Free Legal Aid Centres.
Note: It should be possible for commercial debt managers to “voluntarily” commit to

comply with the code. In this scenario a list of those who have signed up to the code
could be published on the Financial Regulators website and or NCA website and
advertised to the public. In turn DMC’s should undertake to declare their status using
some agreed form of disclosure. The IBF and its members could agree deal with
Commercial Debt Managers who have signed up for the code. See Rules section 23.
REASON FOR THIS CODE

Advice to consumers about debt problems has for many years been provided by the
Money Advice and Budgeting Service (MABS), the Citizens Advice Bureau and Free
Legal Aid Centres.
Since 2008, fee charging commercial debt management companies (DMC’s) have
entered the market. Consumers, consumer bodies, credit institutions and others have
raised concerns about DMC’s and marketplace behaviors. They point to problems
emerging here similar to problems experienced in the UK where DMC’s have operated
for some time.
It is clear that certain unwelcome practices have emerged here in particular
• false and misleading claims,

• opacity
• ambiguous or hidden pricing and fee models
• predatory selling
• deceptive online marketing
• marketing of “free advice”
DMC’s generate revenue from charging consumers for setting up and administering
plans. In some cases creditors may pay a fee or charge to the DMC which is in turn
charged to their customers account.
The DMC business model here is similar in almost all respects to those operating in the
UK for the past decade or so. DMC’s in the UK and Northern Ireland are licensed by the
Office of Fair Trading (OFT) under the UK Consumer Credit Act and required to comply
with OFT guidance. The OFT considers 1DMC to be a high risk consumer credit sector.
The UK experience is instructive as some DMC’s operating here are UK companies that
are operating cross border, have established operations here or are in alliance with local
partners.
It’s notable that having first issued guidelines for DMC’s in 2001 and updating them in
2008 the 2OFT, instancing concerns over the level compliance interventions and
continuing harmful practices, is engaged in a review of the sector. Responding to
heightened public concern about debt management practices, the UK Government is
considering regulating the sector.
It is timely then to consider a code of conduct for commercial debt managers offering
their services in Ireland.
AIMS OF THIS CODE
1
The number of UK DMC’s is somewhere between 150 (OFT) and 800 (Moneysupermarket.com). The largest operations service
c80% of customers. Companies range in size from large operations to small “one man in a garage” operations. Some have multiple
online shop fronts and some masquerade as charities, non-for profit and governmental type agencies.
2 The OFT issued debt management guidance (the guidance) in December 2001 (updated September 2008 to reflect the reforms
introduced by the UK Consumer Credit Act 2006). The guidance sets out minimum standards for debt management businesses that provide
debt advice (including free to client) and/or seek to re-schedule customers' repayment of debt and charge for doing so. Key principles relate
to the transparency of advertising and promotion of a debt management businesses' services, fees charged to consumers, acting in the
best interests of the consumer and keeping the consumer informed. Applicants and license holders are expected to abide by the guidance.
The purpose of the code is to set out minimum standards to be met by DMC’s. The code
doesn’t, however, set out a comprehensive checklist and not all of its elements will apply
to some DMC’s. It is not exhaustive and conduct or omissions not included in the code
may be taken into account in determining compliance with its general principles. DMC’s
are expected to abide by the spirit as well as the letter of the code.
Some of the practices highlighted in the code are clearly unfair or improper, for example,
lack of transparency about the services to be provided. In those cases DMC’s should
have been aware even before the issue of this code of the risk of action if they engaged
in such practices or allowed their employees, agents, or associates to do so. In other
cases the position might have been less clear, and the code is intended to be helpful in
outlining the kinds of business practice to which the 3FR/NCA is likely to object
The key requirements of the code are:
• Advertisements and marketing must be accurate, clear and not misleading.

Any reference to 'savings' on repayments must make it equally clear that
debt rescheduling will usually lead to an increase in the size of the sum to
be repaid, the period of repayment and may potentially affect the
consumer's credit record
• No claims of being able to guarantee debt forgiveness or freezing of

interest. Such claims are not within the competence of a DMC to deliver on.
• No cold calling by personal visit or misleading or unlawful cold calling by

telephone or sending of unsolicited emails
• Consumers must be given adequate information before entering into an

agreement.
• Contracts should specify the nature of the services provided, total cost to
the consumer, amount to be repaid and duration of the contract. Contract
terms should be fair, legible and in plain language
• A realistic assessment of the customer's financial circumstances must be

made before advice is given, including verification of income and regular
outgoings. Any advice must be given in the best interests of consumers.
• Where a debt management plan is recommended DMC’s must demonstrate

suitability. This is especially important as the suitability of a debt
management plan is determined by the consumers’ financial
circumstances.
• DMC’s must inform clients of the outcome of negotiations with creditors,

as well as any developments with creditors such as the issue of default
notices or the threat of legal action
3 ISSUANCE AND COMPLIANCE MONITORING ROLES TO BE DECIDED

• Payments from consumers should normally be passed on to creditors

within five working days of receipt of cleared funds.
KEY INFLUENCES
Principles set out the broad expectations as to how DMC’s should interact with their
customers. These principles should be reflected in all aspects of a DMC’s business
dealings with consumers.
The Code comprises general principles and more detailed rules designed to enhance
understanding of and compliance with those general principles. In all circumstances, the
overriding obligation on DMC’s is to adhere to the letter and spirit of the general
principles.
The Code comprises the same provisions, where feasible and practicable, that apply to
other sectors of the financial services industry, whilst endeavoring to take account of the
nature of debt management business. It also contains some provisions that are specific
to debt managers because of the nature of that business.
Drawing up the code has been guided by the Government’s six core principles for better
regulation i.e. necessity, effectiveness, proportionality, transparency, accountability and
consistency.
WHAT IS A DEBT MANAGEMENT COMPANY (DMC)?
A DMC offers a service to individuals in debt for a payment. They provide advice to the
consumer and negotiate with creditors on their behalf to set up a payment plan for the
individual that may involve a reduction in monthly payments and a freeze on interest
charges. The individual consumer makes one payment to the DMC, which is then
distributed to each creditor. The core product is called a debt management agreement
which is the service individuals pay for.
They may offer services such as debt consolidation, arranging mortgages and or
consumer credit products and act as insurance intermediaries. Where they do so they
are required to comply with the Financial Regulators’ authorisation procedures and
comply with its prudential regulations, codes of business conduct, fitness & probity and
minimum competency requirements.
Some DMC’s charge a percentage of the monthly payments as a fee. Some charge a
fee to establish a debt management plan and scaled charge related to the number of
creditor payments per month. Others charge a percentage of the monthly saving. In
addition, the entire first month's payment may be kept as a deposit or a charge for
setting up the payment plan. Some DMC’s offer a refund of the first payment when the
individual has paid off their debt on the payment plan. Fees are usually taken from the
monthly payment, before payments are distributed to creditors.
While there is no objection to DMC’s 4charging for, or consumers choosing to pay for,
debt management services, the consumers using these services will, however, often be
vulnerable because of the nature of their financial problems and, almost by definition,
have the least available financial resources. It is therefore, particularly important that the
services provided by DMC’s are carried out with due care, skill and fairness.
The practice of basing charges on a percentage of the payment made by a debtor or

