For many years Gregory Pennington (GP), part of the Financial Wellness Group (FWG), has charged its clients monthly fees for running Debt Management Plans (DMPs)
But MaPS awarded Gregory Pennington a contract that began on 1 February 2023. And it can’t charge fees for DMPs under this contract.
StepChange, Payplan and CAP have always provided “fee-free” DMPs, where all a client’s payments go to clearing its debts.
So what has happened to the older DMPs that GP charges fees for?
Gregory Pennington’s DMP fees
Last year its website said:
Gregory Pennington Limited charges an arrangement fee of up to £195 from the first 6 regular payments you make, to cover the cost of setting up your Debt Management Plan (DMP).
A management fee will also be charged of 20% of the payment you make in each payment period (this could be every four weeks or monthly depending on what suits you best and when you receive your regular income), and is subject to a minimum of £42.50 and a maximum of £90.
We will only take a maximum of 49% in fees of each payment to ensure that at least 51% is paid to your lenders.
GP tells clients that there are alternative fee-free DMPs. They do this at the start of a DMP and at each annual review. So it is the client’s choice what DMP firm to use.
Charging fees makes a DMP take longer to finish
Fee charging reduces the money that goes to a client’s creditors. As a result, it will take longer to complete the DMP and the client stays in debt longer.
Take an example of a client paying £100 a month towards debts of £6,000:
- in a StepChange DMP without fees, the debts would be all cleared in 5 years
- paying the old Gregory Pennington fees, the same debts would take over 8 years to clear.
This is the reason I have always suggested that people avoid fee-charging DMPs, see Choosing a debt management company – free or pay fees?
When will Gregory Pennington tell clients about fee-free DMPs?
GP will tell a client at their annual DMP review that they can now switch to a fee-free plan.
But that doesn’t seem reasonable to me. Some clients will be told after a couple of months, others after nearly a year.
By delaying telling someone, it may cost that client hundreds of pounds in fees they do not need to pay.
Also an argument that it is the client’s choice whether to switch doesn’t seem right here. A client may be happy with their DMP and be worried about switching to a different firm. But what reason could there possibly be to say to GP, No, we would rather carry on paying you fees even though we don’t have to?
Instead, a better approach would be for GP to immediately stop collecting fees and refund clients the charges that have been collected since February when the MaPS contract began.
The FCA’s PRIN 6 says:
A firm must pay due regard to the interests of its customers and treat them fairly.
The way GP is approaching this does not seem to me to be in the interests of its clients and is not treating them fairly. And from the end of July, it may also be against the new FCA Consumer Duty.
Clients paying fees can complain
I think a client paying fees for an old Gregory Pennington DMP should complain. And ask for a refund.
It is better for these complaints to be in writing. If you can send a complaint by message when you are logged into the GP website, that will do. Otherwise, email jonathan.warr@
Here is a template for you to adapt:
“I want to make a complaint about the monthly fee I am being charged for my DMP. [insert a DMP reference number or client number if you have one]. I have been told that since the start of February new DMPs you set up don’t have any fees. Why haven’t you switched your current customers like me over to the new, cheaper plans? Your inaction here has prolonged the time it will take for me to get out of debt and is unfair.
I would like my account to be switched to a no-fee DMP immediately. And I would also like a refund of the fees that I have been paying since the start of February.”
If your complaint is rejected, send it to the Financial Ombudsman. This is easy – use the Ombudsman’s online form.
In a DMP? A good time to ask for refunds
Can the FCA Consumer Duty help you?
Could a Debt Relief order help you?
Gemma Clark says
Does this mean that GP are going to be outsourcing their current fee charging DMP’s. If so, where will they be switched to?
Also, where is the money that was awarded by MaPS going to go? Is it simply going to compensate for the loss of DMP income?
Sara (Debt Camel) says
Not so far as I know. I think GP/FWG are just changing their business model to get the MaPS income and not charge fees. I suppose they may also be asking creditors for Fair Share income, but they haven’t said this.
I guess the MaPS income is to cover whatever GP/FWG said they would do in their tender
James says
What about old cases with Gregory Pennington? I had a DMP with them 4 years ago?
Sara (Debt Camel) says
In this case you would definitely have been charged fees and the fact that they have now stopped charginbg fees to new cases isn’t relevant.
If you were unaware that you could have got a DMP without any fees, you could complain about that. But there may be very little evidence about this now.
Amanda says
I have a debt management with GP, I have raised a complaint. I am still waiting for an update, been waiting a month now. I had my annual review with them in August 2023, there was no mention of them now offering free of charge debt management plans, which I think is really bad. They mentions other providers offer this but not them !!!
Sara (Debt Camel) says
OK, you can send this to the Ombudsman at 8 weeks. But I suggest at the 6 week point you should phone them up and ask why you have not had a reply to you complaint.
Mark says
I have just come across your website, i have been in a DMP since late 2018 with only a few months to go before I’m free of GP. I don’t expect a response and when i went through my last review in 2023, there was no mention pf this.
Sara (Debt Camel) says
They didn’t say you could switch to fee free? I suggest you make a complaint and ask for a refund of all your fees back to Feb 23. And send this to the Financial Ombudsman if they don’t agree.
Mark says
I dont believe they did. I sent off an email last night after reading your post regarding the fees.
Thank you
Sara (Debt Camel) says
Well if they did, they obviously didn’t explain it properly! Poor communication!
Amanda says
I finally got a very long winded response from GP, basically saying they would still be charging me my month fee, hope by the end of this year to be done with them, I am planning on paying off my final debt, I will do the negotiations myself, as if GP do it they also take a cut of what they save you.
Sara (Debt Camel) says
Have you sent them a complaint? Why did they say you could not transfer to fee free?
Mark says
My complaint has been forward on to the respective teams. They did ask if i wanted to pause the plan.. Erm, no thanks 🤣
Andrew Taylor says
in May 2023, a relative gave me £10000 to pay off a chunk of my Debt Management Plan with GP. They took some of the £10000 as fees.
Does that mean, I might be able to claim that back? Thank you
Sara (Debt Camel) says
If GP had not told you you could switch to a fee free DMP, yes I think this is well worth a complaint. Send it to the Ombudsman if GP don’t refund those fees.
Heather Frost says
Really interested in following this, I’ve been with GP for years, no mention of moving to a fee free DMP, and when I tried a couple of years ago to clear the debt was amazed how much they took from my lump sum payment.
Sara (Debt Camel) says
So you are still paying them a fee? Send them in a complaint now, ask for a refund back to Feb 2023 last year, and send this to the Ombudsman if they don’t do this.
Heather says
Thank you.