How will the Money Advice Service proposals affect you?

Details about the new approach from the Money Advice Service, including their objectives for co-ordinating personal debt advice services from April 1, were recently outlined in a London meeting.

We spoke to Anthony Sharp, co-founder of the Money Advice Liaison Group, who attended the meeting. He said, “I went to the meeting held by the Money Advice Service before the information about their objectives (which has now been released) was made public. At the moment, the Money Advice Service can’t say an awful lot but they did reveal that they are looking to be able to provide funding for up to 150,000 individuals with free-to client face-to-face advice, which is a 50,000 increase from last year.

“Unfortunately for those interested in the future of funding for free-to- client debt advice, I don’t think we will know anything more until the middle of this year at the earliest.”

The new approach from the Money Advice Service comes after they received a grant to fund a research programme, provided by the Department for Business, Innovation and Skills (BIS). Two main research documents were produced as a result: Debt Advice in the UK and User Needs from Debt Advice: Individual and Stakeholder Views, alongside an exploration of the way to attribute the costs of debt advice services through a levy on the financial services industry.

Nick Pearson, Director of External Affairs at Paymex Group, commented: “The information released by the Money Advice Service is very interesting and I personally waded through both of their research documents. Whilst I felt the paper on User Needs appeared to stack up, the article on Debt Advice in the UK seemed to me to be a partial view of the debt solutions sector, which makes it a fairly mediocre piece of work.

“What is interesting is the announcement of the levy on the financial services industry which will be administered through the FSA. A major beneficiary group when consumers go to repay their debt is secured lenders because we always tell people to repay their mortgage or housing costs first. However, only 30 per cent of people who have unsecured borrowing arrears are homeowners. Secured lenders will be paying 85 per cent of the cost of the Money Advice Service. This funding arrangement has been put in place to protect the position of ‘fair-share’ contribution debt providers.”

So how does the Service propose to put customers first?

The highlights of the new approach include:

-    A commitment to automatic referral of customers by creditors to an effective advice service so people get the best advice for their needs before a crisis is reached;

-    Improved availability of “triage” services for customers, so those who need it get the right kind of timely advice online, on the phone or face-to-face, with a solution satisfactory to both creditors and debtors;

-    Increased participation of creditors in “fair-share” arrangements; and

-    More consistent and higher standards of service delivery wherever customers go.

Anthony added, “The Money Advice Service has commented that they will focus on developing an effective triage which could include the fee-charging sector. When asked about this, they commented that they want to ensure that all services are included and on offer. How this will quite happen is not clear at the moment.

 “It is almost certain that the funding will come from an FSA levy, which of course presumably will eventually be an FCA levy once the FSA disappears. We do at least know that the free sector will be safe for another year.

“It was a useful meeting but, once again, as many questions were raised as answered.”

The Money Advice Service will also start a tender process this autumn for the provision of a new face-to-face service starting from autumn 2013. They will be encouraging a wide range of firms and agencies to participate in this.

Consumer Minister Norman Lamb MP said: “I would like to thank the Money Advice Service for commissioning this research into the debt landscape. It will be invaluable in shaping the provision of debt advice in the future – in particular the Money Advice Service’s new role in coordinating consistent debt advice to meet consumer needs.

“We want people to be better informed and able to make better choices based on good, impartial and sympathetic advice. That is why it is so important to help people manage their money more effectively by increasing the level of free face-to-face advice available to consumers. The Money Advice Service will work with existing advice services, who are committed to providing the best support for consumers to take the service to the next level.”

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Posted in: advice,affect,money,proposals,service

Demand for debt advice likely to increase

Anyone who has needed to see a debt advice professional over recent years will know how much more difficult this has become due to the soaring demand for these services from the many consumers who are struggling with their finances and finding it difficult to repay their debts. Many have had to wait for long periods of time in order to get an appointment with a debt counsellor to discuss debt problems and issues.

