The FairLife Foundation

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1 FairLife Debt Advice Mark Executive Summary The primary reason for launching a Mark in Debt Advice is to ensure that customers who are in debt are treated fairly. The Debt Advice Mark interlinks with FairLife s Marks in personal loans and debt recovery and helps to form an umbrella of trust across the industry. Consumers struggling with debt often have multiple creditors and the experience of debts being passed onto other companies can be very confusing, especially for the vulnerable. It is hoped that consumers will be reassured when all the companies they deal with display the FairLife Mark and that this will offer some consistency when they are contacted by an unfamiliar company. Criteria 1. The first criterion is that the Debt Advice service is free to the client. 2. The second criterion is no cross-selling. o Any other products or services provided by the debt manager should also be free to the client. This is to prevent debt managers from cross selling inhouse products or services which charge a fee to vulnerable clients. 3. The third criterion is no incentives to sell third-party products. 4. The fourth criterion is the FairLife phone call. o Background: where a FairLife debt recovery firm is proving difficult to contact, a FairLife debt advisor can insist on one fifteen minute phone call every calendar quarter under the FairLife programme. The debt advisor agrees that it will only demand FairLife phone calls for up to one in ten (ten percent) of its client base (this should be adequate as the thousands of phone calls made to willing recipients are not included). 5. The fifth criterion is display of the FairLife Mark. o Where practical the licensee places the FairLife Debt Advice Mark on their website and on their written communications with clients. 6. The sixth criterion is participation in the FairLife Family. FairLife Limited Page 1 of 5

2 o The sixth criterion relates to passing on clients to other groups, or recommending products & services. If two providers offer a product or service, and both are equally in the client s best interest, the licensee should favour the company with the relevant FairLife Mark or the company on the relevant FairLife Mark register 1. Criteria detail and examples The first criterion is that the Debt Advice service is free to the client. The bulk of funding for free Debt Advice services comes from charity donations, a levy on the finance industry collected via the Money Advice Service and the practice of fairshare operated by many reputable lenders. It is however legal for companies to target people in debt and to offer Debt Advice services where the customer is charged. Fee paying debt managers can be the right choice for certain people but these situations are outside the scope of this FairLife Mark. The second criterion (no cross-selling) and the third criterion (no incentives to recommend third party products or services) seek to reinforce the message that the indebted client should not be seen as a source of profit. The second and third criteria seek to prevent companies gaming the first criterion by offering free Debt Advice services and subsequently supplying products whereby the customer still ends up paying fees. FairLife will encourage firms to follow the spirit of the criteria but will equally seek to make the rules themselves as encompassing as possible. Notes: 1. Nothing in criteria two or three prevents a FairLife debt manager from referring a client to a fee paying service, or a fee charging product, if this referral is considered to be in the best interests of the client. 2. Nothing in criterion two prevents debt advice groups from applying for the mark if they are part of a commercial group provided that the debt advice operation is a separate entity. The debt advice service must be free to the clients and the products of outside vendors must be considered equally with those from within the group. Any recommendation must reflect the client s best interest. The fourth criterion is use of the FairLife phone call. Most debt recovery firms speak regularly with debt advisors but some are not set up to speak by phone. This can be awkward for debt advisors when dealing with their most 1 FairLife run a register of companies that are considered to have equivalent standards to those displaying the FairLife Mark but that have chosen not to adopt the FairLife Mark. FairLife Limited Page 2 of 5

