Daily Mail Newspaper - March 2016
Our whistleblower wanted it to be fully investigated as to how Derby North MP Amanda Solloway's husband had allowed the firm to go into voluntary liquidation,
The Daily Mail newspaper found victims of the firm's failure and it has led to call for Solloway to resign.
Read the full story:
\eA debt management company run by the husband of a Tory MP has gone bust – leaving hundreds of hard-up families on the edge of ruin.
Amanda Solloway’s spouse Rob ran a controversial firm that has left at least 500 households facing the loss of large sums of money.
The venture offered to eradicate household debts for clients by charging fees to deal with creditors on their behalf – while at the same time reducing the amount they owed.
But after the firm went into voluntary liquidation, some clients may now face the double whammy of having paid out thousands while not clearing any of their debts.
The firm, which Mr Solloway co-owned with two other directors, has been the subject of numerous complaints and folded earlier this month.
Mrs Solloway, the newly-elected MP for Derby North, last night distanced herself from the company run by her husband of 32 years.
The scandal is acutely embarrassing for the 54-year-old because she sits on the Commons’ business, innovation and skills committee and has co-written a book about how to be successful in business. Called Emotional Intelligence: Activities for Developing You and Your Business, it advises how to ‘establish trust’ within a company.
HAVE YOU BEEN HIT BY COMPASS DEBT COUNSELLORS' COLLAPSE?The MP, a management consultant, admitted she had visited her 54-year-old husband’s offices but insisted she had not done any work for the company. She was elected as the MP for Derby North with a majority of just 41 votes last May and in the past she has not been shy about discussing her business credentials.
In her maiden speech in the Commons, she said: ‘I don’t have a degree. I don’t really have A-Levels to talk about, but I do have common sense and a business background.’ Fellow MPs were warned she would ‘bring some good Derbyshire straight talking to this House’. But this week, at her three-bedroom, £500,000 detached home in the village of Borrowash, she was reticent on business matters.
She issued a statement through the Conservative Party yesterday saying: ‘Amanda has never undertaken, in any capacity, any role in her husband’s business either unpaid, advisory or otherwise.’ There was no word from her husband.
HOW DOES THE SCHEME WORK?MOST debt management firms like to play the Good Samaritan.
They advertise on Facebook and Google and hoover up customers who have fallen on difficult times after being made redundant or suffering a family tragedy.
The prospect of also losing their homes is so terrifying that many jump at the first sign of a helping hand – even if it costs a fortune.
Companies boast about warding off the debt collectors when a ballooning loan threatens to ruin you. As a customer, you sign on the dotted line and a consultant negotiates a ‘compromise’ with the company chasing you down.
Instead of coughing up a hefty sum today, you can make affordable monthly repayments. It sounds like a terrific service – until you see the costs.
Though there is no evidence Compass Debt Counsellors acted in this way, many of the 50,000 debt firms operating in Britain are just as profit-hungry as the loan sharks they claim to fight off.
Take the debt consultant PDHL, which was stripped of its licence by the City watchdog this week.
Its fees were adding up to an astonishing 42 per cent in extra costs to customers’ loans.
For someone who owes £10,000, this means a £4,200 bill just to have an office clerk negotiate on their behalf. And the fees are so high that some borrowers’ debts never get any smaller.
In a case seen by charity Citizens Advice, a woman paid £90 a month towards a £13,000 debt for five years, only to find her payments were being swallowed by charges and she still owed £13,400.
What many struggling families don’t realise is that the same help is available free through organisations such as the National Debtline, Citizens Advice and StepChange.
A party spokesman added: ‘Mrs Solloway has said that she has visited the [her husband’s] office a handful of times. On behalf of Mr Solloway, there isn’t any further comment.’
Compass Debt Counsellors, based in Long Eaton, Derbyshire, claimed to have helped ‘thousands of people get back in control of their finances’.
It advertised in the Yellow Pages but later started buying customer details from PPI firms and cold-calling them. Telesales staff would offer to get rid of a client’s debt within five years. They would also offer to deal with creditors – an enticing prospect for anyone being hounded for money.
