(background) The FairLife Foundation Debt Recovery Mark Industry Summary The FairLife Foundation is a new charity designed to benefit everyone in the UK by improving everyday financial products and encouraging a culture of saving. The charity s mission is to improve the country s finance industry by awarding its trademark logo (The FairLife Mark) to products and services that offer a defined benefit to the public. The Mark is a fair trade initiative that will span all areas of finance, eventually forming an umbrella of trust (known as the FairLife Family). The FairLife Foundation itself is being gifted to the nation by passing ownership to leading UK charities. There are two types of FairLife Mark: Product and Service Marks highlight financial products and services which offer a defined benefit to the public. Commitment Marks highlight where organisations have made a commitment to improve peoples lives financially. The Debt Recovery Mark is a Product & Service Mark. FairLife s Product & 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 constitutional 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. FairLife Debt Recovery Mark The primary reason for launching a Mark in debt recovery is to ensure that customers debt is kept within the FairLife Family regardless of how many times their debt is purchased or how many debt recovery firms are involved. 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 the companies they deal with display the FairLife Limited Page 1 of 6
FairLife Mark and that this will offer some consistency when they are contacted by an unfamiliar company. Practices in the debt industry are already sound under the watchful eye of the FCA and the Credit Services Association. A growing issue with debt rogues at the end of the last decade 1 was addressed by the FCA and the industry is currently in very good shape.. It is hoped that the FairLife charity will form an additional barrier to any disreputable groups reestablishing themselves, and an additional mark of quality for reputable firms. People being dealt with by debt recovery firms often fall into two categories: can t pay and won t pay. FairLife s criteria focus on helping the former, whilst not assisting the latter to avoid their responsibilities. Debt recovery firms include debt collection agencies (or DCAs), debt purchasers, and any firm to whom debts are outsourced. Criteria Each criterion is numbered and has a title line. There is a short description underneath the title with greater detail being found in the body of the document. FairLife Debt Recovery criteria: 1. The first criterion is display of the FairLife Mark o Any written contact with a customer, whether to establish initial engagement, deal with arrears or provide other information, must display either the basic FairLife Mark or the full FairLife Debt Recovery Mark. Where this is not possible for practical reasons the communication must state clearly that the firm has a FairLife Mark. 2. The second criterion is to highlight free debt advice o The second criterion is to ensure customers are informed that they can get free help from a FairLife Debt Advice group or from a group on FairLife s debt Advice register. 1 See for example the Daily Mirror Stop the debt rogues campaign of 2011. FairLife Limited Page 2 of 6
3. The third criterion is FairLife phone calls o The third criterion relates to debt recovery firms that would not normally have telephone contact with debt advice groups 2. It applies only to customers whose debt is a FairLife debt. If requested by a FairLife debt advice group 3, the debt recovery firm must agree to take part in a minimum of one fifteen minute phone call per calendar quarter about the customer. The number of FairLife phone call requests that can be made is limited in the FairLife Debt Advice Mark to ensure they are reserved for special situations such as vulnerable customers or complex circumstances. o In addition, the customer has the right to a Fairlife phone call direct with the debt recovery firm at any time. 4. The fourth criterion is an affordable payment option o The fourth criterion relates to customers whose debt is FairLife debt (or FairLife-marked debt). o A Fairlife debt collector should wherever possible agree an affordable repayment plan with the customer. o Before a FairLife debt collector takes any enforcement action 4 against such a customer, the organisation should where possible conduct an affordability assessment to evidence that the customer has sufficient disposable income or assets, and that the firm has tried to contact the customer to agree an affordable repayment plan. 5. The fifth criterion is passing on FairLife debt 5 o Where the licensee owns customer debt and subsequently opts to sell, outsource or pass on this debt to other organisations the recipient must be informed that the debt is FairLife debt. 2 Most debt recovery firms speak regularly with debt management advisors but it is not against the law for debt recovery groups to refuse these calls. This can be awkward for debt managers when dealing with their most vulnerable customers. 3 The criteria of the FairLife Debt Management Mark restrict the number of customers that a debt manager can request a phone call for to one in ten. 4 Enforcement includes the use of bailiffs and other court enforcement. 5 Criteria six does not apply where the customer has left the UK and the debt is being sent out of the country. FairLife Limited Page 3 of 6
