Frp Advisory Group Regulatory News (FRP)

18 Oct 2006 07:01

Debt Free Direct Group PLC18 October 2006 18 October 2006 DEBT FREE DIRECT GROUP PLC DEBT FREE DIRECT TAKES THE LEAD ON AUDIT AND ACCREDITATION AND PROVIDES OPERATION UPDATE Having for some time been lobbying for greater regulation of the sector, DebtFree Direct ("DFD") are delighted that creditors are now recognising that notall debt advice companies are the same and that only enhanced regulation canensure that both the consumer and the creditors get a fair deal. DFD has built its business to be 'regulation ready' and has recently conducted a number of high level meetings with lenders to discuss the issues for the debt solutions industry. From those meetings it is clear that creditors are concerned about: • Unregulated businesses advertising IVAs in inappropriate ways (for example, leading consumers to believe that 75% of their debt can always be written off). • Consumers being mis-sold IVAs when there is a more appropriate solution for both consumers and creditors. • Offers of repayment being put forward which are not the consumer's best affordable offer. • Advice companies profiting from putting consumers into fee charging debt management plans that are significantly less beneficial to both consumers and creditors than the creditor funded debt management plans available from companies like PayPlan and CCCS. • "Not for profit" advice groups advising too many consumers to go bankrupt and avoid making payments to their creditors. Debt Free Direct shares all of these concerns. We have also noted the responseof Jim Fitzpatrick (Trade and Industry Minister) to the banks' calls for greaterregulation of the debt solutions industry. We understand, and have some sympathywith, the Minister's position. DFD remains of the view that, unless and until the lenders' legitimate concernsare addressed, a consumer's access to an IVA may be compromised. This iscontrary to the Insolvency Service's (a department within DTI) stated aim ofincreasing access to IVAs. In an attempt to increase awareness of these issues and to offer solutions tothem, DFD is holding a conference on 9 November 2006 and has invited the majorbanks and other lending institutions exposed to the consumer debt problem toattend. Debt Free Direct's message is three-fold: 1. When an IVA is the appropriate course of action for the consumer it will also give a higher return to the creditors than any other solution. 2. When IVAs are properly put in place (that is, the Debt Free Direct way) the return is significantly (29%) higher than returns currently being achieved by the 'industry' as a whole. 3. Creditors can ensure that appropriate advice is given and IVAs are put in place properly by accepting only IVAs put forward by "audited and accredited" debt advice companies. DFD is working with an international firm of accountants with specialistknowledge of the IVA market to develop an audit process that will providelenders with re-assurance that: • best advice is always given; • offers of repayment are always the best available; • advice is robustly tested; • a fair balance between the interests of the consumers and lenders is maintained. The audit will take place in a few weeks' time and the audit opinion will besubmitted to creditors for their consideration. Our meetings with lenders give us considerable confidence that they will embracethe "accreditation route". We expect this to be very good news for DFD and otherhigh quality solution providers. Clearly, the poorer performers will beidentified and isolated. Debt Free Direct has, for some time, considered itself to be the market leaderand has close to 20% of the IVA market. Its success relies upon giving the mostappropriate advice to consumers and at the same time achieving the bestavailable return for creditors whilst treating their customers fairly. We expectthese initiatives to strengthen further our position in the market. Operation Update DFD has now successfully completed the relocation of its principal operation to40,000 sq ft premises in Adlington, Lancashire. These premises provideconsiderable space for continued growth of the business. Recruitment activityhas been ramped up and we expect to employ 300 people by December 2006. DFD is currently trading in line with the last trading update delivered to themarket on 04 September 2006. Our enhanced resources have allowed us to increaseour media activity in a cost efficient manner. We expect to generate and processrecord levels of IVA cases in the coming months. A trading update will follow indue course. Enquiries: Debt Free Direct Group plcAndrew Redmond, Chief Executive Officer 01257 240599Paul Latham, Finance Director 01257 240529 Numis SecuritiesIain McDonald 020 7776 1500Lee Aston Financial DynamicsEd Gascoigne-Pees 020 7269 7132Nick Henderson 020 7269 7114 Notes Debt Free Direct helps individuals find the best solution to their debtproblems, based upon an analysis of their particular financial circumstances.Financial information on an individual is processed through a computer model(the Best Advice Model) developed by Debt Free Direct in order to recommend asolution suitable for that individual's particular financial circumstances. Thesolutions offered range from basic advice, such as simply destroying creditcards and curbing unnecessary expenditure, to the following solutions: • consolidation loan • re-mortgage • informal arrangement • individual voluntary arrangement (IVA) • bankruptcy Debt Free Direct is unique in the marketplace in that, unlike most of itscompetitors who sell specific products, Debt Free Direct looks to provide thebest advice to the consumer and recommends them the most appropriate service. Debt Free Direct is based in Chorley, Lancashire, and was admitted to AIM inDecember 2002. This information is provided by RNS The company news service from the London Stock Exchange