Bournes Debt Solutions in administration

fermi

fermi wrote: »

IMPORTANT for Bournes customers - Please read.

Administrator's proposals (PDF)

Reply form 2.25B (PDF)

Bournes clients - please read those documents.

fermi

Considering that large amounts of client's money that should have sat in a ring fenced account has seemingly gone missing, then may well be a good idea to report to:

http://www.actionfraud.police.uk/report_fraud

sourcrates

£500,000 pounds of clients money "gone missing" !!!!


Sounds as if they have, allegedly, been robbing peter, to pay Paul for a while now.


This kind of "debt solution" should be made illegal, they only seek to profit from other peoples misery, and in turn prolong that misery.
I really wish people could be made more aware of shysters like this, and be warned off from using there so called "service".


I think a blanket ban of been able to advertise these companies would be a start, and also if people Google "debt solutions", they are directed to the charity sites, rather than the ones which charge you.
But alas money talks with advertisers doesn't it !!!!

fermi

http://www.theguardian.com/money/2014/nov/22/borrowing-debt-management-bournes-administration

Heartache, as savings pots to pay off creditors go missing

Debt management is big business. But far from solving problems, clients of one firm face losing thousands more


Rupert Jones

Saturday 22 November 2014

The Guardian,



Tracy fears she has lost as much as £11,000, while Steve believes £7,000 of his cash has gone. They are among hundreds – or potentially thousands – of people worried they have been left out of pocket after a debt management firm collapsed into administration with half a million pounds of customers’ money apparently missing.

Bournes Debt Solutions, based in Manchester, is the latest in a line of debt management companies to hit the buffers. It’s a case that graphically highlights the hazards of letting such firms look after large sums of cash, which they are supposed to pass on to people’s creditors to settle their debts.

Bournes traded from an address in Tib Lane in central Manchester, and offered debt management plans, bankruptcy advice and other services. It went into administration on 18 September – just weeks after receiving a visit from the main City watchdog.

What’s particularly heartbreaking about this case is that many of those affected have been struggling financially for years but had managed to build up sizeable pots of cash which Bournes supposedly had in a ring-fenced account and was going to hand over to their creditors to settle their remaining debts.

In a letter sent out last week, and seen by Guardian Money, the administrator revealed that:

• While the firm’s customers believed they were making payments into a separate client bank account, “it appears this was not so, and that a significant proportion of this money has been spent”.

• The Financial Conduct Authority (FCA), the UK’s chief financial regulator, believed the “shortfall to clients” was in excess of £500,000.

• The firm’s 2,000-odd customers – who are being treated as unsecured creditors – may get little or nothing back. Administrator Peter Levy warned that it “remains unclear” at this stage whether creditors will receive any repayments.

• Bournes had been ordered by the FCA to tell clients to cancel standing orders they had with the firm because it wasn’t in a position to make payments to creditors. But Levy said it had become apparent that the directors did not comply – which meant some customers had carried on paying.

There have also been questions raised about whether the alarm could have been sounded sooner after evidence emerged suggesting that back in March, and unbeknown to clients, the Office of Fair Trading (OFT) was “minded to revoke” the firm’s licence.

However, this didn’t happen, and when the FCA took over policing the sector on 1 April, Bournes was given interim permission to carry on operating – and pulling in customers’ cash. The FCA visited the firm in early August, and later effectively ordered it to shut up shop, though this clampdown didn’t take effect until September.

Some customers won’t have lost any money because their cash will have been passed on to their creditors.

But, like many firms in this field, Bournes also allowed customers to make regular payments into a “savings” pot that could eventually be used to make “full and final settlement offers” to banks, card companies etc. In return, a creditor agrees to write off the rest of the debt.

“We have a lot of victims on our forum,” says Sharon Coleman at LegalBEAGLES, a consumer law website. “One has lost £6,000, and another £10,000, that they had been ‘saving’ with Bournes.”

Guardian Money spoke to Tracy (she didn’t wish to give her surname), who is married and lives in north Wales. She handed over more than £21,000 over four years though, as of April 2014, her creditors had only received just under £7,000. The firm’s fees for the period totalled around £3,500. Tracy says there should have been a sizeable sum – as much as £11,000 or more – sitting in her “pot” in a ring-fenced account that was to be used to clear her remaining debts.

“I’m very, very worried,” says Tracy. What makes it worse, she says, is that she has been struggling financially for years, but under the plan she signed up for, she was due to be debt-free by June 2015. “I don’t think we’ve got a hope in hell of getting our money back.”

She notes that the administrators have recovered £185,000 that was in the company’s main business bank account, and says: “Because it was our money sitting there, we should be first in line.”

Another Bournes client, Steve, who lives in the Dover area of Kent, says he had built up around £7,000 in his pot. He fears it has all gone. “It means I’ve still got £7,000 of debt that I’ve got to pay off. I was literally right at the end of the process and was going to be debt-free. I was paying Bournes a regular amount, and I knew I had a nice pot building up with them.”