paid to creditors is considered inimical to consumer interests. Consequently the
permitted charging structure set out in this code allows for an initial plan set up fee and
an administration charge based on the number of creditor payments to debtor accounts
which may be set on tiered basis.
The practice of charging for negotiating a lump sum early settlement with creditor(s) is
based on a percentage fee charged on either the lump sum payment or amount written
off. This practice is inimical to consumer interests. The code will establish a maximum
chargeable fee in either case.
There are two generic models one in which the consumer pays the DMC the second
where the creditor pays the DMC with charges for the consumer debtor account. Some
DMC business models include elements of debt collection processes principally the
monitoring of payments, reporting on these to creditors and undertaking reviews at
creditor’s request.
This code will apply equally to DMC’s who provide advice and a similar range of
negotiation and payment services for no direct charge to the consumer.
CONCERNS OVER DMC’s

A number of concerns have been raised by consumers, consumer agencies, lenders and
others as follows:
• In the absence of licensing, guidance and regulations there is a high risk of

abusive marketing practices and predatory selling which are known aspects of
unregulated markets for consumer financial products and services.
• Certain DMC’s were operating cross border online business models some of
which are 5ambiguous and non-transparent.
• Some DMC’s may claim to be not-for profit and/or charitable concerns.
• Differing models some of which are marketed as free to the consumer are in fact
not 6free.
4 Consider regulating for fees and charges structures – there are many variations ranging from debtor pay to credit pay models.
Transparency is critical.
5 Some DMC’s are UK based operations with a thin online Irish content font page. Some offer IVA’s and other products unavailable here.
Others appear to different companies but are fronts for one company.
6 Free advice is marketed as a sales generation tactic
• Advertising can be misleading
• Transparency over the nature and cost of the services provided
• the quality of advice and information given to the consumer
• The handling of client money.
• Websites purporting to be a DMC when in fact they are lead gathering agents to
any number of DMC’s
• Websites where the DMC is not identifiable and contains no reference to

recognisable debt management companies.
CONCERNS OVER CREDITORS
Some creditors have a blanket policy of refusing to enter into negotiations with DMC’s,
or refusing to accept payments sent by DMC’s on behalf of consumers. Where a
consumer appoints a representative to negotiate on their behalf it is an unfair and
improper business practice on the part of the creditor to operate a policy, without reason,
of refusing to consider such requests.
It is expected that where a creditor agrees to accept lower payments that debt collection
activity will be suspended by it. It would be unfair consumer practice to agree to accept a
lower payment and continue to pursue a debtor for the balance.
It is the intention to ensure that creditors agree to accept payments from a DMC subject
to some criteria. This is not a matter for this code but will be dealt with separately.
MANDATORY OR VOLUNTARY CODE OF CONDUCT?
Some DMC’s or a trade body may propose a voluntary code of conduct. However the
sector is considered to be a high risk consumer protection area of concern and for this
reason a mandatory consumer protection code is identified as a priority.
A DMC when operating as a mortgage broker or insurance intermediary is required to

comply with authorisation requirements, codes of conduct, minimum competency and
fitness and probity regimes.
In the case where a DMC has appointed agents, licensed third parties or otherwise
accepts applications from others who call on potential customers, the code where
applicable applies to these agents or third parties.
DMC’s AS FINANCIAL SERVICE PROVIDERS
The provision by DMC’s of debt advice to a consumer and recommendation of the

suitability of debt management plans or other options is considered a financial advisory
service. Debt management plans and their administration are considered a consumer
financial product and service.
Existing regulatory codes where applicable will apply to DMC’s in particular the fitness
and probity, minimum competency requirements, consumer protection code and
requirements concerning the appointment of agents or third parties to provide advice on
its products and services and to arrange for debt management plans or other associated
products or services.
DMC SERVICES COVERED UNDER THIS CODE
DMC services covered under this code of conduct consist of the following services when
provided to debtors who are individuals defined as consumers:
• Advising on how to restructure debts, how to alter debt repayments or how to

achieve early resettlement of debts.
• Contacting creditors and/or negotiating with creditors, on behalf of the consumer

debtor, in order to have any of the above arrangements (whether that conduct
amounts to “negotiation” or not)
• Providing a facility for the debtor to make a single repayment which is then
distributed on his/her behalf to his/her creditors
In addition, if and when credit reference services are provided:
• undertaking reviews of the consumer debtors' financial circumstances and/or

making payments on their behalf, including ascertaining whether a credit
information agency holds information relevant to the financial standing of the
debtor
• ascertaining the contents of such information so held
• advising consumers on how they might take steps to secure the correction of, the
omission of anything from, or the making of any other kind of modification to,
information relevant to their financial standing
• advising consumers on how they might take steps to secure that an agency
which holds such information about them stops holding it or does not provide it to
another person
• taking steps on behalf of a consumer with a view to securing the correction of,
the omission of anything from, or the making of any other kind of modification to,
information relevant to the financial standing of that individual
and
• taking steps on behalf of a consumer to secure that an agency which holds such
information stops holding it or does not provide it to another person.
Where any DMC gives assistance, on a non commercial basis, in one or more of the
ways outlined above to consumers in debt, it will be expected to meet relevant parts of
the minimum standards set out in the guidance. Elements of the code and its guidance
are relevant where they set out the principles or deal with actions or circumstances that
are a feature of the relationship between the DMC and the consumer.
DEFINITIONS
In this Code:
“advertisement” means any commercial communication usually paid for by a debt

manager, which is addressed to the consumer public or a section of it, the purpose being
to advertise a product, service
“advertised product or service” means the product or service that is the subject of an
advertisement;
“agent” a person or company that markets, advises and arranges for debt management
plans on behalf of a debt manager or debt management company
“associated undertaking” means an associated undertaking within the meaning of

