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The Credit Services Association (CSA)
Debt Management Company PDHL Ltd has been refused FCA Authorisation
We have this morning been contacted by the FCA and informed that Debt Management Company PDHL Ltd has been refused authorisation. This announcement follows legal action taken by PDHL challenging the FCA’s decision which they have recently withdrawn. According to the regulator, up to 16,000 customers will be affected and Money Advice Service (MAS) will start contacting these customers via letter today – a process that will be completed in stages.
The Money Advice Service with StepChange and Citizens Advice, have provided additional capacity to deal with impacted customers and this morning a spokesperson for MAS confirmed they felt they had put in place a structure that could deal with this number of customers seeking advice, although they do not expect all 16,000 to do so at the same time.
The CSA hopes to have sight of the letter MAS will be sending to former PDHL customers but again today asked MAS to urge customers in their communication, to contact creditors, DCAs and debt buyers as well as encouraging them to contact the free advice service providers as their arrangements with PDHL will cease immediately.
Following a previous email sent in December 2015, we would urge members to continue to demonstrate the right behaviour and show forbearance and signpost affected customers accordingly.
In December we shared with members the following information provided by the FCA:•In these circumstances, in addition to the general requirement for due consideration and forbearance towards customers in arrears and default under CONC 7.3.4R, the reasonable period to allow customers to put together a repayment plan under CONC 7.3.11R could be longer than usual. During this period, although members could (and should) still contact customers to refer them to debt advice providers, no collection activity would take place.
All members will need to ensure they are prepared for a potential increase in debt management plan (DMP) arrears and transfers over the coming months. Where agreed, the 60 day forbearance could be built into collection processes, and the FCA will expect everyone to help in minimising the effect on impacted customers.
Members should be aware that customers may have already been contacted by a new debt management company (DMC) as some contact detail lists have been sold by firms looking to exit the market, rather than sell their portfolios. This may cause further confusion which should also be considered.
Members should also be aware that PDHL and other refused DMCs may still be receiving money from customers under DMPs and the FCA expects all firms that are no longer authorised, to ensure funds are correctly applied as part of an orderly winding down of their activities. Protection of client funds is a high priority for the FCA.
The CSA will be examining the Court decisions made during the legal action pursued, but now withdrawn by PDHL, but details emerging already indicate that precedents have been set around the ability to continue to trade under an Interim Permission in the event of a decision not to grant authorisation. This will have an effect throughout all firms seeking authorisation by the FCA and we will communicate the details of this to members separately.
Members should now expect more DMCs to decide whether they wish to continue with their applications for authorisation and whilst around 100 firms have already done so, there could be more withdrawing or being refused authorisation following this announcement over the coming weeks.