History of Debt Advice Foundation

Before 2002

The Founding Trustees of Debt Advice Foundation

had previously worked as chartered Accountants in the commercial sector. At that time they first began to look closely at the consumer debt industry and were surprised by the lack of coherent advice readily available within the market. They decided to build an ethical debt advice business, based around the principles of the "The Best Advice Model" (later to set the standard for the industry).

This team went on to establish a commercial debt advice business (Debt Free Direct Group plc). As a consequence, they found themselves coming into daily contact with large numbers of consumers who were in desperate need of debt advice and assistance.

However, because Debt Free Direct was a commercial business listed on the London Stock Exchange, it was necessarily more focused on profitable activities. This led the Founding Trustees towards the idea of setting up a charity which would seek to tackle problems outside the commercial scope of Debt Free Direct.

2002 - 2004

Debt Advice Foundation was established and registered as a charity in December 2002 by its Founding Trustees, Andrew Redmond, Paul Latham and John Reynard.

At that time the charity which was then known by its original "off the shelf" name of The Fonsco Trust, was dormant.

The initial objectives (objects as they are known in the charity world) of the charity made the primary purpose - "the relief of poverty". This was deliberately left very wide ranging as the Trustees wanted to devote time to developing a long term plan.

In September 2004 the charity changed its name to the DFD Trust (but remained dormant), as at that time it was considered likely that Debt Free Direct would be able to at least part fund the charity. However, this idea did not ultimately gain the acceptance of the Debt Free Direct Group plc board.

2005

Consequently, during 2005 the Trustees appealed for donations to be made to the charity. Approximately £75,000 was received in 2005 from a major high street bank.

In December that year the charity changed its name to Debt Free Advice Trust (because by this time it was clear that Debt Free Direct would not be contributing to the charity as originally anticipated).

2006

During 2006 bank donations increased to nearly £120,000. By this time the Trustees were confident that the core purpose of the charity going forward would be to focus on helping people out of serious debt as well as helping them avoid getting into debt in the first place. The team also felt strongly that improved financial education would assist young people in avoiding problem debt in the future.

2007

By early 2007, the Trustees considered that the time was right for the charity to seek to fill the gap between the commercial sector and the (then) existing not-for-profit offerings. The Trustees believed that they should look to raise the standard of charitable provision by ensuring the charity could benefit from the best of the commercial sectors expertise, but in a not-for-profit setting.

To help it achieve the above, the charity set up what is known as a trading subsidiary, Treegrove Limited, and in February 2007 changed the charity name to Debt Advice Trust.

By using the learning and systems that had been successfully established within the commercial environment (at Debt Free Direct), and applying those within the charity, consumers would benefit from:

A free service
A comprehensive financial analysis
Provision of the most appropriate solution from within the full range of potential options.

The original concept was that the charity would be supported by partner (debt) organisations forming an "expert panel". This was part of the Trustees' vision to achieve a "best of breed" partnership across the debt advice industry. Significant interest was generated and expressed by a number of highly reputable potential partners including Payplan, the Consumer Credit Counselling Service, Invocas (Newtomorrow), Grant Thornton and McCambridge Duffy, as well as Debt Free Direct.

It was intended that Debt Advice Trust would be funded by donations and sponsorships from across the industry. Having secured that funding the charity would ensure that the service was widely promoted and that advice was delivered independently from the influence of any one party to the debt problem.

The activity was very successful in advising and supporting hundreds of people with debt problems. However, the cost of promoting and providing the service was in excess of donations and sponsorships generated from across the debt industry. It became clear that while the leading lights from the commercial sector were willing to participate they weren't willing to fully fund the service. Not wishing to deplete the charity's funds the Trustees decided to suspend the service until a more sustainable funding model could be found.

During (2007) the charity received donations of £280,000 and invested £150,000 in promoting and providing debt advice and support.

In July that year the Trustees were delighted to introduce a new chairman, Dennis Benson, and to finally settle on a long term name for the Charity - Debt Advice Foundation.

Upon changing the name of the charity to Debt Advice Foundation, Debt Free Direct adopted the name Debt Advice Trust, in order to run this as a separate organisation to Debt Advice Foundation.

Following the appointment of Dennis Benson, Debt Advice Foundation's objectives were amended in August 2007, to specifically reflect the Trustee's desire to focus on:

Promoting the provision of free advice to those who needed it.
The advancement of education and research in matters relating to debt awareness and the prevention of debt.

The focus on debt education, in particular, arose as a combination of Dennis's personal interest and experience, the Trustees' belief that improved financial education would help young people avoid debt problems in their future lives.

2008

By the end of 2007 both Paul Latham and John Reynard had already stepped down as Directors of Debt Free Direct Group Plc (by this time renamed Fairpoint Group Plc). Furthermore, in May 2008 Andrew Redmond subsequently stepped down as CEO of Fairpoint Group Plc, remaining as a non-executive director until early 2009 when he stepped down from this role. NB The charity's Trustees are not employed by or have any commercial ties to any other debt companies (save private shareholdings previously acquired).