Regulation 34 of the European Communities (Companies Group Accounts) Regulations
1992;
“business day” means any day except Saturday, Sunday, bank holidays and public
holidays;
“certified person” has the meaning assigned to it by section 55 of the Investment

Intermediaries Act, 1995;
“charge” means any cost or fee which a consumer must pay in connection with a product
or service provided by a debt manager;
“complaint” refers to an expression of grievance or dissatisfaction by a consumer, either

verbally or in writing, in connection with:
a) the provision of a product or service to a consumer by a debt manager or

b) the failure of a debt manager to provide a product or service to a consumer;
“connected party” shall, except where otherwise stated, include a partner, officer,
controller, associated undertaking, related undertaking or subsidiary undertaking,
employee or person authorised to engage in the business of debt management on
behalf of a DMC including any associate of the person concerned;
“consumer” means any of the following:

a) a natural person acting outside their business, trade or profession;
b) a person or group of persons, but not an incorporated body with an annual

turnover in excess of €3million (for the avoidance of doubt a group of persons
includes partnerships and other unincorporated bodies such as clubs, charities
and trusts, not consisting entirely of bodies corporate);
c) incorporated bodies having an annual turnover of €3 million or less in the

previous financial year (provided that such body shall not be a member of a
group of companies having a combined turnover greater than the said €3 million);
or
d) a member of a credit union; and includes where appropriate, a potential

‘consumer’ (within the meaning above);
“customer” or “client” means any person to whom a DMC provides or offers to provide a
service the subject of this Code, and any person who requests such a service;
“client account” the account into which consumer debtors make a regular payment and
from which regular payments are made to their creditors;
“debt management company” a company providing debt management services as

defined in the code;
“debt manager” a person or company providing debt management products and

services;
“DMC” a commercial debt management company or debt manager;
“debt management plan” a voluntary agreement between a consumer debtor and debt
manager in which; the debt manager negotiates a payment schedule with the debtors
creditors; and collects and administers regular payments from the debtor which it
disburses to the debtors creditors;
“debt management programme” the same meaning as a “debt management plan”
“employee” means a person employed under a contract of service or a person otherwise

employed by a DMC;
“group” includes a company, its parent and its subsidiaries and any associated
undertaking or related undertakings;
“officer” in relation to a DMC, means a director, chief executive, manager or secretary,

by whatever name called;
“online activity” means the advertising of and offer of services to consumers via the
internet. It also includes lead generation or online response forms.
“outsourced activity” is where a DMC employs another person (other than a natural
person who is an employee of the DMC under a contract of service) to carry out an
activity on its behalf;
“person” means a natural person or a legal person;
“record” means any document, file or information (whether stored electronically or

otherwise) and which is capable of being reproduced in a legible form;
“related undertaking” means:

a) companies related within the meaning of section 140(5) of the Companies Act
1990;
b) undertakings where the business of those undertakings has been so carried
on that the separate business of each undertaking, or substantial part thereof, is
not readily identifiable; or
c) undertakings where the decision as to how and by whom each shall be

managed can be made either by the same person or by the same group of
persons acting in concert.
GENERAL PRINCIPLES
A debt management company must ensure that in all its dealings with customers and
(within the context of any future authorisation/licence procedures), it:
1. acts honestly, fairly and professionally in the best interests of its customers and
the integrity of the market;
2. acts with due skill, care and diligence in the best interests of its customers;
3. does not recklessly, negligently or deliberately mislead a customer as to the real

or perceived advantages or disadvantages of any product or service;
4. has and employs effectively the resources and procedures, systems and control
checks that are necessary for compliance with this Code;
5. seeks from its customers information relevant to the product or service

requested;
6. makes full disclosure of all relevant material information, including all charges, in
a way that seeks to inform the customer;
7. seeks to avoid conflicts of interest;
8. corrects errors and handles complaints speedily, efficiently and fairly;
9. does not exert undue pressure or undue influence on a customer;
10. ensures that any outsourced activity complies with the requirements of this Code;
11. without prejudice to the pursuit of its legitimate commercial aims, does not,
through its policies, procedures, or working practices, prevent access to basic
services such as those provided for by MABS; and
12. complies with the letter and spirit of this Code.

COMMON RULES FOR DEBT MANAGERS

GENERAL
A debt manager must ensure that all warnings required by this Code are prominent, i.e.
they must be in a box, in bold type and of a font size that is larger than the normal font
size used throughout the document or advertisement.
1. PROVISION OF INFORMATION TO THE CONSUMER
A Debt Manager must:
ensure that the name of a product or service which it provides is not misleading in terms
of the benefits that the product or service can deliver.
not make the sale of a product or service contingent on the consumer purchasing
another product or service from the DMC.
not charge a consumer a fee for any optional extra(s) offered in conjunction with a
product or service, unless that consumer has positively indicated that they wish to
purchase the optional extra(s).
must ensure that all warnings required by this Code are prominent, i.e. they must be in a
box, in bold type and of a font size that is larger than the normal font size used
throughout the document or advertisement.
assist a consumer in understanding the product provided, including all related payments
and charges. Consumers must be provided with adequate information about the service
and the consequences and costs of entering into an agreement.
prior to entering into an agreement with a consumer, disclose all the fees and costs in a
clear manner and prominently indicate the cost nature of the service in all
documentation.
provide information as to the nature of the service that is being offered; the total cost to
the consumer of the service including any initial or fixed charge fee or deposit, the
periodic management fee to be paid to the DMC multiplied by the estimated length of the
contract; the amount to be repaid; and the likely duration of the contract must be clearly
explained at the outset.
• where it is not possible to establish at the pre-contract stage the cost or duration
of the contract, the consumer must be given a realistic estimate of cost and the
duration of the contract. This should be accompanied in close proximity by a
clear warning that it is an estimate. The assumptions on which the estimate is
based should be set out. If during the pre-contractual stage it becomes clear that
the estimate does not adequately reflect the consumer's circumstances, a

