I am afraid that I cannot support new clause 10. While I have great sympathy with the aim of the hon. Member for South West Devon (Mr Streeter) to keep the free-to-consumer plans going, I do not feel that his new clause will achieve that.
I am slightly unclear about the use of the term “fee”. As the hon. Gentleman said, this is currently a voluntary arrangement. I am a little concerned about what public benefit would result from his proposal. Would it merely ensure supplier revenues for certain service providers? If so, is that really a legislative issue? I have wider concerns. I feel that too few debt providers give advice on debt, but I also feel that the current landscape is fairly confusing. I do not think that introducing a statutory funding mechanism for one debt solution—a debt management plan—is the right way forward. Plenty of options are available to people in debt, including bankruptcy, debt relief orders, debt management plans, administration orders, debt consolidation, and individual voluntary arrangements.
Many of those plans are not funded sustainably. I think that one organisation that offers them is paid £35 for each order that it issues, and that is not a sustainable solution. I do not want providers to offer plans on the basis of how they are funded rather than on the basis of what is best for the individual, but I fear that the new clause could lead to their doing so. I am sure that many would not, but the new clause might lead to more providers’ choosing to offer the “fair share” solution because it is statutorily funded, whereas they make a loss on every debt relief order that they issue. That is not the best solution for the individual who is in debt.
I think that we need a proper review of the current debt solution landscape. I believe that it is too complex, and that it is not properly costed. I also believe that the providers have insufficient funding. As the hon. Gentleman said, there has been a problem with the debt management plans. In fact, a review of the fee-charging debt management companies found that 60% of their clients were put in a worse position. That cannot be allowed to continue,
and I am pleased that the FCA is cleaning up the market. However, I worry about what will happen to people who come off debt management plans. They took a big step to deal with their debts—and facing up to the fact that you cannot pay your bills is a difficult decision to make—and went to a provider. Now they have been told, “Actually, your provider was not providing a good service. Go and find somebody else.” I worry that those people will not look around, and I hope that the Minister will look at ways of promoting opportunities for them to go to other providers.
4.30 pm
I also hope that funding will be available for the other providers, and that they will not be left in the unsustainable position of having to pick up a large number of people all at once. It might be sustainable to pick up 16,000 people over a few months, but to pick them all up immediately when a company goes bump is really difficult. I have sympathy for the motives behind new clause 10, but I do not feel that it will solve the main problem, which is that many debt solutions providers do not have sufficient funding. The new clause would focus on only one solution and could well skew the market in the wrong way, to the advantage of the providers rather than of the people who need the solution.