The uncertain future of debt advice
Marc Bloomfield
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Proposals for debt advice services could leave clients without the help they desperately need, as Tom Barrett and Amy Taylor explain.
Debt advisers are used to supporting a very broad range of clients with varying needs and ever-changing problems. They may initially present with money and debt problems, but beyond this is usually a tragic and human series of events that led them to that moment of need: addiction, job loss, health problems, relationship breakdown, abuse, etc. It is not unusual for an adviser to discover that further help is required to deal with housing, immigration, benefits and mental health issues, to name a few. The debt adviser is quite often the last port of call, driven by an impending catastrophe such as an eviction warrant, and without access to that advice, many of our clients would have nowhere to turn. It is therefore extremely important that local face-to-face debt advice services are not only maintained but expanded.
For at least the past 12 years, debt advice agencies have had to weather the worst of financial storms. In 2010, the UK was cast into a period of austerity by the Conservative-Liberal Democrat coalition government. For debt advice, this included the imposition of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), which was introduced in early 2013. What this meant in practice was that debt advice was taken out of scope for legal aid, as it was deemed to be ‘advocacy work’ not legal advice work. This despite the fact that many debt advisers provide advice on the enforceability of contracts, or represent their clients in court using legal arguments. This resulted in £50m a year being wiped off independent advice agency budgets (Phil Jew and Simon Johnson, ‘Commissioning the right thing’, Quarterly Account, summer 2012, page 14) and, as a consequence, by March 2015, nine Law Centres had closed (Impact of changes to civil legal aid under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Eighth report of session 2014–15, HC 311, House of Commons Justice Committee, 12 March 2015). Local authorities also saw draconian cuts to their funding, and they in turn reduced their funding of local advice.
The road to MaPS
In addition to legal aid funding, many advice services were also funded via the Department for Business, Innovation and Skills (BIS) between 2006 and 2012. From 2012, a new remit was added to the role of the Money Advice Service (MAS), supporting the provision of debt advice in England, and in the financial year 2012/13, it provided £27m of funding to the sector. While a significant amount of money, and consistent with previous BIS funding, this widened the gap left by the withdrawal of legal aid. The additional remit also brought a change in funding source, moving from a taxpayer source under BIS to a levy system under MAS. The funding that MAS distributed was obtained through a Financial Conduct Authority (FCA) levy on FCA-regulated firms. In late 2018, MAS was absorbed into the newly created Single Financial Guidance Body, along with Pension Wise and the Pensions Advisory Service, and in April 2019 was rebranded the Money and Pensions Service (MaPS).
MaPS is an arm’s-length organisation sponsored by the Department for Work and Pensions using the money obtained through the FCA levy. While MAS was far from perfect, it at least had a well-researched five-year strategy for the funding of debt advice that was set to see us through to 2023. This comprised grants to regional providers, which could then sub-contract to local advice agencies. It enabled agencies with local knowledge to direct their own services. The bureaucracy under these contracts was a problem, though: more time was being spent drafting lengthy confirmation-of-advice letters than advising people in debt, in order to comply with the overzealous Debt Advice Peer Assessment Scheme (DAPA), which was introduced by MAS in 2015 to ensure quality in the sector, but is set to be replaced by an as yet unknown scheme in April 2022 (‘Money and Pensions Service (MaPS) statement: update on MaPS Quality Assurance Framework’, press release, 12 January 2022). There is a great deal of consternation among advisers about exactly what quality the scheme is ensuring; some would say the quality of posterior coverage is its aim, rather than the quality of advice. Of least concern appears to be outcomes for clients, which really misses the point.
Working under a MAS contract became a transactional numbers game, with targets only achievable if very little casework was carried out for clients. This has cultivated a disturbing trend for national charities to boast on social media about the number of conversations they have had, the number of phone calls taken, the number of webchats, and so on – and yet little about whether these impressive figures equate to meaningful outcomes. In essence, it led to clients being bundled off with information packs loosely related to their ‘contact’.
The latest proposals for debt advice services
Since its inception in 2019, MaPS has set out on a course to shelve its predecessors’ strategy ahead of 2023 and recommission the procurement of debt advice with a distinctly commercial and competitive tendering process. It has more money to achieve its aims – £77m per annum to be precise – and began its tendering exercise in July 2021. It proposed three national remote advice centres, three regional advice centres (remote and in-person via subcontracts), three remote debt relief order (DRO) hubs and a remote business debt hub. The key word here is ‘remote’. ‘The focus,’ MaPS stated in an email on 16 July 2021, ‘is on mobilisation for more customer-focused, more efficient and more impactful debt advice services from April 2022.’ Whatever that might mean. Debt advisers have never considered their clients to be customers; being a ‘customer’ in some way denotes that a person has made a market-based choice. Most of our clients have not chosen to seek debt advice – it is not a ‘market’ they want to be in.
On closer inspection of the tender documents and examination of the division of the £77m funding pot, it revealed that regional advice providers were set to lose around 50 per cent of their existing £33m provision, while national hubs would receive the lion’s share of £42m. Taking into account the ‘remote’ nature of the national, DRO and business debt hubs, at least 74 per cent of the funding pot is directed at remote advice, with the remaining 26 per cent being split between three regions (the North, the Midlands and the South).