revised estimate must be given.
where an initial up front fee, part payment of an up front fee or deposit is payable, the
consumer must be given a clear explanation of:
• what aspect of the service is covered by the fee or (as the case may be) what the
deposit is held for
• the manner on which it is calculated
• the manner in which the balance of the up front fee is payable i.e. over three
months
• the effect this part payment schedule will have on payments made to creditors
during the part payment period
• whether it is refundable, with due regard to the principles of contract law in
relation to deposits and part payments
must advise the consumer that they will be given the opportunity to withdraw from the
contract, the procedures for withdrawal the circumstances in which costs will and will not
be incurred and, if they are, what they are likely to be.
provide the opportunity for the consumer to withdraw from the contract, if when he/she is
informed of the of the total cost of service, he/she decides the service is unsuitable
must warn the consumer in writing:
• where the first payment goes to the DMC and not to the creditors (whether as an
initial up front fee, part payment of an up front fee, as a deposit or for some other
reason) that they will miss a payment or payments or their payments will be
reduced to their creditors and will therefore go into arrears or further into arrears
This warning must appear prominently on either on debt management plan agreements
Warnings should be developed for each section
• that creditors are not obliged to accept reduced repayments to freeze interest
and charges and that, unless they do, repaying the same debt over a longer
period of time will lead to an increase in the total amount to be paid
• that collection actions, including default notices and litigation, can ensue and that
there is no guarantee that any existing or threatened proceedings will be
suspended or withdrawn. The possibility of default notices – including that they
may incur costs that are added to the debt – must be made clear.
• of the likely impact of the debt management programme on the consumers credit
rating. In particular it should be stated that they might not be able to obtain credit
in the short term and that there is some likelihood that they will not be able to do
so in the medium to long term either. Consumers must not be misled into thinking
that their credit rating will improve earlier than when the payment of their debt is
completed, or even immediately thereafter; records are retained by credit
reference agencies for a further six years.
• of the importance of meeting debts such as mortgage, rent, utility and certain
insurance payments.
• in particular there must be a consumer warning that their home is at risk if they
do not keep up repayments or clear arrears
• not to ignore correspondence or other contact from creditors or those acting on

behalf of creditors
advise the consumer of the nature of those commitments that will, and especially
importantly those that as a matter of the DMC's own decision, will not be included within
the repayment plan, must be made clear to potential clients. The DMC must exercise all
due care to ensure that debts that it says it cannot deal with are not included in
programmes by mistake.
where a DMC is aware that a particular creditor refuses to deal with it, (for whatever
reason and whether or not the DMC regards this refusal as justified), the consumer must
be told of this as soon as the DMC is aware that the consumer has an account with that
creditor.
where consumers make payments by way of standing order or direct debit, issue
monthly statements to consumers who pay weekly and quarterly statements to
consumers who pay monthly.
give adequate notice to affected customers by registered post or by hand, where it

proposes to withdraw its services. A debt manager must ensure that any outstanding
business is properly completed.
inform consumers of the amount and order in which payments will be allocated to
different creditors outstanding balances
ensure that, where it intends to record a telephone conversation with a consumer, it

informs the consumer, at the outset of the conversation, that it is being recorded.
ensure that, where it communicates with a consumer using electronic media it has in
place appropriate arrangements to ensure that secure transmission of information to,
and receipt of information from, the consumer.
ensure that all printed information it provides to consumers is clear, plain language, be a
print size that is clearly legible and must state clearly the implications of entering a debt
management agreement.
where contact is made with a potential client after a referral from a credit or mortgage
broker or lender, the debt manager must disclose at the outset of the conversation how
they obtained the consumers details, what service they offer and that they cannot
themselves provide a loan.
where a debt manager remunerates third parties for providing referrals or referring
consumers to it, it must disclose this to the consumer and set out the terms and amount
of any referral fee paid for the introduction or any fee that may be charged to an account
with the referring party.
where a debt manager operates by means of any distance communications it must

comply with the requirements of the xxx to provide amongst other things certain
information to the consumer before the contract is concluded.
where a debt manager recommends that, one of the consumers options is a remortgage,
or further advance, or consolidation loan, the DMC must disclose to the customer in
writing the level of remuneration they will receive from the third party who arranges this
service, if not already disclosed by the third party.
2. PRESERVATION OF A CONSUMER’S RIGHTS
A debt manager must not, in any communication or agreement with a consumer (except
where permitted by applicable legislation), exclude or restrict, or seek to exclude or
restrict:
a) any legal liability or duty of care to a consumer which it has under applicable law or
under this Code;
b) any other duty to act with skill, care and diligence which is owed to a consumer in
connection with the provision to that consumer of financial services;
or
c) any liability owed to a consumer for failure to exercise the degree of skill, care and
diligence that may reasonably be expected of it in the provision of a financial service.
3. CONTRACT TERMS
A specimen 7consumer information sheet is attached in appendix X in a form

