Credit Management June 2019

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OPINION Herd Mentality The issue of future funding of debt advice is an elephant that refuses to leave the room. Peter Wallwork AUTHOR – Peter Wallwork MCICM I was surprised and disappointed recently to read that Sir Hector Sants, the Chairman of the Money and Pensions Service (MaPS – formerly the Single Financial Guidance Body), is suggesting that the Financial Services community should be ploughing even more money into the debt advice sector. Surprised because the FS community already contributes vast sums (almost £60 million) into funding debt advice, and disappointed because as yet nobody has even attempted to address the very real concerns and questions the CSA and its members have raised in relation to how the funding is currently being spent. Neither have they answered whether even the current levels of funding are fairly contributed and efficiently managed. Mr Sants, in his interview, said that the FS sector needed to spend more money on what he called ‘prevention’, and equipping individuals to become financially empowered. He said there needed to be a strategic shift in the balance of engagement from remediation to prevention. Making this shift would give better outcomes to consumers, and enable a ‘high quality dialogue’ between the consumer and the advisor. Looking at the comment trail that followed the online piece, Sir Hector’s proposals have not been particularly well received. To suggest that ‘remediation’ and ‘prevention’ are interchangeable is stretching the argument. His proposal, as one commentator recently put it, is akin to suggesting that greengrocers should pay for people to be educated about the benefits of fresh fruit and veg, or that car manufacturers should pay for driving lessons because cars are rather complicated things! But all of this again comes back to the fundamental point. There is still a clear lack of transparency and data regarding the current funding channels and sources. It is why finding a solution is proving such a challenge. We are agreed that any future funding contributions should be fair, equitable and transparent, but any future thinking must remember that it is not only financial services businesses that ‘benefit’ from debt advice and informal debt repayment plans. We need to address this tired and rather elderly elephant in the room, as he has been there for some time and should have been dealt with long ago. There are clearly firms and organisations that benefit from debt advice, but who currently contribute nothing towards it. They may contribute in other ways, but without data, we have no way of knowing. Without transparency on who contributes currently, the industry ends up blaming one another and pointing fingers. The CSA is continuing to make representations to MaPS, and has already completed much positive work with the advice sector who principally agree with our concerns around transparency and efficiency. The CSA also has a positive dialogue with the Chief Executive of MaPS, John Govetts, to challenge MaPS position on asking for more money before addressing our genuine and well-reasoned concerns. Mr Govetts has suggested that the CSA should propose what a future funding model should look like, and it will use its Buyers Forum (on June 5) to gauge its buyers members’ opinions prior to further discussions planned with MaPS shortly after. But this could be a case of the cart before the horse. How can you get to the bottom of what a good funding model looks like if we don’t have the answers to our original set of questions? If we don’t have transparency, and if the funding burden is not fairly distributed, then why should members accept that they have to pay more? On this issue, as well as the issue of future fees, we are led to believe that the authorities/regulators are in listening mode. Let us hope that is the case, for if we are expected to ‘fit the bill’ on any future budget that MaPS decides to set, then we should have an input into what that budget may look like. But with an impression that fees are already on the rise, and the mood music from Sir Hector in relation to future funding, we might well have to be shouting very loud to be heard. Peter Wallwork MCICM is Chief Executive of the Credit Services Association (CSA). The Recognised Standard / www.cicm.com / June 2019 / PAGE 18
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Credit Management June 2019

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