Once again, it’s been a year of change and growing demand in the world of debt advice. Here’s a quick round up, in no particular order, of the main things we’ve seen and heard at the Trust over the past 12 months, which will no doubt shape the year ahead.
A year of progress on policy change
Household debt under growing scrutiny
In response to the concerns around growing levels of household debt in 2017, the issue of problem debt shot up the government’s agenda in 2018. Everyone from the Treasury Committee to the National Audit Office piled in to raise the pressure on government to tackle the challenges households in debt face.
The new Financial Inclusion Policy Forum began its work to bring together government policy – contributing to an encouraging early result in the Budget, with the announcement on piloting a no-interest loan scheme.
And the Treasury’s new Breathing Space Unit spent the year developing and consulting on a very encouraging proposal for this new statutory scheme, which if we can get the detail right – most notably ensuring public sector debts are included – could be a real game changer for tackling problem debt in England and Wales. It’s been a long time in the making….but it feels we’re close to landing an agreement on this.
A busy year for the FCA
The Financial Conduct Authority has continued to make progress in its work regulating consumer credit – with measures on persistent credit card debt, a new price cap in the rent-to-own sector and just this week, a radical and welcome shake-up of overdraft pricing. The FCA’s impact on both the marketplace and individual firms over the past few years is not to be underestimated either with Wonga’s demise hitting the headlines this year.
We were pleased that the FCA listened to the concerns raised by the Trust and other charities over its planned new vulnerability definition – and that the original definition, which has been so influential in moving this agenda forward, has been retained. New vulnerability guidance next year will keep up this momentum – and we continue to see growing creditor interest in this area beyond financial services, too.
And, it’s been a long time coming, but we’ve finally seen some FCA action on IVA lead generators – with the regulator formally cataloguing the issues we’ve been highlighting by issuing a Dear CEO letter to debt packager firms. Coupled with a critical report from the Insolvency Service, the net appears to be closing….
Finally – some progress on bailiff reform
Eighteen months on from the launch of the sector’s joint Taking Control campaign for bailiff reform, it feels we are finally making progress. The Ministry of Justice’s new call for evidence – now wider in scope than was originally envisaged – has been joined this month by the welcome announcement of a Justice Select Committee evidence session in the New Year. The Money Advice Service’s new toolkit for local authorities and more examples of councils reducing and even ending bailiff use points to positive progress – something the Trust will be looking to further contribute to in 2019.
Meanwhile, on the front line…
Growing numbers need help
A defining feature for us at the Trust this year has been the growth we’ve seen in calls coming into our services. Calls are at a 5 year high – a trend reflected across the sector and one that shows no sign of abating. The roll out of Universal Credit over the next year, with its associated payment delays, will only exacerbate this. Also concerning is the continuing rise in people contacting us who have deficit budgets, as we outlined this in our A Decade of Debt report. For many of these people, drifting in and out of debt is a norm in their lives. While advice services can help these clients to manage their debts, for many of them achieving a sustainable budget in the longer term, will require other solutions outside the remit of advice services.
People who are self-employed or small business owners in debt face their own particular challenges too – as outlined in our Taking Care of Business report – and with growing numbers contacting Business Debtline, this is an area we’ll need to come back to more in 2019.
Quality in the spotlight
2018 was also a year when quality in the advice sector was put in the spotlight, with new initiatives to develop a sector wide CPD scheme and the introduction of the Debt Advice Peer Assessment for Money Advice Service (MAS) funded services. The importance of achieving consistently high standards can’t be underestimated, but as funders raise expectations of agencies, and compliance requirements translate into new processes and standards – there is also a risk that we could end up with an overworked and frustrated workforce.
Our own survey of over 400 Wiseradviser users found that 42% said ‘trying to meet organisational targets or adhere to processes that are not efficient’ and 41% said ‘workload’ was what demotivates them in their role. At the same time, we highlighted the need to better support advisers as they help people in vulnerable circumstances in our report – Vulnerability: the Experience of Advisers – with MAS, the University of Bristol’s Personal Finance Research Centre and Money and Mental Health. As we move into 2019, keeping the focus on standards but in a way that supports and maintains morale among the workforce will need to be a focus.
Is technology the answer?
Ah technology – the panacea for everything, or so it seems from every meeting I go to. I am in no doubt of the benefits this can bring to clients and services, and it is exciting to see more agencies embracing webchat (an increasingly popular channel at National Debtline) and developing online tools. My concern, however, is that there is a tendency to over-evangelise about chatbots, open-banking and the like.
That said, we are right to be exploring these – and where possible doing so as a collective sector to make the most of resources available. MAS’s work in this area as part of its technology workstream, and Nationwide’s Open Banking for Good which we are pleased to be supporting, have been promising developments in this regard.
And the technocratic stuff…
For those following wider advice sector developments, the year started with a bang as the Wyman Review of Funding for Debt Advice was published weeks earlier than expected. It left many of us scratching our heads over how to achieve ‘a 20% efficiency saving over the next two financial years’ at the same time as increasing supply of advice by 50%, with limited additional funding. While the aspiration was hard to disagree with, for many stretched services, it seemed a stretch too far!
A Single Financial Guidance Body is born…
In May, the best named non-governmental department body in the UK – the ‘SFGB’ (we await the rebrand!) – finally passed into law, with the Department for Work and Pensions wasting no time in appointing Sir Hector Sants and John Govett at its helm as chair and chief executive. Merging the three bodies – Money Advice Service, the Pensions Advisory Service and PensionWise – into one is no mean feat. But it is clear that the shadow team have hit the ground running, and we look forward to working together with the new Body and of course the devolved administrations from January 2019.
And while it’s farewell to MAS, they have been busy!
MAS took their first foray into the world of commissioning, issuing a formal procurement exercise for face-to face advice services in London and the North-West. Some services will be anxiously awaiting the outcome of this, and it sounds like there are many useful lessons to be learnt from the process.
Clearly keen to leave a solid foundation for the new body, MAS also spent much of 2018 setting up a Target Operating Model – essentially a high-level vision for the sector. This brings a range of existing plans, including the Wyman recommendations, together. Watch this space in 2019.
The more things change…
But while change seems to be a constant these days in the debt advice world – the life-changing difference that the advice sector makes remains the same. Amidst all the debates we have about policy design, funding, structures, technology, we need to keep this real human impact front and centre.
As a quick reminder of this, here’s some feedback from people who contacted National Debtline and Business Debtline during the year. Merry Christmas to all our friends in the advice sector and beyond – and we’re looking forward to another busy year in 2019!