There are now fears that the situation could actually get worse with the demand for debt advice rising as a result of government cutbacks amongst other things. The austerity drive that was announced by the government last year and is due to be imposed over the course of this year and next year will have a profound impact on the finances of many people, such as those who see their benefits cut or those that will see their jobs go due to cutbacks in the public sector, which can then have a knock on effect in the private sector.

However, officials have said that it is not only the austerity drive in the UK that will drive people into worse financial situations but the similar situations that are going on around the world, which has a knock on effect on the UK. Some even think that the UK could be in line for another recession, which would bring dire news for businesses and consumers alike.

One official spoke about the cutbacks and economic situation in the UK and in other countries, stating: “At the moment it just seems to be a worldwide trend. I think the inevitable consequences of that is it is going to be a difficult period ahead, not just for the UK but for much of the world.”

Tags: Financial Services, knock on effect, debt advice, financial planning, economic situation, consumers, appointment, fears

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Posted in: advice,Demand,increase,likely

Is The Citizens Advice Bureau Worth Your Time?

When looking for debt advice UK wide, one of the sources often cited is the Citizens Advice Bureau.  The stated mission of this particular charity is to provide sound advice to consumers regarding issues that are pressing on their minds.  Foremost among the advice offered by the Citizens Advice Bureau is debt consolidation, as well as advice on bankruptcy and other options open to consumers who find themselves in dire financial circumstances.  While there are many supporters of the bureau, there are also detractors who raise valid questions about whether consumers benefit from utilising the resources it provides or if their interests would be better served by seeking debt consolidation advice, along with other forms of financial information, from a different source.

The Citizens Advice Bureau relies heavily on the assistance of volunteers to manage the requests for information and help that are received each day.  Often, the volunteers are professional debt advisors who offer some of their time each month to help people who are in need.  At other times, the volunteers are less informed and up to date on issues such as bankruptcy law, changes in the qualifications for an IVA or even on what is happening in terms of laws that impact the function of debt management and consolidation options.

The citizen’s debt advice that is obtained from the CAB should be double-checked with other sources.  This makes it easier to identify any information that may be outmoded or is incomplete in some manner.  Doing so will typically accomplish one of two things.  First, the double check may confirm that the information obtained from the debt advisor via the CAB is in fact up to date and complete.  When this is the case, the consumer can move forward with confidence and make informed decisions on how to proceed.

At other times, the double check may reveal that the citizen’s debt advice obtained through the CAB was not as complete or as accurate as the consumer first thought.  When this is the case, verifying the data with other sources makes it possible to fill in the blanks, update the information and avoid making what could have turned out to be a rash and ultimately damaging financial move.  From this perspective, taking the time to verify data from more than one source makes it possible to reach a responsible decision regarding which strategy to use in settling debt and getting back on an even financial plain with as little difficulty as possible.

While many see the Citizens Advice Bureau as the best way to get advice on dealing with debt, it should be viewed as only one resource among many and not necessarily always the best source.  Take the time to obtain information on debt management and settlement from more than one source and your chances of making the right decision and getting out of debt in the timeliest manner will be greatly enhanced.

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Posted in: advice,Bureau,Citizens,Worth

Debt Advice: Wedding Budgets for This Summer

Getting married is meant to be a happy occasion, but worries about the cost of a wedding can sometimes start to overshadow everything else.

No one wants to begin married life needing debt advice.  Fortunately, there are many steps that can be taken to reduce the cost of a wedding and avoid needing debt consolidation programmes without compromising too much on the celebrations.

One of the most important things that can be done when planning a wedding is to set an affordable budget and then stick to it.  There may be other people willing to contribute to the cost of a wedding, such as the bride or groom’s parents, but care must be taken not to overestimate the limits of their generosity and then end up with outstanding bills to pay.

Once a realistic budget has been established, make a list of everything that will need to be paid for, taking care to include every detail.  One of the common reasons for a bride and groom needing debt advice after their wedding is all of the added extras that no one ever thought to include.  Add up the likely cost of each item on the list and then see if the total falls within the overall budget.

Many couples will come to realise that the total cost of their ideal wedding adds up to more than they expected.  On reflection, there may be items that they can let go from the list without too much difficulty.  However, there are other ways of cutting costs that could bring the total cost of the wedding down and within budget.

