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Lenders urged to consider changes when planning debt recovery strategies

05 August 2008

The Common Financial Statement (CFS) was relaunched on 16 June 2008. Sponsored by the British Bankers Association (BBA) and the Finance and Leasing Association (FLA), the CFS provides trigger figures agreed with the industry and advice sector.

Budget sheets will be compiled by advisers on debtor’s behalf, and as long as the debtor’s expenditure falls within a set of trigger figures agreed by the BBA and FLA members, repayments will be accepted under the CFS banner. 

Advisers are also expected to provide sufficient explanation when expenditure falls outside the agreed trigger figures.

Access to the trigger figures are subject to a license application, and so far there have been requests from debt management companies, creditors and independent advice agencies.

The license is free and covers conditions of usage, primarily that the CFS logo and trigger figures will not be manipulated in any way, and that the license holder will not release the figures into the public domain.

The CFS is based on the lowest 20% income. For example, by default if a creditor has accepted a CFS compliant offer of repayment that falls within the triggers, then good practice would indicate that they do not proceed to enforce the debt via a charging order/attachment of earnings.

If the creditor does proceed to charging order, there may be an impact to costs when it goes to court. Lenders should consider these changes when developing future debt recovery strategies.

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Gill Payne

Head of Collections (Associate Equivalent)
T: 08700 86 3017
I: +44 (0)1604 54 3017
E: gill.payne@shoosmiths.co.uk