Money Advisor 2012


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In this edition of Money Advisor Update, aimed at money advisors, we share our technical insights and expertise

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Money Advisor 2012

  1. 1. Money Advisor UpdateSummer Edition 2012We have just wrapped up our Grant Thornton Spring Training Seminars, FTwhich were a fabulous success with over 2,000 attendees across twenty-sixvenues. The feedback has been superb and due to huge demand, we havedecided to launch our first autumn training seminar series. The dates andlocations for the seminars are featured in the newsletter along with detailsof how to book your place.The theme “The rise of personal in the UK (March 2012). The need be missed and would recommend thatinsolvency in the UK” and our topic to service debt is posing a significant you book your place early, as places“Fix the debt, fix the family” were challenge in the current economic are limited.very well received at the last seminars. downturn when a lot of householdRAWhile one of the main effects of debt is income and savings are drying up. I look forward to seeing you atbeing trapped in a cycle of poverty, it is When money is tight, it is even more your local upcoming Autumnimportant to understand that it is not important to spend time prioritising Training Seminar.just a financial problem for finances and increasing understandingthe individual. of exactly where savings can be made. Having the feeling that money is If household debts are larger thanowed to someone and that one may income and savings have becomehave to work for years to come just to limited, it is best to investigate the debtpay bills, is taxing on the individual’s solution options early. The soonerpsychological health and well-being, the debtor starts to effectively tacklewhich then can have an impact on their debts, the quicker they can seethe rest of the family, as well as their the benefits. Many people regain theirrelationships with friends and work self-esteem, rediscover life purpose andcolleagues. Debtors are placed under relate better with family and friends.constant stress in order to survive. The articles in this newsletter will GarethD Partner This is the reality of the economic give you a snapshot of the topics thatsystem in which we now live in. will be discussed. I will look in detail ContentsSpiralling fuel costs, high inflation, at “Debt is a problem. Sorting it oututilities, housing costs and a pay freeze shouldn’t be” “in the Autumn Seminars 01 Welcome from Gareth Neillfor many employees, signals a difficult under the title... “how are IVA’s 02 Debt is a problem, finding atime for households who are already continuously evolving?” solution shouldn’t be.burdened and pushed to the limit on We are also delighted to welcome 05 Grant Thornton Debt Freecredit bills. The economic climate has guest speakers, Liam Waine from – 10 tips for holidayscontinued to impact the nations wallets Stephenson’s Solicitors who will be 06 What does the future holdhence financial priorities have suffered discussing “What does the future hold for unenforceable loans?as a result. The typical household is for unenforceable loans?” along with 07 Autumn Training Seminarscurrently using up to a quarter of their a leading PPI expert discussing “Help 08 Case Lawincome to pay off their interest after Ease Debt: how can PPI reclaims ease a 10 UK Client Service Managerspaying regular bills and the average debt problem”. It will be an informativehousehold debt is estimated at £55,436 and fascinating seminar series not to contacts
  2. 2. Debt is a problem… …finding a solution shouldn’t be! FTDebt is a chronic issue in our society that is effecting analarming number of people in the UK. The combined effectsof the economy, advertising and changing social attitudeshave created the perfect storm to bring personal insolvencyto record levels. Everyone has money worries sometimes and up to or above 4,200 percent interest. Payday loans are Government introduced the IVA to assist anyone, whose incredibly tempting, with an application taking as little as 12 debts are unmanageable.debt has no respect of income. minutes to process and money being in your account within 24 hours, but people need to pause and weigh up the risks What is the criteria for an IVA? and long term effects. An IVA can help many people become debt free within 5 Pay day loan companies are not only marketing to years, as well as providing legal protection from further individuals, who are having difficulty with debt but are interest and charges being added to your debts. Every During the recent recession, also starting to market to small businesses, which has IVA is unique and tailored to individual’s needs based on unemployment soared and many of recently has caused a media storm. Pay day loan companies debtor employment status, income, expenditure, amount of those fortunate enough to keep their are capitalizing on the crisis created by banks who have unsecured debts, number of creditors and even your current RA jobs faced pay cuts. Every day 314 people are declared insolvent or bankrupt which is equivalent