Dom Taylor, External Affairs Intern, Money and Mental Health Policy Institute

Three steps towards effective debt advice

8 April 2022

Last week, I had the pleasure of attending my first event in parliament –  organised by the All-Party Parliamentary Group (APPG) on Debt and Personal Finance, focused on the need for debt advice following the pandemic.  Speakers including funders of debt advice, essential services, trade associations and research groups were brought together to discuss  much-needed changes in the debt advice system. Amongst those offering insight was our Chief Executive Helen Undy, who emphasised that, when it comes to improving debt advice, mental health has to be at the forefront of the discussion. Here are our essential three takeaways from the event:

1. Getting debt advice to those who need it

Professor Sharon Collard – Research Director at the University of Bristol’s Personal Finance Research Centre and member of Money and Mental Health’s Advisory Board – presented her research conducted with Abrdn Financial Fairness Trust. Their findings identified the considerable extent to which supply outstrips demand as far as debt advice is concerned, as well as the worrying proportion of people who don’t find their issues effectively addressed even if they do access advice. 

This led to a discussion with the Money and Pensions Service (MaPS) Chief Executive Caroline Siarkiewicz about the recent debt advice recommissioning process, the impact the process had on the sector, and the challenge of meeting rising demand and more complex debt advice needs with a real-terms reduction in funding for face-to-face advice. While the overall increase in debt advice funding was welcomed by everyone attending, the proportion of funding allocated to in-person services and the process through which these are commissioned have clearly led to ongoing tensions between the sector and MaPS. It’s hoped that this return to ‘in-person’ conversations can in some way start to rebuild those relationships between organisations who are ultimately working towards a similar goal, especially at a time when many are deeply worried about their financial future.

2. Debt advice services must be accessible for people with mental health problems

When thinking about the outcomes of debt advice, the role of an individual’s mental health can not be understated – especially as 50% of people in problem debt will be experiencing a mental health problem. As explored in our own research, impaired clarity of thought, reduced concentration and difficulties in communicating are only a few of the challenges that people with mental health problems face when trying to engage with debt advice.

Our recent campaign success, working alongside a large coalition of debt advisors to increase funding for face-to-face advice, is a positive step. Still, further action is needed to ensure that good quality, accessible advice reaches everyone who needs it. Reflecting this, Helen voiced our recommendation of establishing a minimum quota for face-to-face advice, along with mental health training for all debt advisers. The significance of poor mental health as a key factor in the efficacy of debt advice was echoed by the other panellists, who accepted that more work is still to be done to this end.

3. Firms need to step up their provisions for vulnerable customers

While funders of debt advice – such as MaPS – have a responsibility to ensure debt advice services are accessible and effective for people experiencing poor mental health, it falls on providers of essential services to ensure that they too meet this aim.

Sue Lindsey – Director of Customer Policy and Engagement at Wessex Water – described the support they offer to customers facing financial difficulty. Working with non-profit debt advisers and assessors to develop bespoke customer plans, extended payment breaks and a choice of communication channels for customers were some of the ways that they had responded to the influx of struggling customers following the pandemic. Still, barriers to customers accessing this vital help remain. 

Naturally, the actions of one firm aren’t indicative of the national picture; the prevalence of intimidating debt collection practices and inaccessible customer service are just two of the ways in which companies fail to consider the needs of people with mental health problems. We’ve previously launched our Mental Health Accessible programme to guide firms in the right direction.

The need for prompt action

As was consistently reiterated by the panel, improving access to debt advice services is not just important for those already dealing with the effects of the pandemic; with the cost of living crisis forecast to worsen over the next year, and with insufficient government measures to support households that are struggling, the necessity of quality debt advice is only growing in urgency.