The Debt Counsellors Charitable Trust Report and Financial Statements Period ended 30 June 2015 Charity no: 1158869
Contents Legal and administrative information 1 Chairperson s Statement 2 Trustees annual report 3-7 Independent examiners report 8 Statement of financial activities 9 Balance sheet 10 Notes to the financial statements 11-16
Legal and administrative information Names and addresses (as appropriate) Trustees: David Hawkes (appointed 10 April 2014) James Jones (appointed 25 March 2014) Nick Lord (appointed 25 March 2014) Robert Rosenberg (appointed 3 June 2015 Sara de Tute (appointed 10 April 2014) Sam Nurse (appointed 13 December 2014, resigned 11 February 2015) Chief Executive: Nick Pearson Registered Office: Station House Stamford New Road Altrincham Cheshire WA14 1EP 1
Chairperson s Statement This is my first annual statement as Chair of the Board of Trustees of the Debt Counsellors ( TDC ) Charitable Trust and what a year it has been. The launch at the House of Lords in October of last year may have seemed to be the beginning but was actually made possible by months of hard work by a number of people, not least of which was Nick Pearson the TDC CEO and David Mond of the Emanuel Trust, whose vision it was to start the charity and without whose financial and moral support we would not be here today. After setting up the operation, obtaining registration from the Charities Commission and the successful launch we were ready to start providing advice to clients suffering from extreme financial hardship. There were initially technical issues with TDC s FCA authorisation which resulted in a very short period where our operations were interrupted. However, this was quickly resolved with hard work and determination by TDC and pragmatic assistance from the FCA. We have now helped a number of clients who we believe would have struggled to obtain appropriate advice elsewhere. Our vision is to be best in class and to support as many vulnerable clients as possible. None of this will be possible without the support of our benefactors both present and future and I would like to thank all those who have supported us to date and continue to do so. Many thanks also to the Trustees who are all volunteers and dedicate their time to not only attend our quarterly meetings but also to support me and the TDC team throughout the year even though all have other demanding full time roles. They have provided moral support, direction and challenge to help TDC on its journey so far and to shape the future strategy. My final thanks go to the TDC head office team headed by Nick Pearson all of whom have significantly contributed to the success to date. Nick is passionate about TDC and works tirelessly to support his team and to promote the work they do. So in summary, this has been an eventful, but successful year, during which we have concentrated on laying strong foundations. We are now looking forward to building on these foundations and providing much needed advice and support to as many clients as possible. Thank you Sara 2
Trustees Annual Report The Debt Counsellors Charitable Trust for the period ended 30 June 2015 The trustees submit their annual report and the audited financial statements for the year ended 30 th June 2015. The trustees have adopted the provisions of the Statement of Recommended Practice (SORP) Accounting and Reporting Charities issued in 2005 in preparing the annual report and financial statements of the charity. The Charity is a charitable trust and was set up on 11 th April 2014. It is governed by a memorandum and articles of association. Its objects are the relief of financial hardship for the public benefit by the provision of advice, guidance and assistance to persons in financial difficulty. Reference and administrative details of the charity, its trustees and advisers: Please see information on the previous page. Structure, governance and management: The Debt Counsellors Charitable Trust operates from a single site in Altrincham. It is governed by a board of 5 trustees. All the Trustees are unremunerated. The Board of Trustees is chaired by Sara de Tute. The trustees main duties are to: 1. Ensure the charity is carrying out its purposes for the public benefit 2. Comply with the charity s governing document and the law 3. Act in the charity s best interests 4. Manage the charity s resources responsibly 5. Act with reasonable care and skill 6. Ensure the charity is accountable The Trustees are mindful of the Charity Commission guidance on charities and risk management. The charity maintains a register of risks. This risk register and policy is also required as a debt management charity authorised and regulated by the Financial Conduct Authority (Registration Number 673032). The charity trustees have given consideration to the major risks to which the charity is exposed and satisfied themselves that systems and procedures are established in order to manage those risks. Objectives and activities: The Debt Counsellors Charitable Trust provides free, confidential, independent and impartial debt and generic financial advice to anyone living in England and Wales. TDC public benefit statement: TDC exists for the prevention or relief or poverty to the general public/mankind. This is carried out via: a) grants to individuals b) provision of human resources c) provision of services d) provision of advocacy, advice and information e) sponsoring or undertaking research and social policy. Our values: We are a totally client focused charity. We aim to provide our clients with the highest levels of customer service and holistic information, advice, guidance and support when dealing with their debt problems. The Trust fully embraces the key Financial Conduct Authority message that organisations must put the interests of consumers first. The Debt Counsellors aims to be a best in class provider of free debt advice and guidance to help transform the wellbeing of financially vulnerable people. What we offer: We allocate clients a dedicated adviser who will deal with all aspects of their case from cradle to grave; We provide: Debt Management Plans: token and zero offers are also provided as well as pro rata offers (Disposable Income permitting). 3
