FairLife Debt Advice Mark
1. The first criterion is that the service is free to the client.
- The first and primary criterion is that the Debt Advice service is free to the underlying client.
2. The second criterion is no cross-selling
- The second criterion is that any other products or services provided by the debt manager are also free to the client. This is to prevent debt managers from cross selling in-house products or services which charge a fee to vulnerable clients.
3. The third criterion is no incentives to sell third-party products
- The third criterion is that the debt manager is not incentivized to recommend or sell the products or services of other providers.
4. The fourth criterion is to act with integrity and in the client’s best interests at all times
5. The fifth criterion is display of the FairLife Mark
- The fifth criterion is that where practical the licensee places the FairLife Debt Advice Mark on their website and on their written communications with clients.
6. The sixth criterion is participation in the FairLife Family
- The sixth criterion relates to passing on clients to other groups, or recommending products & services. If two providers offer a product or service, and both are equally in the client’s best interest, the licensee should favour the company with the relevant FairLife Mark or the company on the relevant FairLife Mark register2.
The first criterion is that the Debt Advice service is free to the client.
The bulk of funding for free Debt Advice services comes from charity donations, a levy on the finance industry collected via the Money Advice Service and the practice of fairshare operated by many reputable lenders. It is however legal for companies to target people in debt and to offer Debt Advice services where the customer is charged. Fee paying debt managers can be the right choice for certain people but these situations are outside the scope of this FairLife Mark.
The second criterion (no cross-selling) and the third criterion (no incentives to recommend third party products or services) seek to reinforce the message that the indebted client should not be seen as a source of profit.
The second and third criteria seek to prevent companies ‘gaming’ the first criterion by offering free Debt Advice services and subsequently supplying products whereby the customer still ends up paying fees. FairLife will encourage firms to follow the spirit of the criteria but will equally seek to make the rules themselves as encompassing as possible.
The fourth criterion is to act with integrity and in the client’s best interests at all times.
Criterion four is a commitment to deal honestly with clients and to act in the client’s best interests at all times. In particular, if the licensee is setup to facilitate a partial range of options to client problems, care must be taken to ensure that the option recommended is best for the client. The advisor must be open and transparent about the full range of options, recommending that the client speak with alternative providers where appropriate.
The fifth criterion is display of the FairLife Mark.
A key benefit of the FairLife charity is the comfort given to vulnerable clients that all of the groups involved in their debt are part of the same fair trade initiative. This comfort is given by licensees putting the FairLife Mark on their quotes, contracts and written communications.
For some firms, placing the FairLife Mark on paperwork will involve considerable management time and subsequent workload. For this reason a one year lead time is allowed from the date the Mark is adopted. If the work is likely to take more than one year to implement FairLife Ltd should be contacted.
The sixth criterion is participation in the FairLife Family
The power of FairLife is in its breadth, spanning all areas of finance. Over time FairLife Marks will interlink creating an umbrella of trust we call the FairLife Family. This interlinking will ultimately assist debt advice companies and help to protect customers.
The FairLife Family criteria is a request that if two or more providers offer a product or service, and both are equally in the customer’s best interest, the provider with the relevant FairLife Mark should be favoured.
As more companies join the FairLife initiative it will become easier for licensees to stay within the FairLife Family. FairLife Ltd will also work with its Mark holders to identify companies they deal with and these companies will be approached to take a FairLife Mark.
Where a company is known to be reputable but does not wish to adopt the Mark it may be added to the FairLife register for that Mark.
Once the FairLife Family is established many customers falling into debt will be kept within the FairLife Family regardless of how many times their debt is purchased or how many debt recovery firms are involved. This will assist FairLife in helping people who are struggling to pay their debts as well as giving the more vulnerable clients a visible sign they recognise on the written communications from all of their creditors.
1. Nothing in criteria two or three prevents a FairLife debt manager from referring a client to a fee paying service, or a fee charging product, if this referral is considered to be in the best interests of the client.
2. Nothing in criterion two prevents debt advice groups from applying for the mark if they are part of a commercial group provided that the debt advice operation is a separate entity. The debt advice service must be free to the clients and the products of outside vendors must be considered equally with those from within the group.
Any recommendation must reflect the client's best interest.
To download a summary of the Debt Advice Mark click here
To download a licence for the Debt Advice Mark
The primary reason for launching a Mark in Debt Advice is to ensure that customers who are in debt are treated fairly. The Debt Advice Mark interlinks with FairLife’s Marks in personal loans and debt recovery and helps to form an umbrella of trust across the industry.
Consumers struggling with debt often have multiple creditors and the experience of debts being passed onto other companies can be very confusing, especially for the vulnerable. It is hoped that consumers will be reassured when all the companies they deal with display the FairLife Mark and that this will offer some consistency when they are contacted by an unfamiliar company.