US-style debt system proposed
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Your support makes all the difference.TWO hundred banks, building societies and utility companies have been invited to a conference in London today to discuss the prospect of supporting a new system for recovering debts from people in financial difficulty.
The system is based on an American model which combines debt counselling with debt recovery. The counselling organisation takes a 15 per cent commission on the debt recovered from borrowers. This money is used to fund the counselling unit and the remainder of the debt recovered is passed on to the creditors.
Several large lenders, including Barclays Bank, Leeds Permanent Building Society and the finance house GE Capital Retailer Financial Services, have pledged funds to set up a pilot unit in Leeds early next year.
Other lenders and the utilities are being asked to co-operate by agreeing to forgo 15 per cent of the money recovered by the unit on their behalf. They will also be asked to co-operate in debt rescheduling programmes drawn up by the Leeds unit.
As in the US, the unit would negotiate on behalf of the debtors, collect a monthly amount from them and then distribute this among the individual's creditors.
The two main organisers of the pilot are Vic Ware, credit controller of GE Capital Retailer Financial Services, and Malcolm Hurlston, a trustee of the Money Advice Trust, another organisation involved in trying to raise funds to support debt advice services.
Mr Hurlston said the new initiative would complement the work of the Money Advice Trust and the debt-counselling services offered by the National Association of Citizens Advice Bureaux.
He said 90 of the 200 lenders invited to today's conference had pledged to send representatives. He said he had received a 'sympathetic' response from building societies.
Societies have shown a luke- warm response to the efforts of the Money Advice Trust to raise funds for existing debt-support services, including Citizens Advice Bureaux.
In the US, 700 debt-counselling units are funded by the commission system now proposed in the UK, and two leading members of the movement that runs them will speak at today's conference. The conference will be held at the Royal Aeronautical Society, from 9.30am to noon.
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