The high number of experienced debt advisers leaving the profession and absenteeism is well documented. In understanding why this is, it’s helpful first to explain what debt advisers do and why their role is important.
When asked what we do, I describe the debt-advice process: maximising income, completing a financial statement, checking liability and prioritising debts, negotiating repayments with creditors, and advising on the available options for becoming debt free. Doing so, however, fails to recognise the complexity of what we deal with.
The knowledge and skills required of a debt adviser are not dissimilar to those expected of a legal professional. Both require complex problem solving, being able to research, advocate, negotiate, communicate and interview effectively, as well as having an in-depth knowledge of the law. There are also soft skills which are more difficult to teach, such as the ability to actively listen, advise in an empathetic and non-judgemental manner and build trust and rapport with clients. All of which help to break down any apprehensions clients may have about getting advice, due to the perceived stigma of debt.
With an estimated 8 million people in the UK needing debt advice, having free debt-advice services is imperative. In the main, this is provided by the third sector – charitable and not-for-profit organisations (e.g. local advice agencies, Citizens Advice, National Debtline and Stepchange). Some local authorities also provide this service.
An article by the Money and Mental Health Policy Institute explains the link between problem debt and mental health issues. We know that getting debt advice improves mental health and wellbeing. Therefore, relieving debt issues may also help to alleviate the burden on mental health and support services. It can also ease the pressure on housing services by keeping people in their homes. Still, recent articles published by the Money Advice Trust and Money and Pensions Service suggest that public awareness of what debt advisers can do is low.
Despite the demand for services, experienced advisers are leaving. The Institute of Money Advisers identified several contributory factors. Some funders have unrealistic ‘targets’ for the number of clients advised but also demand unattainable quality standards in order to comply with the Financial Conduct Authority (FCA) regulatory requirements (the Conduct Rules). For example, the Conduct Rules require advisers to confirm advice in writing to the client. In practice, this letter ends up being a complex and lengthy document which is time consuming to draft (taking on average 90 minutes) as we need to demonstrate that we have fully advised the client. Another factor is the increasing complexity of client cases and vulnerabilities, exacerbated by the cost-of-living crisis, the COVID-19 pandemic and general cuts to support services. All of these result in unmanageable workloads. Additionally, there’s the emotional toll on advisers’ wellbeing in supporting those with complex and challenging personal situations (such as addiction, abuse and mental health issues).
Recruiting and retaining experienced debt advisers is particularly difficult for those in the third sector: the salary is often not reflective of the advisers’ skill levels and responsibilities and there can be a lack of job security. Organisations are therefore having to recruit trainee posts people who have no experience within the advice sector and who leave once they know what the job entails. Most advisers come into the profession because they want to make a difference, but we can’t expect them to stay when their own wellbeing is negatively impacted.
If upping the quality of advice across the sector is the aim, the focus should be on creating a standardised training programme and compulsory qualification pathway for trainee advisers, like that of a solicitor. It should combine a qualification with on-the-job learning and experience. Doing so would also result in the profession’s being more widely recognised which should, in turn, lead to higher pay.
Then we need to reconsider how we demonstrate quality debt advice. Two issues come to mind. Firstly, should we focus on the number of clients advised or the outcomes we achieve for them? The FCA has introduced its Consumer Duty which requires organisations to monitor outcomes for clients. I am fortunate in my role that management has taken the view that the focus should be on client outcomes rather than targets. I believe this results in higher job satisfaction for advisers as well as better service for clients. Secondly, are we interpreting the Conduct Rules in the way they were intended? Is it in the client’s best interests to receive a lengthy confirmation-of-advice letter? If not, what is the alternative? Further guidance and support from the FCA on how organisations can comply with the Conduct Rules without creating excessive workloads for advisers would be welcome (for example, by working with the sector to create a template letter).
There is some work to be done to improve creditor practice, particularly those who are not FCA-regulated (e.g. local authorities). Some creditors still do not accept offers of repayment which advisers make using the standard financial statement (SFS). The SFS is an industry-accepted income-and-expenditure form which incorporates ‘spending guidelines’ for certain items of expenditure (such as food, clothing and footwear and broadband/phone costs). The spending guidelines set out a maximum amount which is reasonable to spend on that item of expenditure, based on the number of people in the household and Office for National Statistics data. Creditors should accept offers using the SFS if spending is within the guideline figures, but we find this is not always the case. Creditors could also look to build better relationships with debt-advice agencies to support customers, in particular vulnerable ones. We are pleased that more creditors have dedicated teams who deal with vulnerable customers, but there are still barriers which hinder advisers. For example, advisers report that some creditors, particularly energy suppliers, say they will not talk to them, and that the client needs to seek specialist debt advice from more widely known national debt-advice providers (such as StepChange) who do the same job.
The change in government brings with it hope that the future will improve for people in problem debt and those who support them. The recent amendments to the eligibility criteria for Debt Relief Orders (DROs) and the removal of the £90 fee are welcome, but don’t go far enough. A DRO is an insolvency option, similar to bankruptcy, which can clear a person’s debt. When conducting the review of the insolvency framework, the Insolvency Service could consider bringing DROs in line with bankruptcy. Removing the requirement to list all debts on the DRO application and for it to include all qualifying debts up until the date of the DRO would benefit both the client and reduce adviser workloads. Considering removing the bankruptcy fee (currently £680) or introducing a fee remission for those on a low income would also remove a significant barrier.
There are then wider issues which impact personal debt. For example, the shortage of social housing means that some people are trapped in accommodation too big for their needs, resulting in their rent being unaffordable because of the under-occupancy charge. There are also issues with Universal Credit which create or exacerbate existing debt problems. Reducing the waiting period for new claimants and the amount that can be deducted for debts are just a couple of things that would make a difference. In the longer term, incorporating financial education into the school curriculum will help build financial resilience.
Putting aside factors which are beyond the control of the sector, if we want to improve the quality of advice and ensure good outcomes for clients, we need to invest in our advisers and provide them with the right working conditions to ensure they stay.
Nicole Dayaram leads a team who offer free money advice to tenants to help them sustain their tenancies. She started off her career as a solicitor and has worked in the debt advice sector since 2015.
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