acceptable. DMC’s should not materially depart from its form and structure. In
particular the consumer health warnings must remain prominently displayed in
the relevant sections.
Contract terms and conditions should be fair, written in plain, intelligible language and
easily legible.
The contract should set out the :
• nature of the services that are being supplied (including the kinds of debt that will
and will not be covered)
• total cost to the consumer of the service, including any initial or fixed charge fee
or deposit and the periodic management fee to be paid to the DMC multiplied by
the estimated length of the contract
• the amount to be repaid and,
• the duration of the contract.
7
To be developed
Where it is not possible to state firmly the cost or duration of the contract, the contract
must include realistic estimates of cost and the duration of the contract. This should be
accompanied in close proximity by a clear warning that it is an estimate. The
assumptions on which the estimate is based should be set out.
The contract should set out the circumstances in which the consumer may withdraw
and receive a refund of any monies paid to the DMC
Under the Distance Selling Regulations where a consumer enters into a contract before
he has received any written information, he/she has both
• a cooling-off period of at least seven working days during which he/she can
withdraw from the contract with a full refund and,
• a right to be informed that he/she has that cooling off period
The contract must not include any term which says or implies that there are no
circumstances in which a client is entitled to refund. For example a refund (and in some
cases a full refund) may be due to a dissatisfied client if:
• the DMC has promised more than it can deliver. This may be the case even
where the DMC's contract is appropriately worded, if (for example) its written or
oral marketing is over-optimistic or
• the DMC has failed to conduct negotiations with the reasonable care and skill
required by section x of the Supply of Goods and Services Act or
• there has been a total failure of consideration.
The contract should allow the client to withdraw from the contract where, following
signing of the contract the total fee differs significantly from the estimate given prior to
the contract (for example, because a full investigation of the customers’ circumstances
reveals that the monthly payment must be larger than first thought).
Include section on 8standard cooling off period-
4. HANDLING MONEY
Any monies held on behalf of consumers must be kept in a client account not usable by
the DMC for the purposes of its own business. This includes, in particular, any deposit
which under the contract may be returned to the client at any date in the future and any
monies received by the company for payment to creditors. Any interest earned on this
account should accrue to the benefit of the client, not the company.
8 It the practice to allow for a 14 day cooling of period, during which the consumer may terminate the agreement. However as work may
have commenced on processing their plan and DMC’s refund the initial fee less their reasonable costs. This issue has proved contentious
with some DMC’s retaining the full initial payments.
The company must ensure that it holds indemnity/fidelity insurance against fraud of theft
of customers money at a minimum of 9(x) times the monthly turnover.
The contract must specify a period within which payments received from the customer
will normally be passed on which must not be greater than five working days. Delay that
adversely affects the individual consumer's financial position and which exceeds five
working days from receipt of cleared funds is unacceptable.
If the DMC fails to disburse payments to creditors in accordance with the contract, it
should accept responsibility and inform the customer of the delay, together with the
reason for it. The law does not impose liability where the reason for delay is beyond the
control of the supplier. But where the delay is not beyond its control the DMC should
take appropriate action to put the consumer in the position they would have been had
the contract been fulfilled. This includes, for example making good any additional
interest which has accrued and any default charges that have been applied to the
account as a result of the delay. In this respect, the DMC must have appropriate
systems in place to deal with foreseeable problems and to minimise delays, even when
the initial cause is not its fault. As the consumer relies on the DMC to be made aware of
any delay, DMC’s should take reasonable steps to anticipate delays and make good
losses.
A DMC must not accept consumers monies before they have received and
acknowledged in writing the Terms and Conditions of the DMC.
DMC’s must demonstrate, by annual audit certificates from an independent external

auditor, that customers funds are held in a separate client bank account that would not
be at risk in the event of a DMC ceasing to trade, and is not usable by the DMC for the
purposes of its own business. Any interest earned on the account should accrue to the
benefit of the client and not the DMC.
If customers withdraw from debt management programmes, DMC’s must refund any
monies held, excluding any reasonable administration fees due.
5. OTHER TERMS
Contracts must not prohibit consumers from corresponding with, or responding to written
or oral communications from creditors or others acting on behalf of creditors.
However, in order to avoid duplicate or contradictory action, contracts may reasonably

require the customer to send to the DMC a copy of any communication from a creditor.
Where the contract requires or suggests that the customer should send such
correspondence to the DMC, it must deal with it appropriately and promptly.
9
To be developed
The DMC must send to the customer a copy of any written communication it sends to or
receives from the creditor, and (unless the creditor itself sends a copy to the customer)
must keep the customer informed of other communications.
Contracts must not include declarations such as 'I fully understand the requirements of
the contract' or confirmation that certain provisions have been explained.
6. KNOWING THE CONSUMER
All advice given should be in the best interests of the consumer. Debt management
programmes are not suitable for all consumer debtors, and DMC’s must exercise all due
discretion, in the best interests of the consumer, in deciding whether or not take a
consumer as a customer.
7. SUITABILITY
A DMC must exercise all due discretion, in the best interests of the consumer , in
deciding whether or not to accept a consumer on to a debt management programme,
and must bear in mind that debt management programmes are not suitable for all
consumers. A realistic assessment of the financial circumstances of the customer must
be made
A DMC must ensure that, having regard to the facts disclosed by the consumer and
other relevant facts about that consumer of which the DMC is aware, any product or
service offered to a consumer is suitable to that consumer.
8. FINANCIAL POSITION
Before providing a product or service to a consumer, a DMC must gather and record
sufficient information from the consumer to enable it to provide a recommendation or a
product or service appropriate to that consumer. The level of information gathered
should be appropriate to the nature and complexity of the product or service being
sought by the consumer, but must be to a level that allows the DMC to provide a
professional service.
A realistic assessment of the financial circumstances of the consumer, including both

income and outgoings, must be made before advice is given.
Consumer income must be verified by appropriate means, such as pay slips and copies
retained on file
Reasonable steps must also be taken to verify regular outgoings. Estimates of

expenditure on certain items are permitted, but only if precise figures are not available.
Standard expenditure guidelines may be used where there is no better indication of the
client's outgoings provided that there is nothing to suggest that they are inappropriate. A
copy of any financial statement sent to creditors must also be sent to the client.
9. PAYMENTS TO CREDITORS
Any advice given to the client to cancel direct debits or standing orders prior to the
repayment plan being agreed with creditors must be demonstrably in the best interests
of the client. It is not a step which should be undertaken lightly. DMC's must clearly warn
clients of the risks and consequences of this course of action if they advise it. Where this
course is taken, it is normally expected that regular payments to creditors (even if lower
than the contractual ones) should continue to be made wherever possible.
The difficulties associated with stopping contractual payments are especially acute when
they are accompanied by a period in which no payments at all are made (for example,
because the DMC takes the first payment under the plan as a deposit or up front fee or
because there is a delay in distributing payments to creditors). If this will, or is likely to,
happen under the plan the consumer must be clearly informed and warned of the
consequences. It is not sufficient for this purpose that there be a statement to this effect
in the small print of the terms and conditions.
Customers should not be advised to make payments to accounts at a rate lower than the
rate at which any interest and other charges are accruing or may accrue, unless this is
demonstrably in their best interests. In such a case, a clear explanation must be given to
the client as to why this course is necessary and its implications.
If, following advice to cancel direct debits or reduce the level of contractual payments, it
becomes clear that the course of action is not producing results in the customer’s
interest, (for example, because creditors are not agreeing to freeze interest), then the
customer must be informed immediately so that he/she may be advised appropriately
and take whatever action is in his best interests (including the possibility of withdrawing
from the plan).
Customers must be advised of the importance of meeting debts such as mortgages, rent
and utility payments. More generally it should not be assumed that it is always in the
customers’ best interests simply to divide available income between debts in proportion
to their size. For example advice should take into account the fact that some loans may
lose the benefit of a reduced rate of interest if payments are missed, or that there may
be a benefit in settling a loan with a higher rate of interest sooner than one with a lower
rate of interest.
10. REASONS WHY STATEMENT
Before providing a product or service to a consumer, a DMC must prepare a written