to one person every 63 seconds during each working day in the UK. Given the economic turmoil, this figure is not surprising. What does take many by surprise is the diversity of those now seeking Individual Voluntary Arrangement (IVA) advice and embarking upon the journey of debt recovery. This has caused a IVA market shift resulting in a change in IVA criteria. Grant Thornton will be discussing this in more detail at decreased lending to small firms. It is extremely important that the public are made aware of all the options that are available to them, other than falling into the trap of pay day loan companies, with the risk of their debt spiralling out of control. We at Grant Thornton offer free debt advice. Our highly trained licensed Insolvency Practitioners (IP’s) specialise in IVA’s to support individuals on their recovery journey from debt: from the initial assessment stage straight through to satisfactory completion of the IVA. At Grant Thornton, we are committed to exploring all the options to resolve credit concerns and creating a personalised solution for our clients. IVA market shift IVA’s have existed since the 1980’s but have only recently caught the public’s attention because of the UK’s increasing economic challenges. The IVA has become a popular debt situation regarding everyday living. The main criteria about whether IVA’s will help someone, is based on how much they earn compared to their debt for example: if a person earns over £50k but their debt is in excess of this, then you could be in financial difficulty and could benefit from an IVA. The recession has shown us that even people on higher wages face financial difficulties! In general, our clients typically have unsecured debts of more than £15,000, have more than two different unsecured creditors and are not reliant on welfare benefit income only. However the IVA criteria are not completely fixed and we will review each case on it’s own merits. At Grant Thornton, we don’t have a ‘one size fits all’ approach to helping people regain financial control over their debt. We believe in taking a wider view of the individuals circumstances in order to provide tailored debt advice. The criteria for IVA’s needs to be flexible due to continuous economic changes and increase the upcoming training seminars. solution with more and more people opting for this route with over 40,000 people entering into IVA’s each year. An in demand. What are the debt solution options available? IVA is a solution available to people who are suffering with Some cases may have a fairly unique set of financial In the UK there are a variety of debt solutions large amounts of debt and are struggling or unable to keep circumstances, for example if the individual had an available, the main options are IVA’s, Debt up repayments. This may be due to circumstances such as, unsecured debt amount of over £10,000, but under £15,000D Management and Bankruptcy. The option illness, unemployment, bereavement, divorce, separation, and have a regular income, they could be eligible for “Low that people in debt will use depends on total reduction in income or any other changes in circumstances. Value Contribution IVA”. There is no legal minimum debt, personal circumstances, job and personal Sometimes the debt levels are just too high and they have number of creditors yet IVA’s tend to have more chance of preference. Everyone’s circumstances are different, spiralled out of the clients control. getting approval, if the unsecured debt is spread between so it is important that they have the right option for There is a misconception that the only people who ever two or more creditors. The debtor generally needs to be in tailored to the individual. enter into IVA’s are on low incomes and have got themselves employment, however there are some IVA cases approved Increasing numbers of people are opting for into a spot of financial difficulty by overspending and living each year where this criterion is not met. For instance if the quick payday loan’s to solve little debts. The risk on credit. debtor is on long term sickness benefit and has a partner with this option is that little debts can very quickly The recession saw a shift in which more people on working. If the debtors’ partner is prepared to support the grow into a bigger problem, as people are paying middle to higher income sought out an IVA. In fact, the IVA application, then the creditors may accept the proposal.2 MONEY ADVISOR SUMMER 2012 MONEY ADVISOR SUMMER 2012 3
