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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Similarly, another bridal wear shop in Peterborough, Perfections, had one of their business partners file for bankruptcy this year. The landlord of the premises they rented sealed the doors and withheld stock in lieu of outstanding rent payments. As part of the initial investigation by the local Official Receiver(the government officer responsible for investigating financial failure) it was found that the shop had taken more than 80 deposits of around £300 each on wedding dresses. The brides, being unsecured creditors, are now unlikely to receive the wedding dresses they ordered.
The Office of Fair Trading (OFT) has taken action against a company for making misleading claims in its advertising that suggested it was a debt charity.
