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All Party Parliamentary Group on Debt and Personal Finance

About the Group

The All Party Parliamentary Group on Debt and Personal Finance was established in 2003 to provide a forum for MPs and peers to discuss debt and personal finance issues, to monitor legislative developments in this area, and to provide an opportunity for liaison between Members and organisations with an interest in these issues.

The Group is chaired by Yvonne Fovargue MP and the other officers include: Nicholas Dakin MP, Mike Weir MP, Andrew George MP, and Damian Hinds MP. Recent meetings have covered issues such as fuel debt, future funding for the free debt advice sector and the regulation of fee charging debt management companies.

The Secretariat for the Group is provided by the Citizens Advice Public Affairs team, and funding for the Group’s activities is provided by the subscriptions levied on affiliate members.

Recent events

On Tuesday 7th February the APPG on Debt and Personal Finance MPs hosted an evidence session to explore the regulation of high cost credit and debt management services. Members of the APPG hope to improve the regulation of the consumer credit and debt management service markets.

The APPG members took evidence from Teresa Perchard, Director of Policy and Advocacy at Citizens Advice; David Fisher Director of Consumer Credit at the Office of Fair Trading (OFT); John Lamidey, Chief Executive, Consumer Finance Association (CFA); Henry Raine, Head of Regulatory and Public Affairs, Wonga and Melanie Taylor, Director of External Relations, Debt Managers Standards Association (DEMSA). The session was chaired by Yvonne Fovargue MP.

APPG meeting

APPG members and Citizens Advice argued that testimony from their constituents and clients points to an alarming expansion in the size of the debt management and high cost credit industries, and to worrying examples of widespread bad practice within these "markets of distress", including aggressive marketing practices, the use of large up-front fees which lack transparency, and the misuse of rollovers and continuous payment authorities.

David Fisher, highlighted some of the difficulties faced by the OFT in regulating the high cost credit and debt management industries, noting its dependence on relatively small licensing fees for income, the length of time it can take to act against companies engaged in bad practice, and its inability to  ban certain products or suspend consumer credit licences. He said the creation of the new Financial Conduct Authority (FCA) would improve regulation but it was vital that the OFT was not weakened in the interim period.

John Lamidey, Chief Executive of the CFA, and Henry Raine, Head of Regulatory and Public Affairs at Wonga said that the success of the short-term finance industry is borne out by high levels of demand and consumer satisfaction and argued it would be a mistake to deny consumers access to this form of financing.

Mr Lamidey refuted suggestions of misconduct amongst CFA members and argued that the regulatory system is not in need of reform. He emphasised the possible unintended consequences of regulation and argued that product-specific regulation could engender a ‘culture of avoidance’.

Melanie Taylor highlighted the role of DEMSA in ensuring best practice and high standards across the debt management industry and said that DEMSA exists above all to raise standards and not to protect its members. She said DEMSA named and shamed members which engaged in repeated bad practice and acknowledged that large up front fees for debt management services were problematic.

MPs at the meeting suggested possible regulatory measures including caps on interest rates and default charges, the limitation or banning of loan rollovers, product-specific regulations or prohibitions such as a ban on upfront fees for debt management services, and a new power for the OFT to issue interim suspension orders to companies under investigation.  Other reforms and possible improvements discussed included the increased involvement of mainstream or high street providers in the short term credit and debt management markets and improvements in the provision of information and advice to consumers.

Broad agreement was reached on the need to improve the volume and quality of information used by companies in performing credit checks. It was agreed that transparency was essential and that consumers should be presented with the total cost of credit figures up-front and that credit card and overdraft debts must not be excluded from the scope of any reforms to improve consumer credit regulation.

Further details about the Group