Craig Simmons is Head of Debt Policy and Strategy at the Money and Pensions Service (MaPS).
The past few years have certainly signalled an increasingly higher profile of debt problems in the UK. While this growth in problem debt is a very significant cause for concern, there has been the positive and wider recognition that the debt advice sector is now receiving.
Those who work in the sector have always known the importance of debt advice but it’s very welcome that a broader audience is now acknowledging that value. It’s not a point I make to be congratulatory but to highlight the results this delivers, such as significant changes to creditor practices, major policy changes such as Breathing Space and the Statutory Debt Repayment Plan and material increases to the government raised debt advice levy (which is predominantly paid for by financial services firms).
The levy funded debt advice budget in 2017/18 totalled £48m and covered the whole of the UK. The MaPS debt advice budget for 2020/21 now stands at over £100m for England. Debt advice funding in Scotland, Wales and Northern Ireland has been devolved since January 2019.
Of course, an increasing budget is only useful if we use it wisely. In 2018, the Independent Review of Debt Advice led by Peter Wyman CBE recommended the debt advice levy be increasingly used for centralised coordination, infrastructure and training to promote greater capacity and improved quality of provision.
It also recommended higher usage of digital channels for advice and a drive for efficiencies across the sector. MaPS added its support to the direction of travel set by the Wyman Review ‘Better Debt Advice’ as a core pillar of the recently launched UK Strategy for Financial Wellbeing. Its ambitious goal is that everyone is able to access free debt advice when they seek it, with a target of 2 million more people accessing services per year by 2030.
Against that backdrop, MaPS is pursuing a variety of linked projects in this financial year, a handful of which we are set out below.
Debt Relief Orders as a solution
Debt Relief Orders (DROs) are an absolutely critical debt solution used by low income customers who are often in vulnerable circumstances. While these solutions are really effective for those who qualify, most debt advice agencies who process them undertake significant administrative effort in delivering them, which historically has been underfunded.
Several agencies had for some time cited extreme difficulty in continuing to deliver the service due to these funding constraints. From October, we have started to provide funding for DRO administration in England via the Competent Authorities, ensuring that access to the solution remains available. In future we plan to commission DRO administration ‘hubs’, again with the intent to fund administration in England, but also aligned to the Wyman Review recommendations of centralised coordination and infrastructure to help us make the best use of the funds available to us.
This approach builds on a piece of partnership work we’ve carried out with Citizens Advice, where we explored and tested an improved approach to the administration of DROs. This has resulted in a cost saving of roughly a third, a 70% reduction in processing times and high customer satisfaction scores. We intend to build those learnings into the entirety of DRO administration in England as we move forward with our funding of it.
Increasingly complex cases
We recognise that the complexity of debt advice cases generally has increased in recent years and we’ve amended our core grant agreements this year to create provision for advisers to have longer, more in-depth sessions with clients who have complex needs. This has been achieved through increasing funding to our core providers by approximately 11% compared to last year. While MaPS is focussed on increasing the number of people we can serve with our funding, we know customers have very varied needs and our intent is to rollout funding arrangements which give greater flexibility to serve all our customers well.
Using PACE to improve customer experience
PACE stands for Piloting Adviser Capacity and Efficiency and is our key test environment to improve customer experience both in reaching debt advice as well as their onward journey through it. It again seeks to build on the Wyman Review’s direction by utilising central infrastructure and making the best use of available technology. Starting in March 2020, the first phase of PACE is testing three key innovations:
- A virtual contact centre (VCC) to improve the customer journey by directing clients to an agency with capacity to help immediately, through a scheduled call back or where one isn’t available, the MaPS contact centre.
- An open data proposition utilising credit reference, open banking and other data to improve the customer journey by increasing the accuracy and ease of data collection.
- Improved progress feedback to allow creditors to receive updates on client progress through the debt advice process to tailor collection activities.
The very early findings are showing improved engagement rates with advice and above expectation interest from creditors, particularly those from local and central government, to refer customers into the process.
As I mentioned in my last update, we’re using the VCC to support the sector’s pandemic response. To enable that, we’ve slightly extended the length of Phase 1 to February 2021, with Phases 2 and 3 starting in Spring 2021 and Summer 2021 respectively. The later phases will seek to use enhanced and better integrated technology as well as increasing the number of debt advice agencies and creditors involved in the work if the work is showing to be successful.
Quality, continuous improvement and future commissioning
With the inception of Financial Conduct Authority (FCA) regulated debt advice in 2014, quality has increasingly become an even greater focus of our work. The Money Advice Service (MAS), and now MaPS, has collaborated with the debt advice sector over the past few years to develop quality initiatives that help identify areas of improvement and good practice. This not only helps provide MaPS with greater visibility of the quality of advice that it’s funding, but also feedback for advisers to assist with personal development and valuable insight to continually improve the effectiveness of the services. In recent years, this collaborative work has led to development of a quality framework; an effective peer assessment scheme that identifies areas of development and improvement for organisations; a CPD Scheme to support advisers and developed and resourced various training courses for debt advisers.
Since MaPS inherited the debt advice grants in January 2019, we have been keen to hear views about our approach to funding debt advice and how we ensure high quality is delivered in our funded services. We are undertaking work internally to review what currently happens and what we should do in future. While finalising that remains a work in progress, we know providers would welcome longer-term certainty on funding and customers would benefit from services that can flex more to their needs.
We certainly want to continue having an open dialogue with agencies and advisers regarding advice provision, and even more so in these times of uncertainty. Looking ahead, we will be responding to the recent new challenges that debt advice organisations are facing, such as the need to work remotely while ensuring high quality services can still be delivered. Also, we want to explore ways to improve automation of our quality assurance processes and focus on increasing capacity of debt advice with the additional funding of debt advisers across various channels of advice. From a quality perspective our focus is to support the services MaPS funds with delivering high quality debt advice and continually improve regulated debt advice for customers.
In working towards that, I’m happy to confirm our intent to undertake a recommissioning process for the vast majority of our funded debt advice provision. This is with an aim of go live in newly commissioned services from April 2022. While that still feels some way off, it reflects the time needed to complete a full commissioning exercise and, importantly, gives us time to consult with stakeholders on our approach, including getting more detailed customer insight.
We know taking a broader set of views into account will really enhance what we do and the services we fund. We look forward to working with you and, once we’ve completed much of the rollout of the additional pandemic-related funding mentioned it my previous blog, we’ll be promoting the ways, platforms and channels to engage on this from early 2021.