  3. 3. WIN A KINDLE WITH “Grant Thornton Debt Free”GRANT THORNTON!! Ten Tips for Holidays FT G o on an adventure near home. There is a lot to visit and do with in the UK, which can be cheaper, less hassle for example: B udget your holiday and daily spend. Set yourself a spend limit (for meals, drinks and excursions) and stick to the budget. Be aware of extra costs. • Go camping • Credit Card providers can charge up to 2.75% • Go hiking or biking commission every time you use your card abroad – try • Go horse-riding opting for using cash instead • Go to local adventure parks • Mobile Phone Sting: do you know the true cost of making and receiving mobile phone calls abroad? T ime better when you go on holidays to get cheaper deals • Avoid the peak times i.e. non term time, when holidays • Shop around for your currency and remember commission free doesn’t mean profit free are dearer and will also reduce travel stress at airports or on the roads • Avoid flying on Friday’s or Saturdays, if you fly during T hink about what you want from your holiday: would it be better to save up for the holiday you really want? As Summer Holiday’s weekdays you can save a lot of money • Check your passport a month before you go, to ensure F ind specialHow to enter: RASimply complete your details below, cut out and post to: Details of entry: begin, Grant Thornton are offering a fantastic opportunity for Money Advisors to win a Kindle. Name ........................................................................................................... D E • • you don’t have to pay more for a rush application • Research “Foreign School Holiday” in the country you are visiting to avoid their peak times, by waiting a few weeks later you could save money o compare and negotiate for better deals • Price around for travel insurance, check online and then negotiate for the best deal • Shop around for your European breakdown cover and check that your contract is covering where you are intending on going to xplore UK – instead of holiday abroad, plan day trips such as: Go on scenic railway trip Go on boat trip or river cruises • • • • • • R E offers Research online for hidden gems Research cheap hotel chains Locate cheap train tickets Collect newspaper tokens Sign up for special offers by email Travel the ferry at unsociable times to get cheaper fares estrict your suitcase weight limit when flying to avoid expensive overcharges going and coming back. • Remember your weight limit when shopping abroad and you don’t need to buy gifts for people while you are on holiday. xperience something newLynn McCabe Job Title ....................................................................................................... • Go on coach tour • Try Interrail – it is not just for students! Imagine visiting ✃Grant Thornton UK LLP • Visit historic buildings and monuments different European cities on one holiday. If you get reallyWater’s Edge Company ...................................................................................................... • Visit museums and art galleries (some are free) organised and savvy you can book your own cabinClarendon Dock • Visit planteriums travel overnight to your next location and avoid bookingD • Visit local beaches a hotelBelfast, BT 1 3BH. Address ....................................................................................................... . • Go Youth hostelling – some hostels are of high standard and many have family rooms – they are not just forOr email all details of entry to Business Email ............................................................................................. . the and insert • Try a “House Swap” and make friends in hot places“Win a Kindle with Grant Thornton” Personal Email .............................................................................................. Ein the subject line. Entries must be xperimentsubmitted before 27 July 2012 Mobile Number ............................................................................................. . with local cuisine • Track down local restaurants, for better culturalTerms and conditions 1 To qualify for the lucky draw, complete the entry form return via post or email as detailed above. 2 Only one entry per person. 3 Incorrect information will automatically disqualify the entrant. 4 Anybody may take part except employees of Grant Thornton and their family members. 5 Only the official entry form is valid. If sending information via email, all details of entry must be given experience while saving some cash – the more touristyin the email. 6 The prize is not transferable and cannot be exchanged for cash. 7 Grant Thornton cannot take any responsibility for lost entry forms or any damage, losses or injuries related to the lucky locations, the more expensive the cuisine.draw or prize. 8 Winners must be prepared to be photographed and such photograph could possibly be used in future marketing material. All prizes must be collected within three months from the date of winning. 9 Closing date for entry is 27th July 2012 at 18:00. 10 Winners will be notified via e-mail week commencing 30th July 2012. 11 By entering the competition and supplying your information, you consent to receive relevant Grant Thornton promotional material via e-mail and post. 12 The winner selection/decision is final and no correspondence will be entered into. MONEY ADVISOR SUMMER 2012 5