statement setting out:
a) the reasons why a product or service offered to a consumer is considered to be

suitable to that consumer;
b) the reasons why each of a selection of product options offered to a consumer are
considered to be suitable to that consumer; or
c) the reasons why a recommended product is considered to be the most suitable

product for that consumer.
The DMC must give a copy of this written statement to the consumer and retain a copy.
11. OTHER POINTS
Customers must be advised not to ignore correspondence or other contact from

creditors or those acting on behalf of creditors.
Customers should not be advised to close or switch their main banking account unless
there is a compelling reason for doing so. The consequences of switching provider
should be fully explained. A debt manager should not offer to or arrange to switch bank
accounts.
A DMC must gather and record details of any material changes to a consumer’s
circumstances before providing that consumer with a subsequent product or service.
A DMC must ensure that, where a consumer refuses to provide information sought in
compliance with this Code, the refusal is noted on that consumer’s records.
A DMC must maintain a list of its customers who are consumers and the subject of this
Code.
A DMC must endeavor to have the consumer certify the accuracy of the information
he/she has provided to the DMC Where the consumer declines to do so, the DMC must
note this on the consumer’s records.
12. DEBT MANAGEMENT PLAN ADMINISTRATION
DMC’s must inform the consumer of the outcome of negotiations with creditors. This is
not limited to the situation when creditors have refused to deal with the DMC, or refused
to freeze interest. But it is especially important in those cases.
Customers must be kept informed of any developments in the relationship with creditors,
in particular the issue of default notices or the threat of issue of legal proceedings
Where the service provided by the DMC includes debt repayment, the DMC must
• take full account of debts such as mortgage payments, rent, utility payments
etc including any arrears already incurred on those debts, in setting monthly
repayments, and
• reassess the payment plan and consider any necessary changes (including
bringing the plan to an end) to ensure it remains in the consumer’s best
interests, as soon as it becomes aware of material change in the consumer’s
financial position. The customer should be advised of any recommended
changes without delay. Repayment plans should in any event be re-assessed

on at least an annual basis and the client informed of the outcome of the
reassessment.
• Customers should at the outset be given a statement of how their money is being
disbursed. In addition, where a plan has been agreed, the balance owed (or if an
accurate figure is not known the best estimate), the period of payment needed to
clear the debts and the fee charged by the DMC must be included in the
statement. Customers must be kept informed of any material changes to these
arrangements at the time they occur. DMC's should meet any reasonable request
by a client for a statement of his or her position.
• All correspondence, statements and other paperwork sent to or received from

the customer or the customer’s creditors and which has not already been
copied to or returned to the client, should be retained by the DMC until such
time as the contract is completed or terminated. On termination or completion
of the contract, all retained paperwork should be returned to the customer
unless, at that time, the customer says that they do not want the paperwork.
13. UNSOLICITED CONTACT (COLDCALLING)

When contacting a consumer other than an existing customer, a DMC may make an
unsolicited contact to a consumer, who is an individual, by way of a personal visit or
telephone call, only if:
a) the consumer has signed a statement, within the previous 6 months, giving the
debt manager permission to make personal visits or telephone calls to him/her;
or
b) the consumer has a listing in the business listing section of the current
telephone directory, classified telephone directory or in trade/professional
directories circulating in the State; or
c) the consumer is a director of a company, or a partner in a firm with an entry in

one of the directories listed in b) above; or
d) the consumer is the subject of a referral, received from an entity authorised to

provide financial services in Ireland, another entity within the same group, a
solicitor, a certified person or an existing customer.
In relation to d) above, such a referral must be followed up by an indication to the

consumer by the DMC that the referral has been made and asking for consent to
proceed.
A DMC must ensure that, where it makes an unsolicited contact on foot of a referral, it
retains a record of the referral.
An unsolicited contact made to a consumer, other than an existing customer, may only
be made between 9.00 a.m. and 9.00 p.m. Monday to Saturday (excluding bank
holidays), unless otherwise requested by the consumer.
When making an unsolicited contact in accordance with this Code, the representative of
a DMC must immediately and in the following order:
a) identify himself or herself by name, the name of the DMC on whose behalf he/she is
calling and the commercial purpose of the contact;
b) inform the consumer that the call is being recorded, if this is the case;
c) disclose to the consumer, the source of the business lead or referral supporting the
contact; and
d) establish if the consumer wishes the call to proceed; if not, the caller must end the
contact immediately.
A DMC must abide by a request from a consumer not to make an unsolicited contact to
him/her again.
A DMC must not reach a binding agreement with a consumer on the basis of an
unsolicited contact alone, except in the circumstances permitted under the European
Communities (Distance Marketing of Consumer Financial Services) Regulations 2004.
14. DISCLOSURE REQUIREMENTS
A DMC must include its 10“regulatory” disclosure statement:
a) on its business stationery (including DMC agreements);
b) in all advertisements;
c) in all catalogues, brochures etc; and
d) on all electronic communications with consumers including on the home page

of its website, if any.
The regulatory disclosure statement must take the following form:

