The Government hints that the new body should ensure sufficient free debt advice is available to meet the need. We want that duty set out in law.
The new body should also commission debt advice and solution services to fill gaps rather than provide services itself. It should have more focused coordination role in debt advice than MAS has had, and this, along with research and other work, should primarily support its commissioning role.
The new body’s financial capability initiatives should concentrate on groups that show particular vulnerabilities, including vulnerability to financial difficulty. One such focus should be minimising the proportion of the 8-9 million people in moderate financial difficulty whose circumstances deteriorate such that they need debt advice. Preventing problem debt is cheaper, simpler and more effective than always making sure there’s enough debt advice to resolve it.
A focus on the vulnerable must recognise that debt can affect anyone, so the new body needs to be able to react to changing conditions (as seen after the financial crisis) which could see the vulnerable population grow and change rapidly.
The new body’s legal remit is critical. Its objectives for pensions, money guidance, financial capability and debt advice should be defined separately.
We think the debt advice levy should just pay for debt advice, and not money guidance, pensions advice or anti-scam activity.. That’s what providers and funders will expect for their money. Innovative, joined up services can be commissioned by combining money from different budgets, and further boosted by an “innovation challenge fund” to seed new ideas.
A single financial guidance body with a clear remit can be a major plank in Government strategies on social justice and supporting families who are “just about managing”. But social, economic, and regulatory policies are also required for a comprehensive strategy to tackle problem debt.