Two million households need debt advice

Anthony Devlin/PA Wire

As new evidence reveals that two million households are in need of debt advice, the Money Advice Service outlined its objectives for co-ordinating personal debt advice services from 1 April.

Its focus will be to ensure timely help is provided to customers and that consistently high standards of advice are applied across the country wherever over-indebted customers may turn.

So what do the changes mean for those seeking help with their debt?

The highlights of the new approach

The Money Advice Service promise 'a commitment to automatic referral of customers by creditors to an effective advice service' - good news for consumers who will be able to get the best advice before their situation becomes too serious. Also helpful in the sense that customers are often too worried to contact their creditors and say they are struggling to meet payments, but this way they won't need to.

There is recognition that debt advice not only improves the wellbeing of individuals, it can increase collection rates for creditors, reduce court costs and help cut down on repossessions. As a result, the new proposals include involving creditors in the process - which will hopefully mean it will be more in their interest to work with consumers to resolve debt issues.

Creating more consistent standards wherever consumers go for help is also on the agenda - meaning those seeking help don't face a postcode lottery when it come to free debt advice.

There is also a focus on keeping people better informed, so they know there's a free service to turn to, rather than resorting to expensive debt management companies.

The Money Advice Service will co-ordinate the work of debt advice organisations to help meet the needs of people seeking such support. It will build on the work by partners across the UK and, following a transitional period, new arrangements will be in place from the autumn of 2013.

The transitional period

In the transitional period from April 2012 to March 2013, the Money Advice Service will enter new agreements with existing face-to-face debt advice providers, currently operating directly under the auspices of the Department for Business, Innovation and Skills (BIS).

These will focus on service delivery and an increased volume of direct contact for those in most need from 100,000 to 150,000 customers per year. Another big plus point for consumers, who often place more value on face-to-face contact, but have seen the opportunities for this decrease as Citizen's Advice bureaux among others faced heavy budget cuts.

Consumer Minister, Norman Lamb said: "We want people to be better informed and able to make better choices based on good, impartial and sympathetic advice. That is why it is so important to help people manage their money more effectively by increasing the level of free face-to-face advice available to consumers."
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