“[Full legal name of DMC (and trading name(s), if applicable)] is required to comply with
the X Code of Conduct for Debt Managers.”
A DMC must not use the disclosure statement on any business stationery,
advertisement, catalogue, brochure or electronic communication in connection with a
product or service for which the DMC is not (regulated) by the Financial Regulator.
10
Requires a statement pending regulations or licensing requirements
The disclosure statement must not be presented in such a way as to appear to be an

endorsement by the (Financial Regulator/NCA) of the DMC or its products or services.
A DMC must:
a) speedily, efficiently and fairly, correct an error in any charge or price levied on, or
quoted to, a consumer in respect of any product or service the subject of this Code;
b) where it considers that there may have been a material charging or pricing error,
without delay, inform the Financial Regulator of its proposals for correcting any such
error as may have occurred in accordance with paragraph a) above (if any such
information is provided verbally in the first instance, it must be provided to the Financial
Regulator in writing on the next business day); and
c) notify all affected consumers, both current and former, in a timely manner and in such
form as may be agreed with the Financial Regulator, of any material charging or pricing
error that impacted negatively on the cost of the service or the value of the product
provided.
15. FEES AND CHARGES
It is the practice of some DMC’s to assess charges based on a % of the amount to be

paid to creditors. This practice is inimical to consumer’s interests as the greater the
amount paid the higher the charges.
The schedule for charges permitted by a DMC is a combination of:
(1) An initial set fee for setting up and negotiating the plan with creditors
(2) An administration fee charged on a scaled basis on the number of regular

payments made to creditors
It is the practice of DMC’s to charge a fee for negotiating lump sum full and final
settlements.
The schedule for negotiated lump sum full and final settlements is as follows:
A maximum of 11(10%) of the lump sum amount or the amount agreed to be written off
by the creditor(s) whichever is the lower but should be no more than (€5000)
Note: Consider providing for one model as above
11 The % and € amount might be higher/lower but the principle maximises the benefit to the consumer
.
16. HANDLING COMPLAINTS
A DMC must have in place a written procedure for the proper handling of complaints.
This procedure need not apply where the complaint has been resolved to the
complainant’s satisfaction within 5 business days, provided however, that a record of this
fact is maintained.
At a minimum this procedure must provide that:
a) the DMC will acknowledge each complaint in writing within 5 business days of the
complaint being received;
b) the DMC will provide the complainant with the name of one or more individuals
appointed by it to be the complainant’s point of contact in relation to the complaint until
the complaint is resolved or cannot be processed any further;
c) the DMC will provide the complainant with a regular written update on the progress of
the investigation of the complaint at intervals of not greater than 20 business days;
d) the DMC will attempt to investigate and resolve the complaint within 40 business days
of having received the complaint. Where the 40 business days have elapsed and the
complaint is not resolved, the DMC will inform the complainant of the anticipated
timeframe within which the moneylender hopes to resolve the complaint and of the
consumer’s right to refer the matter to the 12Financial Services Ombudsman and will
provide the consumer with the contact details of the Financial Services Ombudsman;
and
e) the DMC will advise the complainant in writing, within 5 business days of the
completion of the investigation of a complaint, of the outcome of the investigation and,
where applicable, explain the terms of any offer or settlement being made. The DMC will
also inform the complainant of the right to refer the matter to the Financial Services
Ombudsman and will provide the consumer with the contact details of the Financial
Services Ombudsman.
When a DMC receives a verbal complaint, it must offer the consumer the opportunity to
have the complaint treated as a written complaint.
A DMC must maintain an up-to-date record of all complaints subject to the complaints’
procedure. This record must contain the details of each complaint, a record of the
moneylender’s response(s), any other relevant correspondence or records and the
action taken to resolve each complaint.
12
Only if DMC’s are subject to the FSO’s remit. If not then this section requires a complaints adjudication
and resolution procedure
17. CONSUMER RECORDS
A DMC must maintain up-to-date consumer records containing at least the following:
a copy of all documents required for consumer identification and profile;
the consumer’s contact details;
all information and documents prepared in compliance with this Code;
details of products and services provided to the consumer;
all correspondence with the consumer and details of any other information
provided to the consumer in relation to the product or service;
all documents or applications completed or signed by the consumer;
copies of all original documents submitted by the consumer in support of an

application for the provision of a service or product; and
all other relevant information concerning the consumer.
all correspondence to and from the consumers creditors
Details of individual transactions must be retained for 6 years after the date of the
transaction. All other records required under a) to h) above, must be retained for 6 years
from the date the relationship ends. Consumer records are not required to be kept in a
single location but must be complete and readily accessible.
18. FEES, COMMISSIONS AND OTHER REWARDS
A DMC may pay a fee, commission, other reward or remuneration only to a person that
is:
a) a regulated entity;
b) a certified person;
c) an individual for whom a DMC has taken full and unconditional responsibility;
d) an entity specifically exempt by law from requiring authorisation;
e) an authorised “credit intermediary” (within the meaning of the Consumer Credit Act
1995); or
f) a financial services provider operating in the State in accordance with freedom of

services or establishment provisions of EU law
DMC Agents are included for under (c) see following section:
19. DMC AGENTS
It is the practice of some DMC’s to accept applications for debt management plans and
other products and services from third parties.
Where a DMC has agreed with or licensed third parties to recommend and arrange the
sale of its products and services to potential customers then it assumed the third party is
acting as an agent of the DMC. In which case, this code applies to the agent.
DMC’s must maintain a register of agents and provide them with letters confirming their
permission to recommend and arrange for debt management plans.
It is the practice of DMC’s to require a payment from the consumer on signing an

application for a debt management plan. On no account should an agent accept
payment from a customer of a DMC payable to the agent. All payments must be made
payable to the DMC. Where cash payments are made then the agent must produce a
DMC receipt for the monies.
DMC agents will be required to comply with minimum competency requirements.

20. MINIMUM COMPETENCY REQUIREMENTS

It is the intention to consider a debt management plan as similar to a retail financial
product in which case a DMC and their agents will be required to comply with the
Financial Regulators minimum competency requirements.
21. FIT AND PROPER
It is expected that any future DMC authorisation procedure will include for fitness and
probity tests. In the interim compliance with this code will require DMC’s to comply with
the Fit and Proper Requirements for Directors and Senior Managers.
22. ADVERTISING GENERAL REQUIREMENTS
A DMC must ensure that all its advertisements are fair and not misleading.
An advertisement must not influence a consumer’s attitude to the advertised product or

service of the DMC either by inaccuracy, ambiguity, exaggeration or omission.
The name of the DMC publishing an advertisement must be clearly shown in all
advertisements.
The nature or type of the advertised product or service must be clear and not disguised
in any way.
An advertisement must be designed and presented so that any reasonable consumer

knows immediately that it is an advertisement.
The design and presentation of an advertisement must allow it to be clearly understood.

