There is less distinction between debt management companies and debt purchasers than one might think. It is almost a question of who has the biggest share of the wallet. KEVIN STILL CHIEF EXECUTIVE OF DEMSA 20 <strong>December</strong> 2015 www.cicm.com The recognised standard in credit management
INTERVIEW Being authorised and under the scrutiny of the FCA, will increase confidence in our industry and among consumers. It demonstrates that we are not unregulated, and we are not cowboys. KEVIN STILL CHIEF EXECUTIVE OF DEMSA Kevin’s knowledge of consumer and commercial credit spans virtually every discipline from software to strategy, crossborder receivables management to pan- European debt purchase. He is a former Director of the Credit Industry Fraud Avoidance Scheme (CIFAS) and Registry Trust (RTL), the UK clearinghouse for County Court Judgments and Decrees. He is also a former DEMSA auditor, working not only with DMCs but also Debt Purchasers and Insolvency Practitioners, all of who have a role in managing people in debt. “There is less distinction between debt management companies and debt purchasers than one might think,” he explains. “It is almost a question of who has the biggest share of the wallet. To put that relationship into context, up to 25 percent of revenues in some DPs is comprised of debt management plans, such are their importance.” In 2010, he set up the Association of Professional Debt Solution Intermediaries (APDSI) with two other directors with the aim of raising standards in the commercial debt advice sector. In August, APDSI merged with DEMSA, Kevin taking on the role as CEO of the combined body. Kevin is under no illusions as to how big the regulatory challenge will be, and one already detects a note of frustration in his voice at the current position: “In the 18 months since the new FCA authorisation process began, not a single DMC has been authorised,” he says. “Some of the submissions have been with the FCA for more than 12 months and although there have been many requests for further information during that time, we are still yet to see our first member over the line.” Kevin ponders why organisations such as StepChange Debt Charity are still on the waiting list and why there has been such a delay. He accepts there is a legacy issue, and is not surprised that his members are considered in the highest risk category following the Thematic Review, a review, he believes, that was actually a fact finding mission by the FCA, and that what it discovered did not necessarily correlate with what it might have been told. “The profile of consumers within a debt management plan, and their general lack of engagement with their debt situation, came as a shock to the FCA,” he says. “Many are homeowners, with a regular income and a minimal reliance on benefits. As homeowners, it means that a rise in interest rates or a rise in property values can impact their financial position. When a debt management plan is cancelled, the reaction seems to be that they must have been given bad advice, when the reality can be that they have moved from an unmanageable to a manageable debt position.” DEMSA in many ways finds itself in the same position as its colleagues in the world of debt collection, and the Credit Services Association (CSA). Like the CSA, it is not a quasi regulator. But it is further developing its Code of Conduct and reviewing its Quality Assurance framework so that the Code is focused around the suitability of debt advice, and on training and competency standards: “It needs to be principles based and outcome focused to treat customers fairly,” he explains. “But that does not mean hiding behind rhetoric or mission statements. “We need to align the rulebook with the practicality of high quality advice. It is not about ‘free or fee’, but more about making sure consumers are aware of all of the options available to them. If it has the kite mark from Trading Standards, then it has to mean something; it has to give consumer confidence.” Also drawing parallels with the CSA, DEMSA is launching a new data gathering initiative. Kevin sees data as being the key to lobbying, PR, creditor liaison activity and strategic responses to regulatory consultations: “The more routine the collection and analysis of anonymised data, the better equipped DEMSA is to support the sector,” he argues. “Robust data can be used to defend what we do and to prove the benefits of the services supplied. The data once amassed can be used to demonstrate the size of the sector and the value placed on it by the consumer.” Another similarity is the Association’s focus on training and development, and its need to support its ‘smaller’ members who are struggling with the cost of compliance. Despite the challenges, however, he still views the authorisation process as a glass that is half full: “Our members operate in a very challenging environment but despite that, complaints against our members are very low. “Being authorised and under the scrutiny of the FCA, will increase confidence in our industry and among consumers,” he says. “It demonstrates that we are not unregulated, and we are not cowboys.” Kevin is nothing if not phlegmatic. He acknowledges the difficulties that lay ahead but is not afraid of tackling them head on. In many ways, it could be an allegory for his rugby career, playing Prop in the front row: “My hero was Jason Leonard,” he says, “but both of us had the good grace to retire with the advent of lycra.” The recognised standard in credit management www.cicm.com <strong>December</strong> 2015 21
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