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Debt Advice Handbook 15th edition

1. Exploring the debt problem

• Obtaining information from the client

Debt advisers must create a trusting and safe environment in which the client can talk about her/his personal and financial affairs. This may take some time to develop, but should start at the beginning of the process, when you make it clear that any information the client provides will be treated in confidence, that you will not judge her/him and are on her/his side.

Explain the role and boundaries of the agency (eg, that it does not offer court representation), what you can and cannot do and why. Obtain as much detail as possible about the client, other members of the household, the debts and the financial situation. It is important to make the client feel as comfortable as possible so that s/he feels able to provide the detailed information needed to advise her/him properly. When collecting information, you are not intruding unnecessarily into the client’s affairs, but you need that information to help her/him decide a strategy and/or negotiate with creditors. It is, therefore, important to tell the client that such information is confidential and explain how the agency’s confidentiality principles operate. Often, people seek advice about a specific debt and are reluctant to discuss other debts they are managing to pay or if they feel the creditor has been particularly helpful. However, it is often impossible to deal with a particular debt in isolation. This stage can therefore include a discussion of the whole position.1See also W McShane, ‘Debt Exploration Part 1’, Adviser 178 and ‘Debt Exploration Part 2’, Adviser 179

Advisers should gain an understanding of what has led to the client’s debt situation (often a change of circumstances) and whether the situation is likely to be temporary or long term. They should also enquire about any potential future changes that may impact on the client’s available debt solutions – eg, expected changes in income and/or outgoings due to the birth of a baby, retirement, redundancy or relationship breakdown.

 

1     See also W McShane, ‘Debt Exploration Part 1’, Adviser 178 and ‘Debt Exploration Part 2’, Adviser 179 »

Obtaining information from the client

Obtain as much information as possible from the client on all her/his debts at the first interview, and record this in a clear and concise manner. In practice, many clients do not bring all the required information at the outset and so much of it may have to be obtained later, possibly from other sources – eg, from a client’s creditors for outstanding balances or credit reference agencies for details of the client’s creditors. It is also worth checking to see whether there are any previous case notes which have been closed to ensure that a full picture of the client’s situation is obtained.

If you are conducting the first interview by telephone, the client must subsequently bring or send any information to the advice agency (and a signed authority to act obtained before creditors can be contacted).

It is essential to obtain sufficient information at the earliest opportunity, as otherwise:

•income/expenditure details and, consequently, the financial statement may be inaccurate and payment offers unsustainable, leading to the client’s failing to maintain the arrangement;
•you may give incorrect advice, leading the client to choose one option when another option might have been more appropriate;
•opportunities to maximise income may be lost.

Use a pro forma to record the information, which could also remind you what to ask the client in order to establish the full facts of the case. An example of a pro forma is in the Money and Pensions Service (MaPS) Good Practice Toolkit, available to members of the Institute of Money Advisers (IMA) in the Resources Directory section of the IMA website, i-m-a.org.uk and to non-members at debtquality.org.uk/good-practice-toolkit. Clients often only reveal the debts they are worried about. It is, therefore, important that you go through all their priority commitments, whether or not they are in arrears, and then move on to the non-priority commitments. Advice should be given in each area on the consequences should the client default. Be realistic about the outcome and be honest with the client at all times.

Check that any agreements have been drawn up correctly and ensure any applicable time limits are complied with.

The first letter after the interview should confirm all the advice given, the client’s options and their consequences. Outline the agreed action and the expected timescale. It is good practice to include details of any action you have agreed to take and any action the client has agreed to take at the start of the letter, so even if the client does not read all of the letter, it is clear what s/he/you need to do next to process her/his case. The MaPS Good Practice Toolkit contains examples of template confirmation of advice letters (see above).

Keep clients informed and involved at each stage, so that they will be able to deal with the case themselves once the case is closed. Remind clients to keep you informed of any change in circumstances throughout the life of the case.

Once all the work is completed on the case, send a closure letter, detailing the work carried out and the outcome, and giving general advice on how to deal with the various creditors in the future.