Where small print or footnotes are used, they should be of sufficient size and
prominence to be clearly legible. Where appropriate they should be linked to the relevant
part of the main copy.
Warnings and product specific information must be clear and must not be obscured or
disguised in any way by the content, design or format of the advertisement.
Any statement or promise contained in an advertisement must be true and not

misleading at the time it is made and any assumptions on which it is based must be
reasonable and stated clearly.
Any recommendations or commendations quoted must be complete, fair, accurate and

not misleading at the time of issue, and relevant to the advertised product or service.
A recommendation or commendation may not be used without the consent of the author
and, if the author is an employee of the DMC or a connected party of the DMC or has
received any payment from the DMC or a connected party of the DMC for the
recommendation or commendation, the advertisement must state that fact.
Comparisons or contrasts must be based either on facts verified by the DMC, or on

reasonable assumptions stated within the advertisement and must be presented in a fair
and balanced way; and not omit anything material to the comparison or contrast.
Material differences between the products must be set out clearly.
23. DMC ACTING AS AN AGENT FOR THE CONSUMER

DEBTOR
Some creditors have a blanket policy of refusing to enter into negotiations with some
DMC’s or even refusing to accept payments sent by DMC’s on behalf of consumers.
Where a consumer appoints a representative to negotiate on their behalf, it is an unfair

and improper business practice on the part of the creditor to operate a policy, without
reason, of refusing to consider such requests.
Where a creditor wishes to refuse to negotiate with a particular representative, it must

make its position known to the representative and also immediately inform any
consumer on whose behalf the creditor is approached by that representative.
Where payments are tendered, not by the debtor personally, but by someone acting on
his/her behalf, it is a principle of law that creditors cannot refuse to accept those
payments. The practice of creditors returning payments, or not crediting payments to
consumers' accounts, purely because they are received through a DMC, therefore, is not
acceptable. This is so even in circumstances where a creditor has indicated that it will
not negotiate with a DMC acting as a representative of a debtor.
24. REFERAL TO DMC’s

Some lenders, credit and mortgage brokers might want to refer consumers to DMC’s as
potential clients. There is no objection to this provided it is done with the informed, prior
consent of the consumer. Referrals must not be made without this consent.
25. COMPLIANCE WITH THIS CODE
A DMC must have adequate systems and controls in place to ensure compliance with
this Code.
Where the Financial Regulator requires a DMC to provide information in respect of the
DMC’s compliance with this Code, such DMC is thereby required to provide information
which is full, fair and accurate in all respects and not misleading and to do so in any
reasonable period of time or format that may be specified by the Financial Regulator.
Where the Financial Regulator requires information in respect of a DMC’s compliance

with this Code, and the Financial Regulator is of the opinion that a meeting with
personnel of the DMC is necessary in order to procure such information in a satisfactory
manner, the DMC must use its best endeavours to arrange for appropriate personnel to
participate in such a meeting in order to provide the required information to the Financial
Regulator.
A DMC must, upon being required by the Financial Regulator to do so, provide to the
Financial Regulator records evidencing compliance with this Code for a period prior to
such requirement as the Financial Regulator may specify (up to a maximum period of 6
years).

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DRAFT “STRAWMAN” FOR DISCUSSION PURPOSES ONLY

A DRAFT CONSUMER PROTECTION CODE

A SUBMISSION BY BILL HOBBS TO THE EXPERT GROUP ON CONSUMER

8TH MARCH 2010

Preventing Consumer Harm – Regulating Commercial Debt Managers

PURPOSE OF THIS CODE

LICENSING AND AUTHORISATION PROCEDURES

Note: It should be possible for commercial debt managers to “voluntarily” commit to

REASON FOR THIS CODE

It is clear that certain unwelcome practices have emerged here in particular

• false and misleading claims,

AIMS OF THIS CODE

The key requirements of the code are:

• Advertisements and marketing must be accurate, clear and not misleading.

• No claims of being able to guarantee debt forgiveness or freezing of

• No cold calling by personal visit or misleading or unlawful cold calling by

• Consumers must be given adequate information before entering into an

• A realistic assessment of the customer's financial circumstances must be

• Where a debt management plan is recommended DMC’s must demonstrate

• DMC’s must inform clients of the outcome of negotiations with creditors,

3 ISSUANCE AND COMPLIANCE MONITORING ROLES TO BE DECIDED

• Payments from consumers should normally be passed on to creditors

WHAT IS A DEBT MANAGEMENT COMPANY (DMC)?

The practice of basing charges on a percentage of the payment made by a debtor or

CONCERNS OVER DMC’s

• In the absence of licensing, guidance and regulations there is a high risk of

• Some DMC’s may claim to be not-for profit and/or charitable concerns.

• Advertising can be misleading

• Transparency over the nature and cost of the services provided

• the quality of advice and information given to the consumer

• The handling of client money.

• Websites where the DMC is not identifiable and contains no reference to

CONCERNS OVER CREDITORS

MANDATORY OR VOLUNTARY CODE OF CONDUCT?

A DMC when operating as a mortgage broker or insurance intermediary is required to

DMC’s AS FINANCIAL SERVICE PROVIDERS

The provision by DMC’s of debt advice to a consumer and recommendation of the

DMC SERVICES COVERED UNDER THIS CODE

• Advising on how to restructure debts, how to alter debt repayments or how to

• Contacting creditors and/or negotiating with creditors, on behalf of the consumer

In addition, if and when credit reference services are provided:

• undertaking reviews of the consumer debtors' financial circumstances and/or

• ascertaining the contents of such information so held

“advertisement” means any commercial communication usually paid for by a debt

“associated undertaking” means an associated undertaking within the meaning of

“certified person” has the meaning assigned to it by section 55 of the Investment

“complaint” refers to an expression of grievance or dissatisfaction by a consumer, either

a) the provision of a product or service to a consumer by a debt manager or

“consumer” means any of the following:

b) a person or group of persons, but not an incorporated body with an annual

c) incorporated bodies having an annual turnover of €3 million or less in the

d) a member of a credit union; and includes where appropriate, a potential

“debt management company” a company providing debt management services as

“debt manager” a person or company providing debt management products and

“DMC” a commercial debt management company or debt manager;

“debt management programme” the same meaning as a “debt management plan”

“employee” means a person employed under a contract of service or a person otherwise

“officer” in relation to a DMC, means a director, chief executive, manager or secretary,

“person” means a natural person or a legal person;

“record” means any document, file or information (whether stored electronically or

“related undertaking” means:

c) undertakings where the decision as to how and by whom each shall be

3. does not recklessly, negligently or deliberately mislead a customer as to the real