As a result of the above, the Trustees were able to spend considerably more time focused on the future direction of the charity.

Their principal focus during 2008 - particularly in light of the revised objectives, was to promote better financial education.

To assist in this venture, the Trustees commenced a working partnership with Southlands High School (Chorley, Lancashire) This partnership involved research among pupils and the authoring (by schoolchildren) and publishing of books aimed at children, teaching them about the problems of excessive debt and the benefits of saving. This was called the "Money Diaries" Project.

To date, two books (out of a planned series of five) have been published. The concept is that the books will provide a working tool for children, building in complexity, which they will recognise and enjoy as they journey through their school years (from Primary School age through to College).

On 23 April 2009, Ed Balls MP, Secretary of State for Children, Schools and Families visited Southlands School to learn more about the "Money Diaries" Project, meeting the authors and teachers from the school and Dennis Benson and David Rodger of Debt Advice Foundation.

The feedback to the "Money Diaries" Project has been hugely encouraging and the Trustees remain very excited about the possibilities of widening its distribution to a national scale. Both books are freely available to [download] for anyone visiting the Debt Advice Foundation website.

In addition, the Charity has invested funds in some new research and data projects including:

How is debt impacting employees and their work?
Why do debtors in serious difficulty not always act quickly enough upon debt advice?

The charity’s accounts for 2008 are currently being finalised and the Trustees anticipate a surplus for the charity of £400,000.

2009

The charity established offices in Darwen (near Blackburn), Lancashire, and Treegrove Limited, (the charity's trading subsidiary) changed its name to Debt Advice Foundation Limited during late 2008 in readiness for its re-launch in 2009.

The principal focus during 2009 has been to use the charity's resources to revisit the areas of debt advice and debt solutions. The charity is well positioned to become a major force for good at a time when free and impartial debt advice is needed by an increasing number of people.

In August 2009 the charity successfully launched a free national debt helpline – providing immediate advice and guidance to growing numbers of people struggling with the burden of personal debt.

In early November 2009 the charity launched a downloadable Personal Debt Analyser Tool – the tool which is freely available to download online gives people the ability to calculate the true extent of their debt problems. The tool performs all the necessary calculations for the user as well as automatically producing an individual statement of affairs and personalised letters to creditors.

Also in November 2009 the charity was listed by the FSA (Financial Services Authority) within their leading consumer website, Money Made Clear, as a source of free and impartial debt advice. The Debt Advice Foundation Personal Debt Analyser Tool is listed within the same site as an online guidance tool.

Debt Advice Foundation's objectives have been updated and approved by the charities Commission; they are:

Debt advice and solutions - help people out of existing debt problems.

We will help the consumer to obtain the most appropriate solution.

Free of any charges to the consumer.
Either provided directly by Debt Advice Foundation or a reputable outsourced provider.
With continued access to Debt Advice Foundation for ongoing advice and support for as long as this is required.

Debt education - help people avoid getting into debt in the first place

Whilst debt advice and solutions are our primary area of focus, we are hopeful that over time prevention will prove to be better than cure.

We believe that as people become older it becomes increasingly difficult for them to change existing habits.
We aim to educate young people to help them understand and differentiate between the good and bad aspects of debt so that they can make appropriate and sensible use of debt in their adult lives.

Debt research - understand better why problem debt happens

In particular our key areas of research are to determine:

Is preventative debt education a viable option, and at what age do "good" or "bad" debt habits become established?
What "principles" are applied by the various charities and commercial companies giving debt advice?
How successful are the various debt solutions, and are they more successful when appropriately recommended?
Why do people with debt problems "bury their head in the sand" and what might incentivise them to seek advice earlier?

Debt campaigning - work to bring about beneficial change to UK consumers

To use our knowledge, experience and research to identify opportunities to change the debt landscape to make it fair for debtor and creditor alike:

Gain broad acceptance to the Debt Advice Foundation "Ethical Debt Advice Charter".
Establish a broadly accepted set of "principles of ethical debt advice".
Establish "joined-up" legislation that protects both the debtor and the creditor.
Ensure that all debt advisors (including charities like ours) are subject to "audit and accreditation".
Establish fee structures (payable by creditors) that ensure consumers have access to the most appropriate advice, and which dis-incentivises creditors from lending recklessly.

The Trustees have also launched the Debt Advice Foundation "Ethical Debt Advice Charter".

In short we believe there are three parties to a debt problem.... the debtor, the creditor and the debt advisor. Each party has an obligation in the process.

The consumer has an obligation to make their best sustainable offer (to repay what they can afford to).
The debt advisor has an obligation to verify the facts and provide the most appropriate (least drastic) advice based on those facts.
The creditor has an obligation to "treat their customers fairly" (assuming that the debtor and the debt advisors have carried out their above obligations) and agree to the solution proposed.

If everybody in the industry followed the above code, the Trustees believe that the debt world would be a better place.