Debt advice works: Measuring the effectiveness of crisis interventions. Lesley Robinson 12 December 2014

Transcription

1 Debt advice works: Measuring the effectiveness of crisis interventions Lesley Robinson 12 December

2 Agenda About Money Advice Service MAS and Debt Advice Sector Impact of Debt Advice Looking Ahead: Debt landscape in the UK 2

3 About Money Advice Service The Money Advice Service s role is to help people manage their finances better. The Service was established under the Financial Services Act in 2010 with all-party government support. The Act gave us these statutory objectives: to enhance the public s understanding and knowledge of financial matters and to enhance their ability to manage their finances From April 2012, the additional responsibility for the co-ordination of debt advice in the UK. 3

4 Our statutory role 4 Assisting members of the public with the management of debt Working with other organisations which provide debt services, with a view to improving: (i) the availability to the public of those services; (ii) the quality of the services provided; (iii) consistency in the services available, in the way in which they are provided and in the advice given Financial Services Act 2012

5 Governance and Debt Funding Our strategic goals and direction are set by a 12-member MAS board. The board is appointed by, but acts independently of, the Financial Conduct Authority (FCA)- the statutory regulator for consumer protection in UK financial markets. We are funded by an allocation from the levy that the FCA collects from the financial services firms that it regulates. This year (2014/15) the Money Advice Service received 81.1M, of which 38.1M was allocated for our Debt Advice work. The portion received by Debt Advice is worked out according to levy raised within 3 designated fee blocks which is charged to a wide range of financial institutions. These blocks are related to: Bank lending Home finance lending Consumer credit lending Firms contributing to the debt advice levy, benefit from their customers receiving debt advice so they are better able to pay back money borrowed. 5

6 The over-indebted population Estimate that 8.8m people are over-indebted in the UK 75% are under the age of 45 64% are women 41% work full time Half have a household income < 20k 48% own their home (with or without a mortgage) 27% rent privately 66% find keeping up with bills a heavy burden 64% have fallen behind with credit commitments in the last 3 months 42% have been chased by creditors in last year 76% would describe themselves as being in debt 6

7 Over-indebted Population and Advice Need in England and Wales At the end of 2013, 8.8* million people across the UK were over-indebted and just 1.5 million (17%) of those are currently accessing advice 32% of presenting demand (17%) need F2F channel * This number has increased to 9.1m people in the first quarter of

8 MAS and the Debt Advice sector MAS works to enable people to have access to high quality debt advice Three year grant agreements in place (England and Wales) Investment in channel development Sector-wide framework supporting initial assessment, referral, quality and evaluation Customer journeys - preventing customers from getting into and helping customers out of crisis debt 8

9 Positive impact of advice Nine in ten have taken action following their advice 80% have started to reduce their debt as a result 92% are satisfied with the advice they receive Seven in ten no longer have creditors chasing them Two-thirds feel their situation has already improved Most clients feel less stressed about their personal situation Source: Optimisa advice effectiveness research 9

10 Debt Advice works In October 2012 we published research commissioned from YouGov, funded by BIS, which demonstrated for the first time that receiving debt advice has a significant impact on reducing personal indebtedness and increasing the manageability of debt, irrespective of the channel used. More advice seekers also remained in manageable debt, compared to nonadvice seekers (83% v. 72%) 10

11 Money advice tools We offer a range of tools to help customers plan their finances and we signpost to debt advice services where needed. Required referrals from Payday Loan Firms to MAS Also available: Letter templates Free printed guides Videos Interactive timelines 11

12 Useful tools Debt Advice Locator: Interactive and easy to use Promotes advice services that are free and hold a MAS accredited standard Allows clients to search advice providers by channel Local search function to help clients find their nearest provider 12

13 Looking ahead: Financial Capability Strategy for the UK and our five-year direction Vision: An overall increase in the UK s financial wellbeing, with substantial benefits for individuals, families, communities, government, industry and society as a whole. We want to encourage financially capable behaviours. Our 5 year strategic direction seeks to have the greatest customer impact, by focusing on reducing over-indebtedness and the numbers of people at risk of falling into over- indebtedness. We will achieve this by: - helping 5 million more people stick to a budget to enhance their resilience to financial shocks - doubling the number of people seeking debt advice, to 3 million people a year. 13

14 Challenges 83% over-indebted people are not currently accessing debt advice. Delivering the right services at the right time. Increasing knowledge and skills to improve take up of multi channel advice. Targeting to engage people in getting advice earlier. Improving routes to debt advice through financial capability provision 14

15 Thank you, Questions 15

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