As the Scottish Government continue its Help out of the Hole campaign, raising awareness of the Debt Arrangement Scheme, some providers of the Scheme are behaving like wolves in sheep’s clothing, plunging consumers further into the hole of debt.
Ever since its launch the Scottish Government have taken a “broad church” approach to the Debt Arrangement Scheme. This has been so successful that the 3 main providers of the Debt Arrangement Scheme are now all private sector firms, albeit it can also be accessed free through Citizen Advice Bureaux and local authorities.
To offset the risk that this would result in some consumers paying for services that they couldn’t afford, Regulation 12(2) of the Debt Arrangement Scheme (Scotland) Regulations 2011 required fee chargers to advise consumers that they could access services for free and where they could access them.
In practice where a consumer disputes this has been done, the Debt Arrangement Scheme Administrator requires written proof showing such advice has been given.
Where it hasn’t, all fees have to be repaid to the consumer.
However, it would appear Scottish Government protection of consumers is not going far enough.
Some firms are now including clauses that mean should the consumer leave their Debt Payment Programmes (DPPs) or transfer them to other providers, all fees that would have been due during the programme becoming instantly payable. Alternatively, other firms it is believed, instead of charging monthly fees, charge a one off high fee, but then allow the consumers to repay it by monthly instalments, to the same effect.
This means in reality there are likely to be cases where a consumers circumstances change and they are no longer able to pay their DPP. Their DAS provider, the very person supposed to be helping them, then serves an all sums due notice, further indebting them.
It also means where consumers wish to transfer to another provider, because their fees are cheaper, they are obstructed from doing so with the fear they will incur further debts.
It is impossible to say whether such clauses are unfair under consumer contract regulations without examining the individual clauses, but clearly standard term contracts that bind consumers into paying for services that may last years, at times when they may be distressed and vulnerable, are reprehensible. This is more so the case where such contracts prevent competition in the market and the ability of consumers to switch to obtain better services for both themselves and their creditors.
I am aware of cases where such contracts have been used and where the DAS provider has turned into a raging bull, conducting themselves in a manner you would expect of debt collectors. This includes employing the threat of pursuing the debtor to prevent them from switching to other remedies or providers.
The Scottish Government is currently progressing regulations through the Scottish Parliament to change the way Trustee’s in Protected Trust Deeds charge their fees; I would urge the Minister Fergus Ewing to consider similar regulations in relation to the Debt Arrangement Scheme and for the DAS Administrator, Rosemary Winter Scott, to consider whether such providers are fit to do so.