In this guest post, Professor Sharon Collard and Sara Davies from the University of Bristol’s Personal Finance Research Centre introduce research into the experiences of people in debt who negotiate with their creditors.
This blog post sets out some key findings from research that explored the experiences of people who face difficulties repaying what they owe, when they attempt to negotiate with their creditors after receiving professional help from National Debtline, and in a few cases, from another free-to-client debt advice service. We call these people ‘self-negotiators’ for short. The study was funded by the Money Advice Trust and the Money Advice Service.
In this guest post, Professor Sharon Collard and Jamie Evans from the University of Bristol’s Personal Finance Research Centre introduce a new nationwide study of debt advisers’ experiences of working with clients in particularly vulnerable situations.
For debt advisers on the front line, we know that supporting clients in vulnerable situations can be challenging. But, at present, we don’t know enough about the scale of the challenge and the types of guidance, training and support that advisers themselves feel they would benefit from.
So today – in partnership with the Money Advice Trust and the Money and Mental Health Policy Institute and with funding from the Money Advice Service – we have launched a major new survey looking at UK debt advisers’ experiences of supporting their most vulnerable clients.
Debt and ‘vulnerability’ are often found together
We know from our previous research that financial difficulty and vulnerable situations often go hand-in-hand. From our survey of debt collection staff we estimated that workers in large debt collection firms deal with the disclosure of a serious suicide risk every three days.
The Trust’s director of external affairs Jane Tully reflects on the Wyman Review of debt advice funding.
After an eventful 2017, it is already clear that 2018 will prove to be a truly pivotal year for the future of debt advice.
The Bill creating the new Single Financial Guidance Body (SFGB) is completing its passage through Parliament, the Treasury is forming its plans for breathing space and the Money Advice Service (MAS) are implementing their commissioning strategy.
Added to this, we now have the recommendations from Peter Wyman’s Independent Review of the Funding of Debt Advice to chew over. The review explores the Government’s support offer for people in financial difficulty, covering long-standing questions including ‘who’ should pay for advice and ‘how’ free-to client advice should be funded.
While not everyone might agree with its contents – and it goes far wider than just these two questions – it has certainly given us lots of food for thought. Here’s a quick round up, and some early thoughts…
In this guest post, Vicky Rebori, Financial Capability Worker at the Mary Ward Legal Centre, gives an overview of the project, one of three funded by the Trust’s Innovation Grants programme for 2017/18.
The alarming growth of individual debt in the UK includes a sector of the population often overlooked: the migrant population. Individuals with English as a second language (ESOL) have particular needs setting them apart from other groups with significant debt levels. For instance, they show higher isolation, which in turn impacts on their mental health. This group consists of foreign adults, including ESOL students and economic migrants, asylum seekers and refugees. They are usually on a low income and lack confidence with the English language as well as with financial matters in the UK.
The aim of the project is to create, test and further develop training courses and materials which can be used to build the financial health of clients who have English as a second language. Despite the huge challenges represented by language and cultural diversity, Mary Ward Legal Centre have created a financial capability programme specifically for ESOL clients. In order to create the resources, we brought together ESOL tutors and debt advisers, to inform the materials we have produced.
Caroline Wells, customer services expert in the Trust’s training and consultancy team, looks at the challenge of complaints handling, and practical steps creditors and other organisations can take to make complaining easier.
We are told that complaints are a gift. Although they may well be, as they help you to improve your product or service – it doesn’t always feel that way when you are at the receiving end of an unhappy customer. When looking at complaints it’s important to see them from a human behaviour perspective and how what they’re saying applies to your organisation.
Part of this is looking at not just what makes your customers complain, but what stops them complaining. Having an issue but not being able to discuss it can cause challenges that lead to financial difficulty and problem debt further down the line.
Last week, we at the Money Advice Service published a report setting out a new perspective on the value of debt advice.
‘The Economic Impact of Debt Advice’ provides robust evidence that in financial terms debt advice benefits the UK economy by up to £960million a year.
And we used extremely conservative assumptions – relying on data from only four of twelve areas where there is plausible impact. This means our level of confidence in these figure is high and it is extremely likely that there are even greater financial, let alone personal, benefits being realised.