According to Companies House, the directors of Bournes Limited are Michael, 46, and Michelle Gilbourne, 44, who live at the same address in Eastwood, Nottinghamshire. They are also the directors of a jobs company trading as ClickNow4Jobs, and were connected to a company called Bournes Reclaim, which was dissolved in 2010.

Guardian Money attempted to contact them but did not receive a response.
The best ways forward

Our article about Bournes Debt Solutions illustrates just how careful you need to be if you’re using – or thinking about signing up to – a debt management firm.

In September the Financial Conduct Authority (FCA) said many of these firms “are falling well short of our expectations” and will need to “raise their game”.

The good news, in theory at least, is that the FCA is beginning to crack down hard on those that aren’t meeting the required standards (it took over policing them from the now-defunct Office of Fair Trading on 1 April).

The regulator told us it had frozen the bank accounts of a number of firms to protect client money, ordered several to stop taking on new business, and issued consumer warnings about some. For example, in September it said clients of three firms – Gregson and Brooke Financial Services (trading as Expert Money Solutions), One Tick (trading as Debt Savers Direct and 1-Tick) and the Money Management Service – should stop making payments to them.

Debt management firms could apply for “interim permission” to operate after 1 April, and are currently in the process of being invited to apply for full FCA authorisation, at which point every aspect of their business will be scrutinised.

The Bournes affair shows that just because a firm says it is operating with interim permission, this arguably doesn’t count for a lot.

Where you need to be particularly careful is if you sign up for an arrangement where you use the firm a bit like a bank, paying in sums over a period in order to build up a chunky pot of cash that can be used to make lump-sum “full and final settlement” payments to creditors.

Sharon Coleman at consumer law website LegalBEAGLES says those struggling financially should always consider using free debt help charities such as StepChange.

Formerly known as the Consumer Credit Counselling Service (CCCS), StepChange offers a range of services including “completely free” debt management plans (DMPs) where “every penny you send us goes towards paying off your debts”.

DMPs are designed to help people repay what they owe by allowing them to make one payment each month, and may be suitable if they have some surplus money available each month once they have met their priority costs such as food, mortgage/rent and utility bills.

Then there are individual voluntary arrangements (IVAs). Sometimes dubbed “bankruptcy lite”, an IVA is a legally binding agreement where the individual makes regular payments to an insolvency practitioner, who then divides this money between their creditors.

Another less drastic alternative to bankruptcy is the debt relief order (DRO). However, at the moment this is only an option for those who owe less than £15,000 and have little in the way of assets or income. An individual is usually freed (“discharged”) from their debts after 12 months, but the DRO will stay on their credit record for six years. In addition to owing less than £15,000, a debtor has to have less than £50 a month spare income, not own their home and have less than £300-worth of assets.

Don’t forget about National Debtline, a free debt advice service run by the charity Money Advice Trust. It may be able to help you with some of these options or point you in the direction of an appropriate provider.

longtermplanner

It won't do the clients any good, but I hope the directors end up in prison.

Barnaby

Yes preferably hung by their genitalia 24hrs a day and used as an exercise swing by the other inmates........

matttye

Should be a similar compensation scheme to rhe FSCS for this type of thing.

I think you'd have to be bonkers to touch a debt management firm with a barge pole.

sourcrates

matttye wrote: »

Should be a similar compensation scheme to rhe FSCS for this type of thing.

I think you'd have to be bonkers to touch a debt management firm with a barge pole.

Thing is though, thousands of people still use them, now weather this is through ignorance or desperation, i don't know.
There should be no excuse nowadays with Google at everyone's finger tips, maybe some people still see debt management as a service to be paid for, or more likely, they are desperate for a solution, and this is the first place they turn.

The glossy Tv adds are the problem in my view, as the charity sector cant complete on advertising, its a shame that some kind of deal cant be struck to allow the free charity providers, some premium airtime for promoting there free service.

Only when they are more widely known by the public at large, will we see the use of fee charging services reduce.

matttye

sourcrates wrote: »

Thing is though, thousands of people still use them, now weather this is through ignorance or desperation, i don't know.
There should be no excuse nowadays with Google at everyone's finger tips, maybe some people still see debt management as a service to be paid for, or more likely, they are desperate for a solution, and this is the first place they turn.

The glossy Tv adds are the problem in my view, as the charity sector cant complete on advertising, its a shame that some kind of deal cant be struck to allow the free charity providers, some premium airtime for promoting there free service.

Only when they are more widely known by the public at large, will we see the use of fee charging services reduce.

Agreed, it's just that I would have hoped people would want to seek out alternatives and in doing so should become aware of the free charities.

Fee charging debt companies are bad for two reasons: -

1. They take some of the money that could be used to pay off creditors;
2. Some of them, like this one, save your money up in a pot with which to make F&F settlements, but it isn't protected in any way. I don't think anyone would be as quick to use a savings account not protected by the FSCS.

fermi