  4. 4. Grant Thornton’s Autumn Seminar SeriesWhat does the future hold Debt is a problem, FTfor unenforceable loans? sorting it out shouldn’t be... Grant Thornton invites you to attend our UK Autumn UK Event Details: Seminar Series. The seminar itinerary and speakers are: Seminars will commence at 10.00am and will finish at 3.00pm • “Yesterday is history, tomorrow is a mystery but today is the present... how are IVA’s are continuously evolving Day Date Location to help clients?” Gareth Neill, Partner and Insolvency Wednesday 05 September Swindon Practitioner at Grant Thornton Tuesday 11 September Belfast Tuesday 18 September Durham • “Is there a future still for challenging unenforceable Wednesday 19 September Newcastle loans?” Liam Waine, Partner and Head of Consumer at Wednesday 26 September Cambridge Stephensons Solicitors LLP RA Liam Waine Partner and Head of Consumer Stephensons Solicitors LLPWe advised a woman who had lost her job after an accident, causing her to fall indifficulties in repaying a loan. Her financial situation worsened further when shesuffered the loss of her husband and had serious health issues within a short spaceof time. A horrible chain of events which steam-rollered her into a debt nightmare.She was getting calls from her lender, and then later from thecompany they sold the debt on to. She contacted us for help. We have a dedicated team ofConsumer law solicitors who have represented people withdebt worries for 15 years and we have helped hundredsof people to get out of debt. Our team can boast manysuccessful cases in ground breaking areas of the law, with spiralled to £420,000 and they needed specialist advice to save their home from repossession. When we looked at the agreement, we found that it failed to contain some of the prescribed terms as required under the Consumer Credit Act 1974 (and associated regulations). This meant they had been paying off a debt for all those years which was unenforceable. Their debt was written off but the years of • “Helping Ease Debt. How can PPI reclaims ease a debt problem?” PPI Expert Who should attend? Following the huge demand and fabulous success of our spring training seminars, we have decided to organise a new series of seminars with fresh ideas in the Autumn across twelve UK locations. Our training seminars are open to both qualified money advisors and volunteers who are looking to improve their knowledge of IVA’s. Benefits of attending: • • • All training seminars are free to attend Free CPD points Leading expert speakers Thursday Tuesday Wednesday Tuesday Wednesday Wednesday Thursday 27 September 2 October 3 October 9 October 10 October 17 October 18 October London Birmingham Nottingham Liverpool Manchester Leeds Sheffield We look forward to seeing you at your local seminar. For more information and to register for your local seminar, please contact: Lynn McCabe on 028 9082 0679 or email before 13 August 2012.many loans written off. stress they went through could not be wiped out. • High level of interaction between speakers and delegates This particular woman had a credit agreement dating Consumer credit agreements have to comply with • Boost your knowledge with fascinating up-to-dateback almost ten years, before the law changed in 2007, so we very strict regulations, and if they don’t, as these cases informationwere able to challenge the validity of it. demonstrate, they can be challenged. • Broad view of different case studiesD We examined the agreement and found there were During the seminar I will look in detail at what the future • Free documentationtechnical issues with the way it was drafted, which could holds for challenging loan agreements and also offer key • Network with other attendeesmean the whole loan was unenforceable. After several identifiers that will signal if a loan agreement may • Complimentary lunch and refreshmentsmonths of correspondence and negotiations, the lender be unenforceable.agreed to write off the balance of the debt and pay the legal Is there still a market for challenging loans or have claimscosts of challenging the agreement. management companies taken the monopoly? Attend the There are even cases dating back to the 1990s which seminar to find out.include discrepancies and have been successfully challenged. A couple we acted for last year had taken out a loan in 1990s. They contacted us after their original debt had6 MONEY ADVISOR SUMMER 2012
  5. 5. R (Payne and Cooper) v Secretary ofCase Law State for Work and Pensions - Court of Appeal The Supreme Court has ruled that the right of the Secretary of State to FT recover overpaid benefits by deduction from future benefits cuts off upon the making of a debt relief order, confirming the decisions of the Court of Appeal (PIF44, July 2011 and of the Queen’s Bench Division (PIF31, March 2011). The Supreme Court further stated (it would seem obiter) that theRecent Cases right also cuts off upon the making of a bankruptcy order and not, as hadRaithatha v Williamson income payments order. estimated overall value of the pension previously been decided by the CourtI have now read the judgment in The learned deputy judge could see should be exactly the same either way. of Appeal in R(Balding) v Secretary ofRaithatha v Williamson in which a no reason for a difference in outcome Nevertheless the decision is what it State for Work and Pensionsdubuty judge in the Chancery Division between a bankrupt who has elected is. Because of the urgency of addressing (CUG947, March 2008), upon theheld that an income payments order and one who has not and none was income payments