One alternative is to get married on a weekday, rather than a weekend.  Couples will be able to book the same venue and service at a lower price simply by moving the wedding to a weekday when there is less competition.  For a summer wedding, perhaps an outside venue could be used to reduce overheads.

Another tip is not to mention that the order is connected to a wedding when dealing with suppliers.  Referring to a ‘family party’ instead will often avoid a premium rate being charged simply because the supplier knows it will probably be paid – this can sometimes be as much as 25 per cent more than the actual price.

Deciding on the guest list can often be one of the major areas of controversy when planning a wedding.  However, if a sit-down meal is involved, costs can be greatly reduced by limiting the number of guests invited.  Many couples decide to keep the number of guests invited during the day to a minimum and ask extended family members and their wider circles of friends along in the evening when the cost per head is much lower.

Although it might seem important to have the perfect wedding day that involves everything the couple desires, the reality is that the wedding day is only the start of their lives together.  Beginning married life searching for ways to consolidate debts following a lavish wedding might leave the bride and groom wishing they had kept their special day a little more low-key.

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Posted in: advice,Budgets,Summer,wedding

Consumers get financial advice from friends and family

It has been reported that more and more consumers are now turning to friends and family in order to get advice about their finances rather than opting to go to a professional in the field. A study was carried out by insurance giant Aviva, which indicated that the majority of people felt more comfortable asking members of their family of friends for help and advice relating to financial matters than asking an industry professional.

With so many people having debt to deal with and many others feeling confused about their financial situations, the need to get advice has become more and more prevalent. The study results showed that only around one fifth of consumers were inclined to go to a financial advisor in the first instance in order to get financial advice. However, the figures did show that the older people became the more likely they were to go to an independent financial advisor.

The study was carried out to examine consumer attitudes towards their finances and how valuable consumers found professional financial advice to be. Almost three quarters of those aged between eighteen and twenty four said that they would turn to friends and family for advice rather than going to a professional. However, only one quarter of those aged sixty five and over would opt to ask friends and family over a financial advisor. The results of the study further suggested that there was a general lack of understanding amongst consumers with regards to the advice and services that independent financial advisors were able to offer.

One spokesperson from Aviva said: “It’s a concern that so many people are relying on friends or family and the internet for financial advice, and that they are not aware of what an IFA could offer them.”

Tags: Financial adviser, insurance, Certified Financial Planner, Independent Financial Adviser, debt, financial advisors, financial advisor

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Posted in: advice,consumers,family,financial,friends

How Sound Debt Advice Helped me Get Back on my Feet

No one who has found themselves deeply in debt gets out of the situation without seeking advice.  While many find it extremely difficult to ask for this type of help, the fact is that most of us are not aware of our options and are usually not thinking straight when a massive wall of debt is resting on our shoulders.  Here is how obtaining debt advice from a qualified financial counsellor helped me decide which course of action was right for me and made it possible to eventually pay off my debts and get my life back.

My debt issues came about for a very common reason.  While I made good money at my job, that stream of income came to a halt when the economy faltered and my employer made a number of positions redundant, including my own.  While I was fortunate enough to find another job within a few months, my income was only a fraction of what it had once been.  At the same time, my accumulated debt load, which was somewhat easy to manage before, had become almost unendurable.  I knew I needed help, but had no idea of where to turn.

I began my search by talking to several debt consolidators.  These services helped me explore the option of an unsecured debt consolidation loan, as well as look at other debt consolidation loans for bad credit, since my own credit rating was beginning to decline.  While these were workable solutions, I wanted to explore other options before making a final commitment.

Before long, I found a counsellor who provided additional advice that made it possible to make an informed decision on how to proceed.  I found that, along with debt consolidation loans for bad credit, there were also bankruptcy options that might apply to my situation.  There was also the option of working out repayment plans with my creditors via a court approved Individual Voluntary Arrangement.  I was excited to learn that there were options other than an unsecured debt consolidation loan that would add to my debt before actually reducing it to any degree and that some of these options would also help to halt damage to my credit rating.

