Money Advice Service takes aim at national debt crisis

Money Advice Service takes aim at national debt crisis

The government-funded Money Advice Service has been charged with dealing with the national debt crisis.

Between 2018 and 2023 the Money Advice Service will be obliged to assist the one in six people in the UK who regularly miss payments or feel their finances are getting on top of them.

Last month the Bank of England announced it would force banks to strengthen their financial position in the face of a rapid growth in borrowing on credit cards, car finance and personal loans.

“Consumer credit has increased rapidly. Lending conditions in the mortgage market are becoming easier. And lenders may be placing undue weight on the recent performance of loans in benign conditions,” Mark Carney, governor of the Bank of England, said at the time.

Debt charities warned of the consequences for the 8.8 million individuals using credit for essential household bills if the Bank’s measures led to lenders increasing rates.

The Service's draft strategy, published today (17 July), identifies priority groups among the over-indebted, for whom it will seek to provide advice and money guidance services, and protocols for how to achieve goals. The strategy also intends to provide ongoing support. 

Sheila Wheeler, director of debt advice at the Money Advice Service, said: “The needs of over-indebted people are at the heart of this draft strategy to deliver better, more inclusive debt advice for those who need it most. 

“To deliver the strategy we will need to build stronger and greater collaborative partnerships with those who deliver debt advice across the UK. These partnerships will enable us to innovate and pilot new ways of reaching the people who need these services the most.2

Ms Wheeler pointed out that the Money Advice Service is to an extent reliant on the assistance of other bodies.

She added: “Consultation is critical and we want to make sure we hear about the evidence, insights and views of organisations working in a range of finance sectors, especially those at the sharp end of debt advice.

"Receiving your feedback is critical in informing and shaping the future direction of the strategy.”

Emanuel Andjelice, chairman of budgeting and savings service Squirrel, said: “I’d welcome any initiative that points people in the direction of robust debt advice. 

“There are organisations, such as Payplan and StepChange, that do a fantastic job, but awareness of them could be better. The Money Advice Service is in a great position to help ensure those who need support can find it."  

The Money Advice Service is paid for by the financial services industry via levies, though advisers do not contribute towards the cost of providing debt services.

A consultation document published alongside the 2016 Budget revealed plans to "restructure the delivery of public financial guidance" with a new pensions guidance body that will merge the functions of The Pensions Advisory Service and Pension Wise, as well as some of the pensions guidance provided by the MAS.