before discharge we bankrupt’s discharge.could take into account a pension suggested in argument. My Lord, the cannot wait to see what may happen in In reaching this conclusion, thewhich the bankrupt, being of adequate obvious implication of the fact that the Court of Appeal. I think we have Supreme Court rejected the “netage, had not elected to draw. This is the debtor has not elected to draw his no alternative other than to review entitlement” principle enunciated RArelevant to bankrupts with pensionsthey could elect to draw whileundischarged, and relevant to IVAs tothe extent that the proposal should notlook to leave the creditors worse offthan in a bankruptcy. I am not persuaded that thisdecision would survive an appeal.There surely will be an appeal soonerrather than later, if not in this case, thenin another. The reasoning for the decision isthat because the bankrupt is entitled toelect to draw the pension he is entitledto the income. Even though the rightof election is property which does notvest in the trustee, the court is saying pension is that he has other sources of income, so that being forced to elect in fact gives the creditors a windfall of a double dip. Further, the one who has elected has already dealt with the question of lump sum v higher annuity on his own terms. One who is forced to elect by an income payments order that takes into account the maximum lump sum has the decision thrust upon him in terms that are unfavourable to him and the consequences of which endure for the remainder of his life. Are these merely the melancholy consequences of debt and improvidence, or are they a contradiction of the policy of s11 of all cases where we have undischarged bankrupts over the age of 55 with a view to claiming income payments on this basis. We also need to review cases of discharged bankrupts where we have income payments already in place and who are over the age of 55, or will be over that age before the term of the income payments expires. The possibility of a review of existing income payments does not depend on there being a change of circumstances (although that would obviously be the usual basis of a review), so a change in the understanding of the law is sufficient reason to consider whether a variation might be obtained. by the House of Lords in Mulvey v Secretary of State for Social Security (1996). This principle had been that the individual was only entitled to receive benefits net of the deduction and therefore there was no recoupment occurring from the bankruptcy estate. Nevertheless, the Supreme Court did not rule that Mulvey had been wrongly decided as it was a Scottish case influenced by the Scottish common law of bankruptcy. The consequence is that there is now a discrepancy between England and Scotland on the matter of recovery of overpaid benefits by deduction. The decision was unanimous, asthat s310 directs the court to take into the Welfare Reform and Pensions If we obtain income payments on was a strong hint that the governmentaccount that which could be obtained Act 1999? the basis of Raithatha v Williamson we might wish urgently to review the law,by the making of an election. This rolls If the court is indeed of the view may need to delay distributing such a hint that has indeed been taken uptwo steps (entitlement to elect in which that it can take into account the funds if the issue is known to be going (see PIF49 above)Dthe trustee cannot directly interfere, maximum lump sum so as to force to the Court of Appeal as the court The Supreme Court also saw fitand entitlement to receive in respect an election on that basis, then the would be able to order repayment if to distinguish the Court of Appealof which the trustee can seek income obvious “planning” point for anyone the payments were ordered / made on decision in Bradley-Hole v Cusenpayments) into one. on the receiving end of a statutory the basis of an incorrect understanding (1953), involving an overpayment In taking into account the demand, bankruptcy petition or even of the law. of rent, where it was held that theentitlement to elect and consequently a bankruptcy order is to elect before overpayment was to be regarded asto receive, it appears that the court can the trustee can intervene, but on the merely a payment in advance of futureforce the bankrupt to elect and indeed basis of no lump sum and enhanced rent, so the tenant could not be madeto elect for the maximum lump sum annuity. I can see no basis on which to pay again when the landlordif he is to be able to comply with the that is a disposition of property as the became bankrupt.8 MONEY ADVISOR SUMMER 2012 MONEY ADVISOR SUMMER 2012 9
