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CONC 3.9 Financial promotions and communications: debt counsellors and debt adjusters

Application

CONC 3.9.1R

This section applies to a financial promotion or a communication with a customer in relation to debt counselling and to debt adjusting.

Financial promotions and communications

CONC 3.9.2G
  1. (1)

    The clear, fair and not misleading rule in CONC 3.3.1 R applies to a communication with a customer or the communication or approval for1 communication of a financial promotion in relation to debt counselling or debt adjusting and in relation to a communication with a customer in relation to providing credit information services.

  2. (2)

    In the light of the complexity of debt counselling, it is unlikely that media which provide restricted space for messages would be a suitable means of making financial promotions about debt solutions.

Contents of financial promotions and communications

CONC 3.9.3R

A firm must ensure that a financial promotion or a communication with a customer (to the extent a previous communication to the same customer has not included the following information) includes:

  1. (1)

    a statement of the services the firm offers;

  2. (2)

    a statement of any relationship with a business associate which is relevant to the services offered in the promotion;

    [Note: paragraph 2.5a of DMG]

  3. (3)

    a statement setting out the level of fees charged for the firm's services, how they are calculated, what service they cover and where it is not possible to state an exact amount, a reasonable estimate of the anticipated fees, or the average level of its fees, for the service in question;

    [Note: paragraphs 2.5c and 3.18f of DMG]

  4. (4)

    a statement of whether any aspect of the services is provided by a third party or at extra cost;

    [Note: paragraphs 2.5a and 3.18f of DMG]

  5. (5)

    a statement that a customer may be eligible under the Financial Ombudsman Service1 and referring by a link or otherwise to the information the firm is required to publish under DISP 1.2.1R (1);

    [Note: paragraph 2.5b of DMG]

  6. (6)

    where this is the case, a statement that the firm's service is profit-seeking;

    [Note: paragraphs 2.5c and 3.18a of DMG]

  7. (7)

    where this is the case, a statement that the firm's service is offered in return for payment from the customer;

    [Note: paragraphs 2.5c and 3.18a of DMG]

  8. (8)

    other than for a not-for-profit debt advice body, a reference to impartial information and to sources of assistance from not-for-profit debt advice bodies;

    [Note: paragraph 2.5d of DMG]

  9. (9)

    where the financial promotion or communication sets out detail of how a customer might resolve debt problems by explaining options, the most important actual or potential advantages, disadvantages and risk of each option, including those of the debt solution offered by the firm;

    [Note: paragraphs 2.5d and 3.18h of DMG]

  10. (10)

    a statement setting out the likely adverse effect of entering into the debt solution in question on the customer's credit rating;

    [Note: paragraph 3.18g of DMG]

  11. (11)

    a statement setting out that evidence of entering into an individual voluntary arrangement, a debt relief order or a protected trust deed will be entered on a public register;

    [Note: paragraph 3.18g of DMG]

  12. (12)

    where applicable, a statement setting out that a debt solution is only available in a particular country of the UK;

    [Note: paragraph 3.18i of DMG]

  13. (13)

    where entry into a debt solution with the firm will lead to a period when payments to a customer's lenders or owners2 (in whole or in part) are not made or are retained by the firm, a warning of the likelihood of falling into arrears or increasing arrears and an explanation of when distributions would be made to lenders or owners2;

    [Note: paragraph 3.18n of DMG]

  14. (14)

    a statement of the risks of entering into an individual voluntary arrangement or a protected trust deed, as the case may be, including of the following risks:

    1. (a)

      if the arrangement or deed fails, the risk of bankruptcy;

    2. (b)

      homeowners may need to release equity from the value of their homes to pay off debts, and that a remortgage may attract higher interest rates or, if no remortgage is available, an individual voluntary arrangement may be extended for 12 months;

    3. (c)

      there are restrictions on the expenditure of a person who enters into an individual voluntary arrangement or a protected trust deed;

    4. (d)

      the customer's lenders or owners2 may not approve the individual voluntary arrangement or the protected trust deed; and

    5. (e)

      only unsecured debts included within the individual voluntary arrangement or protected trust deed may be discharged at the end of the period and unsecured debts not included remain outstanding; and

      [Note: paragraph 3.18o of DMG]

  15. (15)

    a statement that where another option for dealing with a customer's debts is available, that another option is available and may be suitable for the customer.

    [Note: paragraph 3.18r of DMG]

CONC 3.9.4G

In CONC 3.9.3R (8) making reference to impartial sources of information should include making customers aware of publications concerning dealing with creditors published by the Insolvency Service (England and Wales), the Department of Enterprise, Trade and Investment (Northern Ireland) or debt advice published by the Scottish Government.

CONC 3.9.4AG

4Firms are reminded of:

  1. (1)

    the guidance in CONC 3.3.10G(6) to (8) in relation to debt solutions; and

  2. (2)

    the rule in CONC 8.2.4R which requires firms to notify the customer that free debt counselling, debt adjusting and providing of credit information services is available and that the customer can find out more by contacting the Money Advice Service.

CONC 3.9.5R

A financial promotion or a communication with a customer by a firm must not:

  1. (1)

    falsely claim or imply that the help and debt advice is provided on a free, impartial or independent basis, where the firm has a profit-seeking motive;

    [Note: paragraph 3.18b of DMG]

  2. (2)

    falsely claim or imply4 in any way that the firm is, or represents, a charitable or not-for-profit body or government or local government organisation;

    [Note: paragraph 3.18c of DMG]

  3. (3)

    promote a claims management service (within the meaning of section 4 of the Compensation Act 2006) as a way of managing a customer's debts;

    [Note: paragraph 3.18k of DMG]

  4. (4)

    claim or imply that the firm can guarantee a favourable outcome in negotiations with a lender or owner2 concerning the customer's debts;

    [Note: paragraph 3.18m of DMG]

  5. (5)

    unfairly request, suggest or direct a customer to call the firm using a premium rate telephone number.

    [Note: paragraph 3.18w of DMG]

CONC 3.9.6G

An example of unfairly directing a customer to a premium rate telephone number may be to direct a person wishing to complain to such a number.

Contents of financial promotions and communications3

CONC 3.9.6AG

Firms should note the effect of the call charges rule in GEN 7.3

On-line promotion of debt solutions

CONC 3.9.7R

A firm must not:

  1. (1)

    unless it is a not-for-profit debt advice body or a person4 who will provide such services, operate a look alike website designed to attract customers seeking free, charitable, not-for-profit or governmental or local governmental debt advice; or

    [Note: paragraph 3.20a of DMG]

  2. (2)

    seek to use internet search tools or search engines so as to mislead a customer into visiting its website when the customer is seeking free, charitable, not-for-profit or governmental or local governmental debt advice.

    [Note: paragraph 3.20b of DMG]