Individual Voluntary Arrangements via our preferred partners ClearDebt and Grant Thornton. IVA s can normally be considered where the client has at least 70pm disposable income. Debt Relief Orders. We have staff who are Approved Intermediaries via the Institute of Money Advisers or AdviceUK; Bankruptcy Advice and Support; including assisting clients to complete the debtors petition; Full and Final debt settlement negotiation, advice and support; Advice on debt consolidation, generic financial advice and income maximisation. Income maximisation advice is also provided via referral to the Community Interest Company IncomeMAX; TDC staff negotiate directly with a client priority creditors where necessary and will incorporate payment and arrears into the payment arrangements if appropriate; Provide basic generic financial advice via referral to the Money Advice Service website and other independent organisations; TDC is a member of the charity AdviceUK (who provide our insurances and our AdvicePro case management system), The Helplines Partnership, National Homelessness Advice Service, The Association of Professional Debt Solutions Intermediaries, The National Association of Student Money Advisers and The Debt Resolution Forum. All our Specialist Debt Advisers are members of the Institute of Money Advisers and hold either the DRF CertDR or the IMA Cert. MAP. TDC are accredited by the Money Advice Service and hold the Advice Quality Standard in Debt Advice Casework. We are listed on the Money Advice Service free debt advice locator tool. We are authorised and regulated by the Financial Conduct Authority and registered with the Information Commissioners Office. Strategic Report: Key dates at The Debt Counsellors Charitable Trust (TDC) In January 2014, Nick Pearson, the current Chief Executive Officer of TDC, was approached by David Mond from The Emanuel Trust to set up a new free to client debt charity that the Emanuel Trust wished to fund. Nick commenced in the post of TDC CEO on 10 th February 2014. On 13 th March 2014, a meeting of prospective Trustees was convened, leading to the formal creation of The Debt Counsellors Charitable Trust on 11 th April 2014. On 9 th June 2014, at the inaugural Trustee Board meeting, Sara de Tute was elected Chair of the Trust. On 21 st July 2014, TDC moved in to our current premises at Station House in Altrincham. Our first Specialist Debt Adviser, Jan Chadwick, also started work on the same date. From 1 st September 2014, TDC commenced its soft launch as it went live to the public. On 14 th October TDC was officially launched in the House of Lords at a very kindly hosted by Baroness Hayter of Kentish Town. The launch was attended by over 75 people. On the same day, TDC was notified by the Charity Commission that we had been granted Registered Charity status. As a debt advice charity, TDC is authorised and regulated by the Financial Conduct Authority. TDC joined our trade body, AdviceUK in late March 2014. As a result, AdviceUK sent our details to the FCA to be added to the list of members to be grandfathered into FCA authorisation, that is without the need to apply for FCA authorisation in our own right. In late December 2014, the FCA advised TDC that they believed we were not eligible to be grandfathered into authorisation as our trust deed was not signed until 11 th April 2014 (all grandfathered organisations had to be constituted before 31 st March 2014). As a result, TDC had to temporarily cease operations and apply for FCA authorisation in our own right. TDC gained FCA authorisation some 4 weeks after submitting our application to the FCA and recommenced our services to clients on 24 th March 2015. 4
On 27 th July 2015, TDC was awarded the Advice Quality Standard in debt casework and is now listed on the Money Advice Service website as one on the 5 national debt advice providers on their debt advice locator tool. Staffing: TDC now has five employees. These are: Nick Pearson, CEO Mike Morgan Cert.DR, Head of Debt Advice Jan Chadwick MIMA (Cert.), Specialist Debt Adviser Katie Stabler MIMA (Cert.), Specialist Debt Adviser Nicola Brocklehurst MIMA (Cert.), Specialist Debt Adviser Our weekend and out of hours service to clients is provided by Simon Wiggins, who is engaged on a selfemployed basis. The TDC Hon. Financial Controller in Mr David Shalom. The Trustees would like to thank Mr Shalom for work for the charity over the last 12 months. Our clients: Most clients hear about TDC from external organisations, particularly commercial debt solutions providers, who regularly hotkey clients to us where they cannot assist with a debt solution. We also receive a growing number of referrals