We don’t believe anyone should have to pay for debt advice when they’re struggling. We’re only able to deliver free debt advice to so many people because we’re funded almost entirely by voluntary donations.
These donations come from creditors such as banks, building societies, high cost credit providers, utility companies and Money Helper, formerly The Money Advice Service. With their financial support we helped 650,000 people in 2018.
We estimate that the social cost of problem debt to society is £8.3bn a year through the additional strain on health services, lost productivity, lost jobs and longer term reliance on welfare and support services.
With predicted rises in interest rates and further pressure on those living on welfare payments, we expect the need for our services to continue to increase, and without the continued support of our funders we won’t be able to meet that demand. Our main source of funding is a model called fair share contribution (FSC).
Fair share contribution
Creditors understand that free debt advice is beneficial to their customers, and society as a whole.
Fair share contribution (FSC) is a funding model that we introduced to the UK whereby creditors make a donation to our charity. With FSC creditors who receive a payment from one of their customers on a StepChange debt management plan pay a percentage-based contribution for our service, based on the payments they receive.
This funding model allows us to continue to provide free debt advice and continuous support to our clients, is widely recognised within the industry and was recently endorsed in an independent review of the funding of debt advice (PDF) by Peter Wyman.
Last year donations amounted to 80% of all income in the year, however we are actively diversifying our funding model so that we can help more people.
We receive money from StepChange Voluntary Arrangements which arranges and supervises individual voluntary arrangements. The firm earns fees that are agreed with the creditors at the outset of the arrangement and which are deducted from the subsequent distributions made to those creditors. Our other subsidiary, StepChange Financial Solutions, also contributes to our income. It provides advice and the arrangement of both equity release plans and mortgages aimed at helping people out of problem debt.
Other income sources include donations from utility companies, statutory fair share payment for distributing funds of our Scottish Debt Payment Programmes, and interest on cash balances.