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AdviceUK’sAdviceUK’sSustainable Debt Advice Sustainable Debt Advice

ProjectProject

Friends Provident Foundation Friends Provident Foundation

Grant holder Conference Grant holder Conference

25 July 201325 July 2013

Andrew Hull AdviceUK Sustainable Debt Advice Project Co-ordinator

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In 2010:In 2010:• The free debt advice sector did not have the

capacity to meet demand• Demand increasing and capacity reducing with

cuts in public sector funding• No provision for ‘low offer / token payment’ clients

Exploring:Exploring:• Alternative sources of funding for the free debt

advice sector?• Improved sustainability of debt repayments for

clients and creditors?

SDAP was established to address issues SDAP was established to address issues facing debtors and the debt advice sectorfacing debtors and the debt advice sector

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SDAP tested fast track DMP / IVA referrals SDAP tested fast track DMP / IVA referrals and a ‘Lo/To’ payment disbursement and a ‘Lo/To’ payment disbursement

mechanismmechanism

Diagnostic Interview

Diagnostic Interview

Advice AgencyAdvice Agency

ClientClient

DMP/IVA/TD

>= £50 pcm

DMP/IVA/TD

>= £50 pcm

Other options

DROs/bankruptcy/AOs/write-offs etc.

Other options

DROs/bankruptcy/AOs/write-offs etc.

PayplanPayplan

% fair shares or IVA introducer fee

Advice agency assists client

as normal

Advice agency assists client

as normal

Payment disbursement system

(Priority & non-priority debts)

Payment disbursement system

(Priority & non-priority debts)

% contribution

Standing Order

Standing Order

Basic Bank Account

Basic Bank Account

Payment Card

Payment Card

Low offers/token payments

< £50pcm

Low offers/token payments

< £50pcm

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Paylink – Low Offer / Token Payments• 308 clients successfully set up SDAP option• £2.9 million debt• £9,300 per month surplus income• 49 more clients in the pipeline

Payplan – DMP and IVA Referrals• 162 clients successfully set up SDAP option• £3.1 million debt• £26,000 per month surplus income• 52 more clients in the pipeline

Winner of the IMA’s Best New Initiative Award 2013

470 clients benefitted, with a total debt of 470 clients benefitted, with a total debt of over £6m and £35,000 per month surplus over £6m and £35,000 per month surplus

incomeincome

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• The model worked:– Clients improved their well-being– Clients committed to continuing repayments– At least cost neutral for all involved in delivery

• It may have limited application:• Low volumes of cases (hampered by technology

issues?)• Unlikely to generate significant income streams

• Proceed cautiously with any further rollout:• Improve the technology• Work with others in the sector

The evaluation found that the model works The evaluation found that the model works but it is a marginal decision whether to roll but it is a marginal decision whether to roll

it outit out

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• Gap in provision for ‘token payment / low offer’ clients

• Challenges for culture and practices:– Agencies willing to pass on cases?– Mix of delivery channels?

• Is a sector-wide solution possible?• Co-ordinate different initiatives?

– SDAP– Citizens Advice’s DMP pilot project with StepChange– Money Advice Service’s common data project, etc.

• Funding challenges:– Technology for SDAP or integration across the sector– Creditors providing funding through Fair Share and

the Financial Levy

Implications for future financial inclusion Implications for future financial inclusion effortsefforts