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.