Andy, CCCS MoneyAware posted on this on May 8 this year.In a long article, perhaps the key point was 'the option to reclaim is yours. The most important thing to remember is that you don't need to use a claims management company'. Nowhere did they suggest there was any duty to claim or any duty on them to force a claim. It follows from that, that they will not be contracting with a claims company charging inflated fees they can share in, and that there customers will not be left with balances higher than they should be following a successful claim - a real detriment in the event of an IVA failure.
It is high time there was some best practice direction from the regulators on the issue of PPI. There are many interpretations of how it is best addressed, and there will be differing financial arrangements in a lot of firms no doubt, however it is right for the consumer to know if commissions are being received by IP firms, and this should also be transparent to creditors.
All IP firms have a duty to maximise the estate by seeking out these claims, and the "charity" sector should be no different.
Melanie, since the CCCS is entirely funded by the creditors, it would certainly be a first for them to be accused of failing in their 'duty' to them. As you suggest, however, how can commission rates of 40% be consistent with 'maximising returns' in any event. The Regulators have already spoken regarding transparency and the 'duty' to customers regarding fees, commissions and financial arrangements with third parties. It's now up to the industry and customers themselves to bring those companies flouting the rules to book.This is an issue of mass consumer detriment and it will ripple well beyond this forum if the right people take the right action.
Andy, CCCSva is a commercial limited company. It does , however, return its profits of approx £2m a year to the charity wing. It only employs one IP - regulated in the normal way as an individual. The company , itself, comes under the OFT Guidelines. The 'in-house' transfer of profits does of course mean that customers as well as creditors fund the CCCS. They also claim to be self-funding and have no state support. This is not true. The biggest benefit of its charitable status is that it pays no corporation tax. This has cost the public millions over the years for nominal return. CCCSva pays corporation tax since it is not a charity. To what extent this structure impacts on customer advice - who can say ? CCCS criteria for recommending IVAs is very different from the commercial sector, however. The ASA would also say that both Payplan and the CCCS should not be claiming to offer impartial advice since both have a financial interest in the outcome of that advice.
I still remember reading that CCCS only recommend IVAs in 2% of all cases so it would appear that they may favour the Debt Management Plan route for obvious reasons.
Two million seems a good return on one IP ? I guess much of the groundwork and cost is done by the charity side before being passed to the commercial VA dept.
Andy, it's another transparency issue I'm afraid that you've highlighted. If much of the advice, groundwork and costs are borne by the charity, this should be carried out free to the customer and not simply charged for further down the line. They claim all work carried out by the charity wing is free to the customer. CCCSva says it has to charge because of the IP's fees. This also seems a bit of a nonsense since the IP is an employee and can , anyway, only have a nominal input given the number of IVAs being processed.
