Over 40,000 more consumers benefit from free debt advice

More people than ever have benefitted from free debt advice, according to figures from the Money Advice Service.

Debt advice projects delivered by partners across the UK have seen over 91,300 people access their services over the last quarter (April – June 2015), helping even more consumers to resolve their financial difficulties and improve their quality of life.

The latest figures demonstrate that new innovations to help more people, including making processes more efficient, have been successful with an 80% increase in the number of people receiving advice compared to 51,000 people who used free debt advice services during the same period last year.This puts debt advice projects firmly on track to help over 370,000 people with debt advice this year across the UK. 

Driving innovation

This success has been made possible by working collaboratively with partners across the UK to consider how to collectively encourage innovation around how we engage more people with debt advice. To tackle this, the Service partnered with National Debtline, run by the Money Advice Trust and Citizens Advice to increase telephone capacity. To date, this has accounted for around a third of the people helped so far this year, making it easier for consumers across the UK to access debt advice services.

This quarter, the Service also worked closely with partners to ensure that advisers were able to spend more time helping consumers. In April, two national pilots kicked off in partnership with Citizens Advice. The first was to create a new back office function to deal with the administration of Debt Relief Orders (DROs) – a statutory debt advice solution. This makes dealing with DROs a much more efficient process leaving more time for frontline services. The second pilot was introduced to test a centralised telephone casework service, and to deliver web chat and email advice services in two new contact centres. Together these new initiatives aim to help over 16,500 people this year, and the learnings from the pilots will be shared across the sector.

Improving quality and consistency for consumers

A priority for quarter one has been to continue to improve the quality and consistency of the debt advice that consumers receive. The Service worked closely with a broad range of stakeholders across the industry to design a new Income and Expenditure tool to be used as part of the debt advice process with clients – the Standard Financial Statement (SFS). This will ensure that all advice providers are using the same assessment of income and expenditure, encouraging more consistency for clients and their creditors. The Standard Financial Statement will be launched later this year and will include a new savings element so that clients are encouraged to save and improve their financial planning. 

Re-advising clients impacted by closure of debt management firms

In June the Service announced a new partnership with StepChange Debt Charity to help people who have been affected when debt management firms stop operating. The aim was to ensure that those customers affected still had access to impartial debt advice. StepChange Debt Charity and the Service collaborated to set up a special service to provide free advice and support over the phone.

Collective Impact

Responding promptly to the Independent Review recommendations at the end of March, June saw the first meeting of the new high level Debt Advice Steering Group (DASG). This brought together influential stakeholders from banks, other creditor organisations and the advice sector to establish its priorities. These included focussing on improving engagement levels with debt advice and working with creditor organisations to get people into advice earlier. These priorities will help to address the issue that only 17% of over-indebted people access debt advice, and that clients struggle with their debts for an average of a year before seeking advice.

Commenting on the results Lesley Robinson, Director of Debt Advice said: “It is fantastic to see that the hard work our partners have put in to delivering free debt advice services across the UK has generated some really positive results, reaching over 40,000 more indebted people this quarter compared to last year.

“We know that free debt advice really works, our own research shows that 80% of people start to feel in control of their financial situation after receiving advice, and 76% of people start to repay their debts within 6 months of receiving advice. It is important that we continue to work collaboratively to increase the capacity of our partner organisations so that they can innovate and deliver the services which consumers really need.

“There is still work to do to increase the number of people seeking debt advice and we look forward to continuing to tackling this challenge alongside our partners over the next quarter.”

Citizens Advice Chief Executive Gillian Guy said: “Left unchecked debt can easily spiral out of control and seriously affect people’s lives.  That’s why it is really important people can access free, independent and impartial advice to help them sort out their debt problems. 

“We’re pleased the Money Advice Service funding has meant we can try additional ways of providing debt advice. Helping people avoid financial problems in the first place is also crucial whether that's planning for an increase in interest rates or managing a change in financial circumstances, so access to frontline money advice services is also key."

Mike O’Connor, CEO for StepChange Debt Charity comments: “Tackling problem debt is difficult and stressful. People often do not know which way to turn.  Free, expert and impartial debt advice is vital and it should be available to those in need.”

“Our new partnership with the Money Advice Service will ensure that people affected by changes in the debt management sector will have access to the free support they need.”

Joanna Elson, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, comments: “Improving access to free debt advice is crucial, especially at a time when rents are rising and the prospect of higher interest rates is firmly on the horizon. Our new partnership with Citizens Advice, funded by the Money Advice Service, to provide extra telephone advice capacity via National Debtline is a great example of advice providers working together to reach many more people who need our help.”