Salesmen – known as debt counsellors – would then visit potential customers at home and get them to sign up by paying a one-off fee to Compass. Depending on the size of their debts and how much they could afford, Compass would then try to negotiate with creditors to get them to accept a small monthly payment plan of sometimes as little as £2 and get the interest on the debt stopped – something which was impossible to guarantee. Part of the monthly payment would go to creditors, the rest into a client ‘pot’ – with Compass taking a 10 per cent administration fee.
When the pot reached a reasonable amount, Compass said it could negotiate with creditors to get a full and final settlement which was less than the total amount owed.
But now the firm has folded, clients have no idea what has happened to the money they have been saving for years – which in some cases was more than £10,000.
A whistleblower told the Mail he first raised concerns about Compass with the Office of Fair Trading (OFT) in 2011 and had also contacted officials at the Financial Conduct Authority (FCA).
In an email to the OFT, he said: ‘I worked for Compass Debt Counsellors, a fee-charging debt management company. Clients are told that their payments are split 50/50 with half going to the creditors and the other half goes into their own personal client account to build up an amount for full and final settlements. Monthly clients pay in between £400,000 and £700,000 as we have over a thousand clients.’
In 2014, the whistleblower again tried to raise the alert with the FCA. Earlier this week a company dealing with the liquidation of RMR Financial Services Limited – which traded under the name of Compass – told worried clients via email that it was unable to assist with enquiries via telephone. Alan Simon, of AABRS insolvency specialists, said at least 500 clients are thought to be affected.
'COLLAPSE MEANT WE LOST £10K' Mother of one Rachel Walton said she ‘feels so stupid’ for putting her trust in Compass.
The 33-year-old and her husband turned to the firm in 2007 after accumulating £25,000 worth of debt.
The couple, from Birmingham, agreed to pay £350 a month to Compass, which was less than the £700 they had been paying, and were told would mean that after five years they would have enough in the pot to negotiate a settlement with their creditors.
But after five years, the pair said they were told they now owed even more – £35,000 – because Compass ‘couldn’t stop the interest going up’. ‘We were very naive but we just took it as gospel,’ said Mrs Walton. The couple carried on paying Compass until this week, when they found out it had collapsed – and fear the £10,000 in their client ‘pot’ is now lost.
‘We were devastated,’ she said. ‘We thought we were nearly debt free and now we find ourselves back at square one. We feel so stupid but we trusted them.’ Mrs Walton, who is trying to sort out a new plan with a government charity-run scheme, added: ‘Neither of us have slept since we found out. We have spoken to the creditors and our debt is still £26,000.’
'I'M NOW WORSE OFF THAN BEFORE'Teresa Leivars (pictured above) turned to Compass after amassing debts of more than £14,000 on credit cards, bank loans, catalogues and store cards.
The jobless 44-year-old, who has epilepsy, took out another loan to consolidate her debts but struggled with the repayments and defaulted in 2011.
After a friend recommended Compass, she agreed to pay a one-off £1,000 fee for dealing with her creditors on her behalf and monthly payments of £132.
Miss Leivars was delighted, as it meant she could simply let Compass deal with any threatening letters from creditors.
But she first suspected problems in December when the amount in her ‘pot’ was missing from her monthly statement even though she had carried on paying in as recently as January.
The firm told her it was an ‘admin error’.
After finding out Compass had folded last week, she now believes she has lost £2,000.
Miss Leivars, from Barry, South Wales, said: ‘I feel sick to my stomach. I just can’t understand it. I don’t know what I am going to do now, I am in a worse position than when I started with them.’
Asked if their money had been safeguarded, he said: ‘We don’t know where it is yet, we are still looking into that. We are working with the FCA.’ Compass director Mark Harrison, 46, declined to comment when contacted by phone while another director, Richard Mott, also 46, could not be reached for a comment.
Mr Mott drove a Porsche 911 and a Range Rover and owned a gated, five-bedroom home worth £400,000 in Long Eaton. His wife Denise said he wasn’t there yesterday. Motorbike enthusiast Mr Harrison also owned two Porsche 911s and a Range Rover. Sara Williams, who runs the Debt Camel website, said Compass had ‘an unusual approach to debt management’, adding: ‘This may sound like a good idea, but it often doesn’t work well in practice.If the debt management firm fails, the customers are likely to lose the “pot” of their money.’
The FCA did not comment on whether it was pursuing an investigation into Compass.