The FCA says that over a hundred debt management firms who applied for authorisation have been refused or have withdrawn their application. In September 2016, Debt Clever became one of these firms.
Some firms that are closing are looking for ways to continue to make money from their clients. My previous article, Why the FCA should ban the Compass debt advice model, has some examples. This article looks at the different approach that seems to have been adopted by Debt Clever.
Background on Debt Clever and Valour Group
Debt Clever is a brand name of Debt Clever Financial Management. The company changed its name in July 2016 from Valour Financial Management Ltd, two months before it closed.
It is a subsidiary of Valour Group UK (PLC). Despite the plc in the name,Valour Group doesn’t seem to be publicly listed at the moment. Valour’s current mini bond offering says it makes £600k a year profit from every £1 million lent by its subsidiary, Savvy, a HCST loan provider.
Valour Group’s CEO is Mark Bowker. Bowker is listed on the FCA register as the contact for Clever Debt. His twitter account says: Not sure how I’ve managed it but busy living the dream :)
Clever Law is targeting Debt Clever clients
This is another company that has recently re-branded, adopting the Clever Law name in August this year, one month after the Debt Clever name change. It also seems to have changed its business entirely at that point – before then it was an Internet Services Provider.
The Clever Law website says it has a library of legal templates, letters and documents. For debts, it promises:
you will find all of the template letters and template documents you will need to help you to get creditors to accept payment arrangements and to prevent court collections processes against you.
They are charging a monthly subscription of £29.99 a month – or an extra £10 a month if you want your own cleverlaw email address (£120 a year for an email address! madness for anyone with financial problems!).
The website sign-up process doesn’t work, so I phoned customer service and was asked what my Debt Clever reference number was. When I said I didn’t know, I was told this was the same as my Valour reference number. I said I had just tried to sign up on the website, which seemed to confuse the woman I was talking to. She talked to her manager. I was then told that there may be a website problem and someone would get back to me – no-one has.
So it looks as though:
- Clever Law was set up to take on Debt Clever clients;
- it is mainly, possibly only, dealing with Debt Clever clients at the moment. They certainly don’t seem keen to get other clients;
- Clever Law has some Debt Clever’s client details, such as their reference number.
The question for Debt Clever clients is:
Is Clever Law worth paying for?
If the Clever Law service is just some template letters and generic information on debt management, it’s not worth paying for. You can get a better service elsewhere for free:
- National Debtline has an extensive and free library of template letters and information about making arrangements with creditors and court processes. You can also phone them up and they will talk about your specific situation, help you get an income and expenditure sheet in a format your creditors will be happy with and look at whether you have any better debt options.
- CABMoney is a free facility from Citizens Advice that lets you run your own debt management plan, calculating the pro rata offers and generating letters to creditors. It also has letters to creditors for use when you are switching from a different DMP provider such as Debt Clever.
- read When & how to ask for a CCA agreement. For credit cards, catalogues and most loans, if the creditor can’t send you a copy of the CCA, you can simply stop paying it, or offer them a very low settlement offer.
Is a cleverlaw email address worth paying anything for? Perhaps people are supposed to think it looks professional so creditors will accept an offer coming from such an email. But creditors should treat offers from an individual in the same way as an offer from a debt management firm. No, this isn’t worth paying for.
The two questions that the FCA may like to consider are:
Should Clever Law be authorised?
I don’t know whether Clever Law has details of a Debt Clever’s customer: creditors, balances owed, current monthly offer of payment. If it has, it would make it easier for Clever Law to generate useful letters for the customer to send to creditors.
But having detailed client information or having “an expert ready and able to provide the advice you require” as the Clever Law website promises, is very close to debt counselling.
Clever Law seems to be in a difficult position here. If it is providing a useful, tailored service to previous Debt Clever customers, it’s hard to see why it shouldn’t be regulated. And if it isn’t providing a tailored service, it’s not worth paying any money for.
Did Debt Clever behave correctly?
I assume that Debt Clever did signpost its customers to free debt advice. But they also provided information about Clever Law. One customer commented on MumsNet:
They have also sent a bunch of attachments offering a bundle of services from a company that sounds somewhat similar to sort out the rest of his debt.
Was this in the customers’ best interests? Could the similar branding have been misleading to some customers? Did Debt Clever’s letter make it clear to customers that the Clever Law was not authorised, would not sort out the customer’s debt problem and was charging for a service that they could get for free elsewhere?
The FCA has told DMP firms that are closing down that:
we therefore expect firms to inform us at an early stage, including providing us with at least 10 days working days’ notice, of any proposed sale or purchase of customer lists or customer contracts.
This was in the context of a DMP firm transferring/selling its customers to another debt management firm, but I can’t see why it wouldn’t also apply to dealings with a non-authorised firm such as Clever Law. Given the common ownership, I suppose it is possible that no money was actually paid by Clever Law to Debt Clever, but a free transfer of information would seem to be against the spirit of the FCA’s letter. It may also have been problematic from the point of view of data protection.
So far Clever Law haven’t responded to me and I haven’t seen its library of templates.
I will update this article if I get more information.