3 vulnerable clients. All firms holding the FairLife Debt Recovery Mark have agreed to take phone calls from FairLife debt advice groups if they are about clients who hold FairLife debt and have special circumstances. Criterion four defines the terms of the FairLife phone call specifying a minimum call length (fifteen minutes) and a minimum frequency (once per calendar quarter). It also limits the number of clients for which a FairLife phone call can be demanded so as not to place an unreasonable burden on those debt recovery units that are not set up to speak by phone. A FairLife phone call is where the debt advisor has specifically cited their rights under the FairLife program to secure a phone call. This may be done for up to one in ten (ten percent) of the advisor s client base (a number that is unlikely to be exceeded as most calls between debt advisors and debt recovery firms are consensual and do not count as FairLife phone calls). The fifth criterion is display of the FairLife Mark. A key benefit of the FairLife charity is the comfort given to vulnerable clients that all of the groups involved in their debt are part of the same fair trade initiative. This comfort is given by licensees putting the FairLife Mark on their quotes, contracts and written communications. For some firms, placing the FairLife Mark on paperwork will involve considerable management time and subsequent workload. For this reason a one year lead time is allowed from the date the Mark is adopted. If the work is likely to take more than one year to implement FairLife Ltd should be contacted. The sixth criterion is participation in the FairLife Family The power of FairLife is in its breadth, spanning all areas of finance. Over time FairLife Marks will interlink creating an umbrella of trust we call the FairLife Family. This interlinking will ultimately assist debt advice companies and help to protect customers. The FairLife Family criteria is a request that if two or more providers offer a product or service, and both are equally in the customer s best interest, the provider with the relevant FairLife Mark should be favoured. As more companies join the FairLife initiative it will become easier for licensees to stay within the FairLife Family. FairLife Ltd will also work with its Mark holders to identify companies they deal with and these companies will be approached to take a FairLife Mark. Where a company is known to be reputable but does not wish to adopt the Mark it may be added to the FairLife register for that Mark. Once the FairLife Family is established many customers falling into debt will be kept within the FairLife Family regardless of how many times their debt is purchased or how many debt recovery firms are involved. This will assist FairLife in helping people who are struggling to FairLife Limited Page 3 of 5

4 pay their debts as well as giving the more vulnerable clients a visible sign they recognise on the written communications from all of their creditors. Licence fees Number of paid Minimum Annual employees in the UK Licence fee Up to 50 1 Up to Up to Over The Mark is free to charities and not-for-profit organisations (the 1 fee is considered paid ). For commercial companies, the Annual licence fees are designed to be a token amount which contributes to the running costs of the charity. Displaying the Mark and the FairLife Advert The Debt Advice Mark may be displayed at the discretion of the organisation. Placing the Mark is only restricted if the employer sells financial products or services; the restrictions being to avoid confusion. Employers who wish to help establish FairLife as a fair trade mark for the finance industry are encouraged to display the FairLife Advert (shown in the top left hand corner of this document) where employees, customers and members of the public can view it. Obtaining the Mark This information and a licence agreement can be downloaded from the FairLife website under Commitment Marks / Pension Funding Mark. Contact details Contact details for FairLife Limited and the FairLife Foundation Limited: Telephone: Address: Addresses: Unit 40A, The Grove, Hatfield, AL9 7RN admin@fairlife.org.uk FairLife Limited Page 4 of 5

5 Appendix 1 The FairLife Foundation (background) The FairLife Charity is a fair trading initiative designed to benefit everyone in the UK by improving everyday financial products and educating the public. The charity is applying the principle of fair trading to the banks and finance institutions of the British economy; awarding its trademark logo, the FairLife Mark, to products and services that meet defined criteria. The FairLife Mark is a mark of integrity. Providers self certify and agree to follow the spirit as well as the letter of the rules. The mark will span all areas of finance, eventually forming an umbrella of trust known as the FairLife Family, and will ultimately help to highlight minimum standards of sound practice. The Mark will act as a beacon, helping to guide consumers, whilst allowing competition and customer choice to flourish. Together with raising standards, the FairLife Charity is encouraging companies, including those outside financial services, to make commitments in areas such as pension funding, adult education and the treatment of vulnerable customers. The criteria of these different marks can be interlinked to deliver outcomes for the public that are otherwise hard to achieve. There are three types of FairLife Mark: Product and Service Marks highlight where companies have signed up to help establish fair trading in finance at the product level. Commitment Marks highlight where companies have made an organisational-level commitment to improve peoples lives financially. Guidance & Education Marks are awarded in recognition of educating or directing the public in the responsible management of their financial affairs. FairLife s Product and Service marks The FairLife Mark is about putting the customer first and rebuilding the good reputation of the country s finance industry. The mark highlights firms willing to accept The FairLife Foundation as a body that will ultimately help to define minimum standards of sound practise for the finance industry. The Foundation is being gifted to the nation with a remit to represent the best interests of the public and to help grow a strong and profitable finance industry. The criteria may be strengthened over time thereby increasing the scope and effectiveness of the mark. Firms adopting these early marks are demonstrating, in a highly visible manner, their commitment to putting the wellbeing of the public at the heart of their business. More information is available on the charity s website at FairLife Limited Page 5 of 5