In my situation, the journey out of debt meant devising a new household budget and adjusting my spending habits to match my new circumstances.  With the aid of an IVA, I was able to eventually pay off my older debts without losing my home or other assets, even as I learned how to avoid creating new debt in the process.  The changes did not come easily and I did not become an expert at budgeting, overnight.

However, thanks to counsellors who were willing to help me move forward in spite of my occasional misstep, I was able to clear my debt, protect my credit rating and once again be able to answer my telephone and read my mail without fear of encountering a demand for payment on some overdue bill.  If you are in debt and feel the walls closing in, swallow your pride and contact a debt counsellor today.  The debt advice you receive could be the start of better days.

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Posted in: advice,Helped,Sound

Reliable Debt Advice Helped me Get my Life Back

People who have never been deeply in debt and find themselves unable to honour their obligations have no idea how black the days can become.  The constant fear of answering the door or the phone in case a debt collector is lurking on the other end, as well as the worry of opening mail that is loaded with demands for payment of overdue debts can be crushing to one’s ego.  Fortunately, there are ways to escape from this situation, if you can get the right type of debt advice, as I did.

While many people find themselves in poor financial condition because of a job loss, a divorce or a prolonged illness, none of those situations applied to me.  I got into debt because I don’t manage money well.  Thanks to the fact that I was making good money, I had no trouble getting credit and wasted no time in using it to buy whatever I wanted, whenever I wanted it.  At first, I was able to keep up with the mortgage payment, the credit cards and all the other credit accounts I established.  However, over time it became harder and harder, as the balances grew, until finally I had to admit that I was a prisoner to my debt and had no idea of how to get out of it.

It as at this point I swallowed my pride and admitted I needed help.  The question was where to turn for that help?  Fortunately, I was able to find a reliable debt counsellor who was willing to assess my situation and offer some sound advice, along with several options on how to not only clean up my debt, but also learn how to prevent the same situation from arising again by applying a system of debt and money management.

One of the first things my debt counsellor did was to help me investigate the different types of debt repayment options.  This included looking at unsecured debt consolidation loan options, with special attention to debt consolidation loans for bad credit, which unfortunately applied to me by that time.  I learned what to expect from debt consolidators in terms of covering my debts and allowing me to make one payment to them each month, in return.  I also learned the difference between debt consolidation and debt management plans, as well as how bankruptcy or the implementation of an Individual Voluntary Arrangement could work for me.

In addition to providing debt advice that included educating me on my options to settle my debt, the counsellor also helped me learn how to budget properly.  This was not an easy step for me.  For most of my life I had developed a pattern of buying whatever I desired, with no worries about how to pay for it.  In spite of the anguish this mindset had caused, I still had trouble moving to a more responsible way of managing money.  Thanks to a counsellor, who helped me recognise the benefits of the unsecured debt consolidation loan and even aided me in finding a reputable consolidator who offered debt consolidation loans for bad credit, I was able to start with a clean slate that allowed me to enjoy a decent standard of living and steadily pay off my debts.  Today, I still have to fight off the temptation to buy now and pay later, but my approach to managing money is very different from what it was a few years ago.  While I may not have everything I want in an instant, I have the benefit of never worrying who is on the other end of a telephone call or what horrors may show up in today’s mail.  For me, that makes managing my debts responsibly worth all the effort.

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Posted in: advice,Helped,Reliable

ClearDebt condemns cold calling and upfront fee-charging practices; supports Citizens Advice Bureau super-complaint to the OFT

With news today that the Citizens Advice Bureau have submitted a super complaint to the Office of Fair Trading with regards to the practice of cold calling and upfront fees charging by some debt management companies, Andrew Smith, Marketing Director of ClearDebt, and spokesperson for the Debt Resolution Forum (DRF) was invited to discuss the matter on BBC Radio 5 Live.

The audio is available here:

ClearDebt supports the DRF  position on this issue.  There is no reason for anyone who needs debt advice to suffer cold calling and absolutely no reason at all to part with money up front. before a service is provided.

