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Debt Advice Handbook 14th edition

2. Negotiating
Negotiation is a process of communication between the debt adviser or client and the creditor. It takes place over a period of time, after which an agreement is made that both sides find acceptable.
A decision must be made about whether it is appropriate for you to carry out the negotiation or whether it should be done by the client. Sometimes, it is more empowering for an adviser to support a client by providing, for example, a financial statement and some standard letters, rather than negotiating her/himself. In the past, creditors routinely rejected offers made by clients unless and until they were made by an advice agency, even though it was the same offer and based on identical information (but see below).
Some creditors have a policy of refusing to deal with advice agencies. If the client has authorised you to negotiate with a creditor on her/his behalf, the Financial Conduct Authority (FCA) forbids creditors to refuse to do so or to contact clients directly and bypass their appointed representatives.1FCA Handbook, CONC 7.12.2R and 7.12.3G Similarly, creditors should not refuse to deal with clients who are attempting to negotiate their own repayment arrangements. A creditor who refuses to negotiate with an adviser or a client without a justifiable reason should be challenged.
You should conduct all negotiations with the aim of resolving the debt problem and bearing in mind that the client’s best interests are paramount. Ensure that s/he does not offer more than s/he can afford.2FCA Handbook, CONC 8.2.2G(2) Do your best to enable the client to regain control of her/his financial situation as quickly as possible, as opposed to being tied into a repayment programme, which may take many years to complete (if ever).
Advisers are often in a powerful position in relation to creditors because no one in the credit industry wants to be accused (particularly publicly) of acting illegally or oppressively. If a debt adviser from a well-respected local or national agency contacts a creditor to negotiate on a client’s behalf, it is likely that the creditor will want to reach a settlement. In some cases, an adviser’s power is increased because debt advice is likely to lead to payment and, in others, because the creditor realises that a debt cannot profitably be pursued. This does not mean that creditors should routinely be expected to agree to every proposal that you put forward. On the other hand, if you think that the creditor is being unreasonable and/or unrealistic, consider referring the matter to a more senior person in the creditor organisation with a view to using the creditor’s complaints procedure and ultimately referring the matter to the Ombudsman, if necessary.
You should support your arguments by referring to any relevant code of practice or section of the FCA Handbook (generally, the Consumer Credit Sourcebook – see here).
 
1     FCA Handbook, CONC 7.12.2R and 7.12.3G »
2     FCA Handbook, CONC 8.2.2G(2) »
CASHflow
Agencies can provide assisted ‘self-help’ to suitable clients by using CASHflow, a self-help toolkit. To access the updated version of this (incorporating the standard financial statement - see here) go to sfs.cashflow.uk.net. Users of the previous site as well as new users must be set up with new login details in order to be able access the new website.
A money adviser assists the client to draw up a financial statement which is ’locked’ and so cannot be changed. The toolkit includes a suite of letters which the client can use to make offers to her/his creditors and deal with any follow up and requests for reviews.
The financial statement is produced using standard financial statement principles (see here) and creditors have agreed to deal with offers from CASHflow-assisted self-help clients in the same way as offers from the agency itself. You should warn the client that debts may be sold on and, even though the debt purchaser should be informed of any existing payment arrangements, s/he may have to come to a new arrangement with the debt purchaser.1See also C King, ‘CASHflow’, Quarterly Account 50, IMA
 
1     See also C King, ‘CASHflow’, Quarterly Account 50, IMA »