Creditfix, the UK’s largest personal insolvency provider, has announced sweeping changes to how it works with third party debt packager firms.
The move, which will see the company introduce a flat rate to external providers, comes in a proactive response to industry calls for tighter regulation around external sources and to further ensure that customers seeking debt advice get the best solution for their financial circumstances.
Last year, the insolvency industry faced an overhaul as the FCA proposed banning debt packager firms from being paid to refer customers on to other companies. This was in addition to concerns by the Insolvency Service regarding the level of fees being paid by Insolvency Practitioners for receiving client referrals from other Insolvency Practitioners.
Now, Creditfix has announced that all referral fees will be capped, at a flat rate, and the industry leader will only accept referrals for IVAs directly from the firm who first engaged with the consumer, therefore excluding third party debt packagers.
Creditfix will also only accept clients who have pre-agreed to proceed with an IVA, directly from an Insolvency Practitioner firm, where the company has written confirmation from that Insolvency Practitioner.
This will be an additional process, which, once again, confirms that customers are aware of all debt solutions available to them and that an IVA is the best solution.
Speaking of the change, Paul Mason, CEO at Creditfix, said “Given our strict criteria and our robust compliance processes, we at Creditfix are confident that all consumers who enter an IVA or any other debt solution with our firm do so in full knowledge of the options available to them and that the arrangement is entirely appropriate given their individual circumstances.
“However, we agree with the FCA and Insolvency Service that more must be done to protect consumers from rogue debt packagers, especially during the current affordability crisis that makes free and impartial debt advice more important than ever.
“That is why Creditfix has proactively introduced changes that will ensure that debt packagers no longer engage with Creditfix, and our customers are further protected from those that would try to manipulate figures to obtain a referral fee.”