from free to client advice providers such as CABx as well as family and friends of existing clients. Increasingly over the year, clients have found us via searches on google and the Money Advice Service website. The overwhelming majority of our clients result in an application for a Debt Relief Orders (TDC have four members of staff who are Insolvency Service Debt Relief Order Approved Intermediaries). Some key TDC statistics: Client numbers: Since 1 st October 2014 TDC has dealt with 1200 new clients. About our clients: Client ages range from 16 to 87 The average client age is 40 Clients housing status: Home owner with a mortgage 3.84% Private tenant 20% Social tenant 63.22% Clients Income: Total individual weekly income level ranges from 0 to 869.49 Average weekly income for the 1200 clients equates to 135.01 Average weekly disposable income for the 1200 clients equates to minus 20.45 Client debts: Total individual debt level ranges from 150 to 250,000; Total debt level for the 1200 clients equates to 5,931,347.62; Average debt level per client is 4,959.32 Types of debts: Number of individual debt liabilities per client ranges from 1 to 41 10% of total debt liabilities were for the Council Tax 6% of total debt liabilities were for Catalogues 4% of total debt liabilities were for Payday loans 5
Debt options progressed with clients: 40% of clients were recommended a Debt Relief Order 10% of clients were recommended a Debt Management Plan 7% of clients were recommended a Bankruptcy Order 4% of clients were recommended an Individual Voluntary Arrangement Financial review: The TDC Board of Trustees is conversant with the Charity Commission guidance on reserves. As of 30 th June 2015, the TDC is yet to build up reserves but is able to rely on a commitment from The Emanuel Trust to fund the charities core costs up to 20,000 per month from 1 st July 2014 to 1 st July 2016. In the event they decide after that date to cease supporting TDC they have agreed 6 months further funding whilst TDC makes alternative arrangements. The Trustees are however committed to building up a reserve of 3 months of operational running costs over the 12 months from 1 st July 2015. Plans for future work: As an FCA authorised debt advice provider, TDC is required to have a detailed business plan. From 1st July 2015 to 31st June 2016 we aim to: Increase from 5 to 12 FTE Specialist Debt Advisers; Recruit a administration/clerical officer; Secure larger serviced office premises; To deliver free debt advice interviews to at least 7500 clients; Raise additional funding donations of at least 225,000 pa in addition to securing a continuation of existing funding sources. Principal risks and uncertainties: As a small not for profit debt advice provider TDC believes that we are exposed to relatively few external or internal business risks. Those we have identified include the following: RISK Loss of funding Loss of Key staff: Loss of key board members: Incorrect advice provided leading to legal action or complaints: Adverse media comment in relation to the charity: Incorrect advice provided leading to regulatory action or censure: TDC lack the capacity to deal with call volumes: Loss of advicepro case recording system data and unauthorised access to advicepro leading to a data breach MITIGATION The Emanuel Trust has provided a guarantee of 6 months funding to allow an orderly wind down of the charity in the event that the charity do not wish to continue funding. TDC is diversifying its funding base in order to spread the risk of any funder withdrawing. TDC is not dependent on any single individual for its ongoing operations. TDC is not dependent on any key board members to operate. TDC has in place 1m of Professional Indemnity Insurance. Use of social media blogs to mitigate any adverse comment. Policy of full disclosure in event of TDC errors. The possibility of incorrect advice provided to a third party is mitigated via ongoing case management, file review, call recording monitoring and external peer review to check compliance. TDC funding is not dependent on meeting specific call volume targets therefore in the event that incoming calls cannot be met clients can be referred to other sources of free debt advice. : AdvicePro is maintained within a robust, secure operations centre compliant with Information Security Code of Practice ISO27001, and automatically backed up daily. In the event of a data breach TDC will inform the ICO, FCA and AdviceUk who operate the advicepro system. All hard copies of client documents are scanned and put on to advicepro system. Hard copies are either returned to client or shredded. Any hard copies are kept in a locked filing cabinet with the key stored in a key safe. 6
A word of thanks: The board and staff of TDC would like to give special thanks David Mond and The Emanuel Trust for their ongoing financial support and commitment to TDC. TDC staff and Trustees would like to thank the following organisations and Individuals for their help and support over the last 12 months: ClearDebt Harrington Brooks and specially Matthew Cheetham, CEO. Dollar QuikQuid PDHL Baroness Hayter of Kentish Town Graham Brady, MP for Altrincham and Sale West Experian Chris Park, Financial Conduct Authority Steve Johnson, CEO of AdviceUK 7