  6. 6. UK Client Service Managers contacts Grant Thornton Grant Thornton UK LLP was established in 1904 and has become one of the UKs leading advisers on debt. Over the Client Services Manager’s (CSM’s) past 20 years, the Debt Services team has helped thousands of people with debt problems. FT Grant Thornton Client Services Manager’s (CSM’s) are Karen Bridson Client Service Associate Director - specialised debt advisors who work with the free money North West and North Wales advice sector to provide solutions to their clients with Karen has been with Grant Thornton for twelve years, multiple debts. Based locally throughout the UK, each CSM covering the North West and North Wales Region. She has meets every client referred to them face to face, usually at worked in the North West Citizen Advice Bureaux Service the agency referring and with the adviser present. They for twenty years and is a committee member of the NWDF. also have access to Grant Thornton offices to hold meetings where necessary. This close working relationship has Linda Wilson Client Service Manager Linda Wilson Karen Young enabled a ‘working in partnership’ approach that has grown Northern Ireland Northern Ireland North East & Cumbria M 07966 495731 M 07826 920228 and developed over many years and has seen thousands of Linda has been with Grant Thornton for eight years E E clients become debt free or on a road to having an end to covering the Northern Ireland Region. Linda worked as a their debt misery. Outreach and Money Advisor Worker with Citizen Advice Bureaux for eleven years before joining Grant Thornton. A typical day for the CSM’s will be busy and challenging, visiting advisers who have set up client meetings to enable Karen Young Client Service Manager Karen Bridson RA North West and North Wales M 07966 796854 E Gillian Downing Yorkshire M 07970 871508 E a thorough review of all options and enabling clients be fully informed so they can make the rights decisions going forward. CSM’s also provide bespoke training on the IVA for advice agencies at their own offices. This is a great way for advisers / volunteers to be informed and kept up to date on the ever changing debt solutions available. Every adviser / volunteer has access to their local CSM at any time, to discuss cases, provide support and meet their clients. This close working relationship has been working well for many years and continues to grow. All CSM are committed to ensuring professionalism and advice that is geared to each individuals circumstances. North East & Cumbria Karen joined the Grant Thornton team three years ago. Prior to joining the company Karen had worked fifteen years as a welfare benefits assessor at Gateshead Council, eighteen months at the Gateshead Housing Company as a debt advisor and eight years at Gateshead CAB as the LRC debt advisor. Dawn Pryce Client Service Manager Midlands & South Wales Eight years ago, Dawn moved to Grant Thornton after being with KPMG for three years supervising the team who dealt with personal insolvency cases on behalf of bank/ lender clients. Prior to KPMG Dawn worked for HFC Bank for eleven years within the correspondence and litigation departments. Jane Lodge Client Service Manager London and South Jane joined Grant Thornton six years ago after wanting to work more face to face with clients, helping them exploreD all their options and help the clients select the best option to Dawn Pryce Jane Lodge Midlands & South Wales London & South ensure they start to go on the recovery road from debt. M 07866 682540 E M 07966 495690 E Why not call your local CSM to meet and discuss further what Gillian Downing Client Service Manager Yorkshire the benefits are to you and your Six years ago, Gillian moved to Grant Thornton after being agency in a working partnership with North East Citizen Advice Bureaux for nine years with Grant Thornton? working as a Specialist Case Worker under the legal service contract after specialist debt training.© 2012 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ means Grant Thornton UK LLP,a limited liability partnership.Grant Thornton UK LLP is a member firm within Grant Thornton International Ltd (‘Grant Thornton International’).Grant Thornton International and the member firms are nota worldwide partnership. Services are delivered by the member firms independently. 10 MONEY ADVISOR SUMMER 2012 MONEY ADVISOR SUMMER 2012 11
  7. 7. Advice that’s FT made to measure. Because one size doesn’t fit all.RA At Grant Thornton, we know that financial problems can affect people from all walks of life, in different ways. We understand that money worries add up to more than just numbers. Our goal is to provide all of the support and advice you need to regain control. How can we help? • We provide high quality free debt advice tailored to your needs • We offer free impartial advice face to face or over the phone • We explore all the options and provide you with a personalised solution to resolve your credit concerns • We can help stop the phone calls and threatening lettersD Time for a fresh start! Throughout the UK, we offer free face to face and phone consultations with a member of our highly experienced team to discuss your options. Call our free phone 0800 783 4582 or email to book a free consultation. * Phone lines are open Monday to Friday - 8.45am to 7.00pm.©2012 Grant Thornton UK LLP. All rights reserved. Grant Thornton UK LLP is a member firm within Grant Thornton International Ltd.Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by member firms. Full disclaimer available at*Quotes are from Grant Thornton clients affected by debt. Names have been changed for confidential resons.V21804