Interview with debt advisor Simon Wyllie

Tue, Aug 21, 2012

Financial Advice, Interviews

How did you come to work in the insolvency industry?

I was asked by some business contacts to assist them in setting up and establishing a debt advice and debt solutions organisation. At the time the industry was much less established than it is today, and it seemed like a really interesting project and opportunity. Over time I came to have my own ideas about how commercial debt advisers could best assist their clients, and eventually the time came when I was ready to help establish our own business based upon those principles.

What is it about the industry which motivates, inspires and interests you?

As a result of their debt problems people can go through months, often years, suffering terrible worry which can have a severe effect on many aspects of their lives. There is often a fear of the unknown, or a sense of embarrassment, that causes people to delay seeking appropriate advice.

The reality is that there is a solution to every debt problem. The huge sense of relief that clients feel when they are advised that there are ways to resolve their debt worries is something from which all good debt advisors take a sense professional and personal satisfaction.

How has your industry been impacted by the on-going global economic turmoil?

When the economic trouble first began the dynamic of personal debt changed. Previously many people had run-up debts with the comfort that their home was appreciating in value and they could easily access that cash to repay the debts later. A lack of access to mortgage and secured loan finance following the credit crunch, along with declining property values, left many people high and dry with unmanageable levels of credit card and bank loan debt.

Since then the banks have cut back on their lending, making it hard for most people to access the enormous amounts of credit that used to be available. We have however seen the rise of high-cost credit in response to banks not lending (and to the fact that the recession has made it hard for a lot of us to make ends meet). For example, payday loans often now quickly and damagingly encourage people into problem levels of debt.

The characteristics of personal debt have therefore changed somewhat over the past few years of economic turmoil, but the wider period of turmoil itself continues to be associated with record levels of debt problems and insolvency in the UK.

Recent studies have shown that a significant proportion of those with insolvencies are also suffering from mental health issues, from depression to schizophrenia, how effectively do you feel these issues are being handled within the insolvency industry?

The Office of Fair Trading issues licences (to companies and individuals) that are required to work as a debt advisor. They have recently made it very clear to debt advice organisations that they must prepare themselves to identify and work appropriately with any client who is in any way vulnerable.

One debt advice and insolvency trade association, the Debt Resolution Forum, recently organised for training to be provided to its’ members by the mental health charity Mind. Reputable players within the industry recognise that they must help vulnerable clients in the correct fashion and are doing so, but sadly there are many organisations still that have made little attempt to properly prepare their operations appropriately in this area.

There are some unscrupulous insolvency “practitioners” out there, who offer misleading advice and unsuitable debt management solutions. How do clients ensure they steer clear of these sharks and receive professional advice which will help them to control their debts?

I don’t think there are many truly unscrupulous insolvency practitioners. They’re pretty heavily regulated by their own professional bodies.

Real areas of wide concern include the numerous debt advice operators that are trading unlicensed, lead-generating websites and cold-callers making false and misleading promises, firms totally ignoring the guidelines from the licensing authority (the OFT), or firms that have set up business models designed to extract the greatest amount of cash from their clients rather than to deliver the best advice.

Ways to avoid problems with debt advice include checking online for consumer feedback about a company you’re thinking about using, choosing only from firms that have joined trade associations (DRF and DEMSA are the main two), double-checking any advice that seems too good to be true, asking an advisor what professional qualifications they have, and making sure you understand every option that is open to you so that you can make an informed choice. There are also independent non-profit organisations that you can use to cross-check the advice that you have received.

Working with so much debt and seeing the difficult consequences of it first hand, do you find you are more inclined to pinch your own pennies?

Financial advisers tell you to keep a sum of cash savings, usually three to six months’ worth of living expenses, ready to bail you out if things go wrong. It took a lot of time and penny-pinching to get myself into that position, but you feel a whole lot more financially safe and secure once you are. It’s all about setting up a solid financial base… once that’s in place penny-pinching isn’t really required any longer. It also makes it much less likely that you’ll have to turn to credit if (or perhaps when?) something unexpected crops up.

It’s tough to save when you’re in debt, and generally your spare cash is probably better used to repay as much debt as possible anyway. However, once the debts have been dealt with I think getting this emergency fund in place should become the next priority.

Author: Simon Wyllie Trust-Deed.co.uk

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