Independent examiner report to the Trustees of The Debt Counsellors Charitable Trust We report on the financial statements of the charity for the period ended 30 June 2015, which are set out on pages 8 to 15. Respective responsibilities of trustees and examiner The charity s trustees are responsible for the preparation of the financial statements. The charity s trustees consider that an audit is not required for this year under section 144 of the Charities Act 2011 (the Charities Act) and that an independent examination is needed. It is our responsibility to: examine the financial statements under section 145 of the Charities Act; follow the procedures laid down in the general Directions given by the Charity Commission (under section 145(5)(b) of the Charities Act; and state whether particular matters have come to my attention. This report, including our statement, has been prepared for and only for the charity s trustees as a body. Our work has been undertaken so that we might state to the charity s trustees those matters we are required to state to them in an independent examiner s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity s trustees as a body for our examination work, for this report, or for the statements we have made. Basis of independent examiner s statement Our examination was carried out in accordance with the general Directions given by the Charity Commission. An examination includes a review of the accounting records kept by the charity and a comparison of the financial statements presented with those records. It also includes consideration of any unusual items or disclosures in the financial statements and seeking explanations from you as trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit, and consequently no opinion is given as to whether the financial statements present a true and fair view and the report is limited to those matters set out in the statement below. Independent examiner s statement In connection with my examination, no matter has come to our attention: which gives us reasonable cause to believe that in any material respect the requirements: to keep accounting records in accordance with section 130 of the Charities Act; and to prepare financial statements which accord with the accounting records and comply with the accounting requirements of the Charities Act have not been met; or to which, in our opinion, attention should be drawn in order to enable a proper understanding of the financial statements to be reached. Mr D Taylor (Senior Statutory Auditor) For and on behalf of Harts Limited Chartered Accountants & Statutory Auditors Westminster House 10 Westminster Road Macclesfield Cheshire SK10 1BX 8
Statement of Financial Activities for the year ended 30 June 2015 Unrestricted Restricted Endowment Total Notes Funds Funds Funds 2015 Incoming Resources Incoming resources from generated funds: Voluntary income Donations and gifts 2 227,833 - - 227,833 Investment income 3 2 - - 2 Total incoming resources 227,835 - - 227,835 Resources expended Charitable activities 4 208,112 - - 208,112 Governance costs 5 953 - - 953 Total resources expended 209,065 - - 209,065 Net incoming resources / (resources expended) before transfers 18,524 - - 18,524 Transfers between funds - - - - Net incoming resources/(resources expended) 18,770 - - 18,770 Net movement in funds 18,770 18,770 Fund balances brought forward at 1 July - - - - Fund balances carried forward at 30 June 18,770 - - 18,770 All of the above results are derived from continuing activities. All gains and losses recognised in the year are included above. 9
Balance Sheets as at 30 June 2015 2015 Notes Fixed assets Tangible assets 8 1,137 1,137 Current assets Debtors 9 6,317 Cash at bank and in hand 19,459 25,776 Creditors: amounts falling due within one year 10 (8,143) Net current assets 17,633 Total assets less current liabilities 18,770 Net assets 18,770 Funds: Unrestricted funds General funds 18,770 Restricted funds - Total funds 12 18,770 These accounts have been prepared in accordance with the Charities Statement of Recommended Practice 2005. The financial statements on pages 8 to 15 were approved and authorised for issue by the trustees on 22 October 2015 and signed on their behalf by: Sara De Tute Chair of the Board of Trustees Date: 22 October 2015 10
1 Accounting policies Notes to the financial statements for the year ended 30 June 2015 (a) Basis of preparation The financial statements have been prepared under the historical cost convention, with the exception of investments which are included at market value. The financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP), Accounting and Reporting by Charities published in 2005 and the Charities Act 2011. The charity has availed itself of Paragraph 4(1) of Schedule 1 of the Financial Reporting Standard for Smaller Entities (effective April 2008 and adapted the Companies Act formats to reflect the special nature of the charity s activities. (b) Charity status The governing document of the charity is the Trust Deed dated 11 April 2014. (c) Fund accounting General funds are unrestricted funds which are available for use at the discretion of the trustees in furtherance of the general objectives of the charity and which have not been designated for other purposes. Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the charity for particular purposes. The cost of raising and administering such funds are charged against the specific fund. The aim and use of each restricted fund is set out in the notes to the financial statements. Investment income and gains are allocated to the appropriate fund. (d) Incoming resources All incoming resources are included in the SOFA when the charity is legally entitled to the income and the amount can be quantified with reasonable accuracy. For legacies, entitlement is the earlier of the charity being notified of an impending distribution or the legacy being received. Gifts in kind donated for distribution are included at valuation and recognised as income when they are distributed to the projects. Gifts donated for resale are included as income when they are sold. Donated facilities are included at the value to the charity where this can be quantified and a third party is bearing the cost. No amounts are included in the financial statements for services donated by volunteers. (e) Resources expended All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with use of the resources. Premises overheads have been allocated on a floor area basis and other overheads have been allocated on the basis of the head count. Fund-raising costs are those incurred in seeking voluntary contributions and do not include the costs of disseminating information in support of the charitable activities. Support costs are those costs incurred directly in support of expenditure on the objects of the charity and include project management carried out at Headquarters. Management and administration costs are those incurred in connection with administration of the charity and compliance with constitutional and statutory requirements. (f) Tangible fixed assets and depreciation Tangible fixed assets costing more than 100 are capitalised and included at cost including any incidental expenses of acquisition. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost on a straight line basis over their expected useful economic lives as follows: Office equipment over 3 years 11
(g) Finance and operating leases Rentals applicable to operating leases are charged to the SOFA over the period in which the cost is incurred. Assets purchased under finance lease are capitalised as fixed assets. Obligations under such agreements are included in creditors. The difference between the capitalised cost and the total obligation under the lease represents the finance charges. Finance charges are written-off to the SOFA over the period of the lease so as to produce a constant periodic rate of charge. 2 Donations and gifts Restricted Unrestricted 2015 Emanuel Trust - 169,500 169,500 Dollar - 15,000 15,000 Harrington Brooks - 33,333 33,333 PDHL - 10,000 10,000 _ - 227,833 227,833 _ 3 Interest income Restricted Unrestricted 2015 Interest receivable - 2 2 _ - 2 2 _ 12
4 Total resources expended Other Other Staff Direct Allocated Total Costs Costs Costs 2015 Rent - 23,159-23,159 Salary and staff costs 152,703 - - 152,703 Advisory costs - 2,999-2,999 Staff training 219 - - 219 Advertising - 37-37 Benefit checks - 1,176-1,176 Credit Union membership - 1,588-1,588 Membership fees - 3,171-3,171 Internet costs - 150-150 Insurance - 381-381 Sundry expenses - 103-103 Conference costs - 1,710-1,710 Legal fees - 6,706-6,706 Consultancy costs - 480-480 Other costs - 1,335-1,335 Bank charges - 85-85 Stationery - 3,573-3,573 Postage - 475-475 Travel - 4,499-4,499 Advice and software - 3,421-3,421 Depreciation - 142-142 Total resources expended 155,921 52,191-208,112 Other direct costs include: 2015 Depreciation on owned assets 142 5 Governance costs Restricted Unrestricted 2015 Accountancy fees - 840 840 Trustee expenses - 113 113 _ - 953 953 _ Accountancy fees include: 2015 Accounts preparation and independent examination 142 13
6 Trustees remuneration The trustees neither received nor waived any emoluments during the year. Out of pocket expenses were reimbursed to trustees as follows: 2015 2015 Number Travel 2 113 2 113 7 Staff costs 2015 Wages and salaries 140,147 Social security costs 12,556 152,703 The number of employees whose emoluments as defined for taxation purposes amounted to over 60,000 in the year was as follows: 2015 Number 60,001-70,000 - The average number of employees, calculated on a full-time equivalent basis, analysed by function was: 2015 Number Charitable activities 4 Cost of generating funds - Management and administration of the charity - 14
8 Tangible fixed assets Office Total Equipment 2015 Cost At 1 July 2014 - - Additions 1,279 1,279 Disposals - - At 30 June 2015 1,279 1,279 Depreciation At 1 July 2014 - - Charge for year 142 142 Disposals - - At 30 June 2015 142 142 Net book value at 30 June 2015 1,137 1,137 At 30 June 2014 - - 9 Debtors 2015 Rent deposit 3,080 Prepayments and accrued income 3,237 6,317 10 Creditors: amounts falling due within one year 2015 Trade creditors 240 Taxation and social security costs 5,818 Accruals and deferred income 2,085 8,143 11 Financial commitments 15
At 30 June 2015 the charity has annual commitments under non-cancellable leases as follows: 2015 Land and buildings Other Expiry date: Less than one year 1,848-1,848-12 Statement of funds At 10 April Investment At 30 June 2014 Income Expenditure gains Transfers 2015 General reserve - 227,835 (209,065) - - 18,770 Total unrestricted funds - 227,835 (209,065) - - 18,770 The General reserve represents the free funds of the charity which are not designated for particular purposes. 13 Analysis of group net assets between funds Restricted General funds funds Fund balances at 30 June are represented by: Tangible fixed assets - 1,137 Current assets - 25,776 Current liabilities - (8,143) Total net assets - 18,770 16