This is a significant cut. Consider that, in June 2019, MaPS reported, in Mapping the unmet demand for debt advice in the UK, that levels of unmet demand are high in face-to-face advice services ‘with demand being over two times higher than supply’ (page 5). Similar reports in previous years have also consistently shown that demand for face-to-face advice is increasing. To reduce the provision of face-to-face advice services now, in the middle of an unprecedented cost-of-living crisis, is short-sighted and perverse.
So, what is ‘remote advice’? It is often called self-help advice, accessed via phone, webchat, email or any other remote channel. It results in a client being sent a bulky self-help pack and a financial statement to complete themselves. Some worry that the ‘here’s some information, thanks for your contribution to our targets and off you pop’ style of advice is simply leaving people to fend for themselves. These services assume that a person suffering the effects of unmanageable debt, enforcement and even eviction is both fully capable and mentally prepared to manage their crisis alone. Every debt adviser has endless stories of clients turning up to an appointment with a carrier-bag of unopened mail, suggesting that a self-help pack and a 60-page letter is unlikely to offer any meaningful assistance. There is anecdotal evidence that this ‘self-help’ model actually helps nobody and leaves clients more confused than when they initially sought advice. Some disengage entirely at this point, their last port of call having failed them.
When an adviser on a remote channel identifies that a person is unsuitable for distanced advice, they will signpost them to local face-to-face advice. One remote adviser has anecdotally told us that they probably signpost 40 per cent of their clients in this way. For those of us working daily with vulnerable people from all walks of life, we know and recognise this statistic, and worry where these clients will go if face-to-face advice services are cut by the predicted 50 per cent.
Sounding the alarm
We Are Debt Advisers (WADA), a grassroots campaign group originally founded by the Greater Manchester Money Advice Group and assisted pro bono by the Centre for Responsible Credit, has been hearing the alarm bells ringing from frontline advisers for some time. There is a real and growing sense of unease about the direction that debt advice is going, not only with the new funding arrangements, but also the forthcoming statutory debt repayment plan, which is of particular concern. Many of us feel that this is taking the role of the debt adviser into unchartered territory. It begins to position debt advisers as part of the debt collection mechanism, rather than people who support their clients to access the justice to which they are rightly entitled. We are not debt collectors; we simply advise clients of their options, rights and obligations, and represent them to the best of our ability, but always in their best interest. Someone from a profit-making debt management company once challenged one of the authors on this and said, ‘Well, better you than a bailiff!’
No, not really. Not at all.
In terms of the MaPS procurement process, WADA and the recently-formed Unite Debt Advice Network (UDAN) have tried very hard to stop the recommissioning and to urge MaPS to consult frontline advisers. There have been freedom of information requests to establish whether or not MaPS actually carried out an ‘equalities and vulnerability impact assessment’ prior to going to tender, which it has so far stifled and refused to comply with. Both groups publicly warned MaPS that its recommissioning process was about to decimate the debt adviser workforce, at arguably the worst time in terms of widespread and deepening poverty, with no indication of any reprieve.
Then, on 17 December 2021, MaPS issued a statement about the regional lots:
[W]e had concerns that the services being offered would not adequately meet the needs of people in vulnerable circumstances at the scale we had hoped to achieve, or provide value for money. We don’t believe that proceeding with this lot would be in the best interests of people who need debt advice, and so we will not be awarding contracts under Lot 2 (regional) at this time.
A three-month ‘extension’ was initially promised (which purported to extend the funding as it was, subject to ‘due diligence’) until July 2022. This left debt advisers in a precarious position as we all asked: what then? With the national, DRO and business hubs continuing – and consuming 74 per cent of the funding pot – there was a question mark over where the extra money would be coming from. And for nearly two months, we waited for an answer.
On 14 February 2022, MaPS issued another statement. The national and DRO hub funding was being cut! The funding of community-based debt advice was being restored to £30m for not three months, but 10! Bidders for the national and DRO lots are having to retender for the reduced value contracts (£37m and £6m respectively).
Does this latest shifting of goalposts indicate absolute chaos behind the scenes? Is MaPS an organisation apparently making things up as it goes along? Where is the research? Where are the consultations?
A worrying number of experienced debt advisers, fearing redundancy and having had enough of the bureaucracy and chaos, have already left the sector, unfortunately but understandably. The exodus continues, and there are real fears that these vacancies will be unfillable, as trust in MaPS has declined. While this latest plot twist is undoubtedly welcomed by debt advisers, the convoluted and confusing process has shaken our confidence in MaPS, and, frankly, there is still far too much money being funnelled into ‘contact centres’ offering remote-only advice, while the local face-to-face services continue to see a real-terms cut.
Many fear that a knowledgeable and experienced workforce, dedicated to helping those most in need, will be replaced by contact centres, scripts and automated processes, where complex liability queries will go unanswered and clients will be coerced into more lucrative debt management plans. In this world, debt advice simply becomes part of the collections process.
Previously, MAS had reported that 33 per cent of the over-indebted population were from the lowest income group (Indebted lives: the complexities of life in debt, Money Advice Service, November 2013, page 19). As is so often the case, it is society’s poorest who bear the heaviest burden, and if the contracts proposed by MaPS proceed, it is they whose access to justice will be most impacted. We will continue to fight this on behalf of our clients, whose voices are least likely to be heard.

About the author(s)

Description: Tom Barrett - author
Tom Barrett is a debt adviser and Institute of Money Advisers representative for the West Midlands.
Description: Amy Taylor - author
Amy Taylor is a debt adviser and chair of the Greater Manchester Money Advice Group.