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StepChange response to Wyman Review of Debt Advice Funding PDF Print E-mail
Monday, 29 January 2018
Peter Wyman’s independent review of the funding of debt advice was published yesterday afternoon.

By Phil Andrew, Chief Executive, StepChange Debt Charity

With the Financial Guidance and Claims Bill in Parliament also setting out a new strategic framework for debt advice funding, the report delivers a frank and timely assessment of where the sector is now. There’s a clear direction of travel for debt advice providers if we’re to meet the challenge of getting debt advice to everyone who needs it.

The review reaffirms some things that we know. Problem debt causes people severe harm, which in turn creates huge social costs, and that debt advice is playing a vital role in limiting harm and cost.

Peter Wyman’s judgment, that the amount of free debt advice needs to rise by 50% in two years, looks a realistic assessment. But there’s currently a gap between demand for debt advice and the capacity to provide it; the report highlights a general consensus that demand’s likely to increase in the future.

Here the report’s clear: Extra resource will be needed to achieve this aim. We welcome the confirmation that the current ‘mixed economy’ of funding methods is working and no fundamental rethink is necessary.

The value and central importance of fair share in the funding landscape is recognised with a call for fair share funding to not only continue, but to expand along the principle that all those who benefit from it should pay.

As a charity that’s primarily funded through fair share, we’re confident that putting this principle into practice will allow us to help more people with a wider range of needs.

Wyman is very clear in arguing that the advice gap can’t be sustainably met solely through a linear increase in funding. Debt advice providers have to do their bit through improving quality and committing to ambitious efficiency improvements.

Improving efficiency is at the heart of report’s vision for a future debt advice sector. Channel shift, avoiding duplication, closer co-operation and smarter use of existing and emerging technologies are cited in a strategic objective for free-to-client providers to commit to 20% efficiency savings over the next two years.

This target is ambitious and perhaps even aggressive. Crucially, it’s achievable, continuing (albeit at a faster pace) on a path that the free sector has been walking for the past few years.

We’re already heavily invested in our own ‘Transformation’ programme — a radical re-tooling of technology and ways of working that should leave us fit to meet the challenge that Peter Wyman describes.

It’s also fair to say that the free advice sector is already, step-by-step, finding value from collaborative solutions to the shared problem of meeting demand.

Finally, the attention to quality is both welcome and absolutely necessary to the Wyman strategy. Driving up efficiency should never come at the expense of good client outcomes.

If we’re not focused on reducing harm and helping people regain control of their finances then we’re not about anything.

The Financial Guidance and Claims Bill opened up questions about the need for setting and monitoring standards, and how this can be improved in an FCA regulated environment. Wyman gives a useful road map for progress here.

However, better quality assurance is not quite the same thing as delivering the right client outcomes. As we focus harder on efficiency, we gain a better understanding that some of our clients require more support, and this in turn needs to be reflected in sector funding models.

This tension between efficiency and meeting diverse client needs is being played out right now in the still emerging ‘vulnerable clients’ agenda, as seen in the FCA Financial Lives and Consumer Approach documents.

This is the area where the Wyman strategy is underdeveloped. While efficiency gains can increase our capacity generally, they must also increase our ability to give our more vulnerable clients the support they need.

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