Credit Management APRIL 2019

for 2019 is about £172 million, divided
into three parts: £56.3m in the SFGB debt
advice levy; £55.7m in fair share; and
approximately £60m made up of ‘other
contributions’ being donations, grants
and similar. We also know that in addition
to the above, firms are now being asked
to contribute to the £20 million FSCS debt
management levy – a fund that customers
interacting with our members, can never
benefit from and that would be better
spent on free to use debt advice, than
effectively bailing out debt management
firms that go bust!
To give some idea of where the money
has been spent historically, in 2017/2018
Money Advice Service (MAS) spent
£43.3 million on 487,000 debt advice
sessions. This means that almost half
of all advice sessions in 2017/2018 were
funded by industry payments to the
debt advice levy alone. Unfortunately,
our understanding starts to falter at that
point as we try to understand which
organisations have received some of this
money, and how many sessions each
organisation produced. Analysing annual
reports can help fill some blanks but even
then, we enter the realms of guesswork,
with money moving between advice
providers, partnership arrangements and
so on. Beyond this, however, the picture
becomes even more opaque.
Indeed, this gets to the very heart of
the current problem; the industry has no
clear global idea of what its contributions
pay for, or visibility of their true impact
beyond broad statements we have to take
on trust. We have no clear idea how the
fair share percentages are calculated,
how those percentages could be reduced
(i.e by widening the pool of contributors)
or how many debt management plans are
in existence. Similarly, we do not know
the cost of creating a debt management
plan, or what services need to be funded
(e.g initial consultation, negotiating with
Little surprise, therefore,
that the Single Financial
Guidance Body (SFGB) and
its predecessors also found
it difficult to unravel the
‘money merry-go-round’ of
debt advice, and why the
CSA is keen to work with
them, in finding a workable
solution.
OPINION
AUTHORS – Peter Wallwork and Henry Aitchison
creditors, annual reviews etc) in order to
have one agreed.
What we do know is that it is wholly
wrong for the funding of debt advice to
continue to fall primarily into the lap
of the financial services sector, and the
concept that ‘all who benefit should pay’
is similarly questionable; many creditors
benefit beyond those that appear on a
debt management plan. Thankfully, and
amongst this web of questions, there is
general consensus that ‘something must
be done’ and it is pleasing to report that
following many conversations, debates,
and discussion alike, actionable steps are
now being put in place.
Peter Wallwork is CEO of the Credit
Services Association (CSA) and Henry
Aitchison, Head of Policy.
£56.3m
Debt Advice
Levy
Who else is
contributing
and how?
Is all funding
going on advice
and plans?
£55.7m
Fair Share
How are those funds
entering system?
What do funds
pay for? £172M
How have they
been calculated?
Is funding being
distributed fairly?
Does funding
favour particular
advice models?
Why isn’t there
clearer data?
What all of us can
agree on, is that
any future funding
contributions should
be fair, equitable and
transparent, and that
any future thinking
remembers that it
is not only financial
services businesses
that ‘benefit’.
£60m
Other contributions
Where are
levy funds
going exactly?
How much exactly
in Fair Share
contributions?
How many debt
management
plans?
Who is offering
advice services?
Can efficiency make
money go further?
Is there effective
competition in
advice provision?
What does
each cost?
The Recognised Standard / www.cicm.com / April 2019 / PAGE 23