We estimate (generously rather than conservatively in this case!) that between £150m and £200m is invested annually in debt advice so our view is that the benefits we’ve identified represent a genuinely impressive return on investment.
The context for this, of course, is that only one in five over-indebted people are seeking advice – our analysis suggests that were we to increase this number then the level of benefit we would expect would rise in proportion.
I am delighted that The Money Advice Trust is supporting Take Five to Stop Fraud, a national awareness campaign on financial fraud and scams, bringing together the financial sector and the UK Government. Scams are becoming more sophisticated and criminals can catch out even the savviest consumers. By working together with Take Five, The Money Advice Trust, creditors and debt advice charities can help consumers confidently challenge fraudsters.
From 22-26 January Take Five to Stop Fraud Week is taking place to raise awareness. And you can play your part too. We’d love you to ‘take five to tell five’. During the Week we’d like everyone to spend five minutes to tell five people – your friends, family, neighbours – about how they can protect themselves from fraud and scams. That way we can spread the message far and wide and make sure we’re all confidently challenging the criminals who would like to part us from our money. Thank you for your support and remember – ‘My money? My info? I don’t think so’.
As a Senior Fraud Prevention Officer in the Dedicated Card and Payment Crime Unit, I have seen first-hand the financial and emotional cost to victims of fraud. No one is too smart to be scammed.
Hardly a day goes by without an announcement or news story about energy. Much of this attention tends to focus on households. It is far rarer to hear about energy in the context of small businesses and the challenges they may face. And yet for many small businesses gas and electricity are significant running costs. Falling into arrears on an energy bill is not only a difficult experience in itself but, if unresolved, can result in a business closing down and ceasing to trade.
At Business Debtline we advised more than 30,000 small business owners in 2017. A considerable proportion of these had energy arrears. From what our advisers hear on a daily basis, we recognise the broad issues many small businesses face in relation to energy. We have worked hard to engage the energy sector and to build good relationships with many suppliers and the trade association, Energy UK.
However, we felt insight was needed to gain a better understanding of this area. To inform our work we commissioned research from the Personal Finance Research Centre at the University of Bristol to explore in greater detail the impact of energy debt on the lives of those people who have contacted Business Debtline.
Director of external affairs Jane Tully blogs on the Trust’s response to the Treasury’s call for evidence on breathing space and statutory debt repayment plans.
This week we turned in our submission to the Treasury’s call for evidence on breathing space – a subject our policy manager Meg van Rooyen has written about on this blog previously, having been closely involved in developing this idea with colleagues in the advice sector over the last few years.
As an idea, breathing space has been a long time coming, and we have been pleased to engage with the Treasury over the last few months as they continue to develop the scheme. Here is a quick tour of some of the main points we have made.
Two schemes, not one
While the two elements that the Treasury are consulting on – breathing space and statutory debt repayment plans – are closely interlinked, it is important that we consider the effectiveness of each in isolation, and that the two elements are not seen as ‘one scheme’.
In this guest post for Thoughts at the Trust, Monzo’s head of financial difficulties, Stuart McFadden, shares his thoughts on designing products and services with debt problems – and vulnerability – in mind.
Debt and mental health go hand in hand. Research shows that people with mental health problems are much more likely to experience problem debt. It’s a vicious circle with each attributing to or exacerbating the other. I’ve given advice and listened to hundreds of debt advice calls, and – it’s clear that getting the right advice can take away a huge burden. Getting the right advice is often the first step towards improving your finances, and your mental wellbeing.
The trouble is that the help and advice tends to come only after the debt problem has become a serious one. Too often the trigger to getting advice isn’t because a problem is on the horizon, but because things have come to a head. It could be because a bailiff is knocking at the door, eviction is threatened or simply because nobody will lend to you anymore, so you can’t continue to ‘rob Peter to pay Paul’.
This is why it is essential that the industry designs products that help people avoid problem debt, and equips people to tackle debt problems when they do arise – and always with the needs of customers in vulnerable circumstances firmly in mind.