One note of caution, however. Are you really being cold-called?

Many reputable debt management companies get people’s details from well known, trustworthy loan providers, or even the creditors that you owe money to – you get calls from companies like ClearDebt, in these cases, because you have been asked if you want to talk to someone about your debt situation and you have specifically agreed that you want this. Occasionally, people forget that they have given this permission, however, a reputable company will always be able to tell you where they got your details from and how they know they have your permission to get in touch – never be afraid to ask.

This is such a grey area, because many pirate lead providers will cold call you and then, in the course of an application for a non-existent loan, get your agreement to be called by debt management companies. This is wrong – but it is sometimes difficult for a debt management company to know that this has happened – which is why this practice must stop (and why companies like us need to work hard to understand how the companies we work with relate to their customers.

By Marketing and is filed under Media Coverage.
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Posted in: advice,Bureau,calling,Citizens,ClearDebt,condemns,feecharging,practices,supercomplaint,supports,upfront

Everyone should be able to get free debt advice

Over the past few years more and more people have found themselves in a position where they are struggling to pay their debts and keep up with their financial commitments, and this has led to an increase in the number of people that are seeking advice about their debts. In fact, the demand for debt advice has become so great that many people are now struggling to get an appointment without having to wait for ages.

One industry expert has now said that there is a concern that some people will end up paying for advice about their debts and finances even though there is free advice available. He said that everyone should have the right to get access to free advice, and this should relate not only to things such as credit card debt and mortgage arrears but also to those that had overspent on their savings accounts.

The industry expert, Joanne Parsley, who is the Associate Director of the debt charity Credit Action, said that the need for confidential and effective financial and debt advice is huge. She said that everyone needed to be able to get access to debt related advice, and nobody should have to pay for this sort of advice. She said: “no-one should pay for debt advice where there is free debt advice available”.

The speech from Ms Parsley came following the revelation from The Insolvency Service that the level of personal insolvencies had started to fall, although it was also pointed out that the number of pensioners that were filing for bankruptcy had rocketed and the number of women becoming insolvent had increased by over 10 percent in the space of the last ten years.

Tags: advice, percent, filing for bankruptcy, bankruptcy, concern, no-one

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Posted in: advice,Everyone,should

Getting debt advice could get harder in Newtownabbey

For more and more people the ability to get free, sound debt advice has become increasingly important. This is due the financial difficulties that many people are facing, and the problems that they have when it comes to repayments of their debts. Over the past couple of years the number of people signing up for debt advice has soared, with charities dealing with a huge number of cases.

However, it has emerged that those looking for debt advice in the Newtownabbey area may struggle to get it in the future after councillors made a preliminary decision to cut the funding of the local Citizen’s Advice Bureau by around one third. This has come as devastating news to the CAB, which would have to compromise on support given to those looking for advice on debt or other issues and consider redundancies.

Citizens Advice Bureau manager Pat Hutchinson has now had to attend a recent Development Committee meeting where she has had to appeal to councillors to keep the funding for the CAB as it is rather than slashing it in the way that has been planned. Whilst a decision had already been made to cut the budget, councillors delayed matters to give the CAB a chance to appeal.  

She told councillors: “To reduce the level of funding by such an extent would mean a cut in the service provision for the people of Newtownabbey and we would have to consider redundancy. Last year we dealt with 36,761 issues from 16,127 contacts. That is an increase on the previous year and more than the Northern Ireland average. And we recovered £3 million for clients, £11 for every pound invested. Advisors have dealt with 3,342 issues or 1,466 contacts on average each – it is a massive workload. The staff cost per contact is £13.42, around £10 cheaper than it is in Belfast or Derry. We are the only independent advice provider in Newtownabbey and with the increase in personal debt there will be a further increase in people needing advice.”       

Tags: Development Committee, charities, sound debt advice, preliminary decision, previous year, northern ireland

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Misleading debt advice sites closed by regulatorEveryone should be able to get free debt advice

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Posted in: advice,could,Getting,harder,Newtownabbey