6. The sixth criterion is the FairLife Family 6 o The sixth criterion is a request that when passing on or selling customers debt the licensee should, where it is in the customer s best interest, favour companies with a relevant FairLife Mark or companies on the relevant FairLife register 7. The first criterion is display of the FairLife Mark. A key benefit of the FairLife charity is the comfort given to vulnerable customers and those in financial difficulty that all of the groups involved are part of the same FairLife initiative. This comfort is given by licensees putting the FairLife Mark on their quotes, contracts, communications and subsequent debt papers. 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 second criterion is highlighting free debt management advice. The second criterion is to inform customers that they can get free help from a FairLife Debt Advice group (or a group on FairLife s debt Advice register). Customers must be told that seeking help may: enable them to regain control of their finances by finding an appropriate solution help them to receive breathing space while free advice is being sought reduce the likelihood of legal action being taken against them The third criterion is FairLife phone calls Most debt recovery firms speak regularly with debt management advisors and criterion three is not relevant. Where firms would not normally have phone call communication this can be awkward for debt managers when dealing with their most vulnerable customers. Criterion three defines the concept of a FairLife phone call and specifies that these calls must be permitted. A FairLife phone call is a request from a FairLife debt advice group to speak about a customer who holds a FairLife debt and has special circumstances. The terms of a FairLife phone call are specified as a minimum call length of fifteen minutes and a minimum frequency of once per calendar quarter. The Debt Management Mark stipulates that the right to FairLife phone calls cannot be given to more than one in ten of the adviser s client base. The customer also has the right to a FairLife phone call with the debt recovery firm at any time. 6 The FairLife Family criterion does not apply where the customer has left the UK and the debt is being sent out of the country. 7 FairLife run a register of companies to whom FairLife debt can be passed which includes companies that have chosen not to adopt the FairLife Mark. FairLife Limited Page 4 of 6
The fourth criterion is an affordable payment option The fourth criterion relates to customers whose debt is FairLife debt (or FairLife-marked debt). A Fairlife debt collector should wherever possible agree an affordable repayment plan with the customer. Before a FairLife debt collector takes enforcement action against these customers, such as the use of bailiffs or court orders, the organisation should evidence that: where possible, they have conducted an affordability assessment including the income, expenditure and other debts of the customer AND the customer has disposable income or assets to make the payment without causing financial hardship OR they have tried to contact the customer to set up an affordable repayment plan OR Criteria four does not prevent letters being sent conveying that, if payments are not received, court action will be taken. The fifth criterion is passing on FairLife debt. The fifth criterion ensures that where possible any debt passed on by supporters of the FairLife charity is passed as FairLife debt. This will ensure that receiving firms treat the debt as FairLife debt and will also encourage companies to adopt the Mark if they are not yet part of the FairLife initiative. The best way to convey that the liabilities are FairLife debt is for the documents to display the FairLife Mark. FairLife-marked debt gives reassurance to consumers of fair and consistent treatment, and may offer a particular degree of comfort to vulnerable customers. 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. The FairLife Family criteria is a request that when passing on or selling customers debt the licensee should favour [as above re competition law] companies with a FairLife Mark (Debt Recovery, Fair Creditor or Debt Management) or companies on the relevant FairLife register 8. Similarly 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. 8 FairLife run a register of companies to whom FairLife debt can be passed which may include companies that have chosen not to adopt the FairLife Mark. FairLife Limited Page 5 of 6
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 pay their debts as well as giving the more vulnerable customers a visible sign they recognise on the written communications from all of their creditors. Contact details Contact details for FairLife Limited and the FairLife Foundation Limited: Telephone: 020 366 40377 Address: Addresses: Unit 40A, The Grove, Hatfield, AL9 7RN admin@fairlife.org.uk FairLife Limited Page 6 of 6