Money Advice Service inquiry

Written evidence submitted by Advice UK


1. We agree with the stated objectives for the Money Advice Service (MAS).

2. We are concerned at the increase in the costs of administering the Face to Face Debt Advice Project, the arbitrary increase in its targets, and the introduction of more onerous reporting requirements and more complex payment arrangements.

3. We are also extremely concerned at the amount of money that the MAS is spending on branding, marketing and consumer communications, money which we think could be better spent on expanding frontline debt advice delivery.

4. We do not think that there are adequate accountability mechanisms for the MAS, or that it has properly consulted with the advice sector on its plans for debt advice delivery. Its effectiveness should be based on a model of continuous improvement, through which services are designed bottom-up against customer demand.

5. We consider that in certain respects the MAS is duplicating services provided by other organisations. We think that the introduction of a new brand has added to the sometimes confusing complexity of the debt advice sector.

6. We think that the MAS should focus its resources on the people who need its help most, i.e. debt clients with the most complex problems and the highest support needs.

7. We welcome the introduction of the levy of financial services firms as a new funding model. However, we think it is important to guard against two dangers inherent in this model: (1) the ‘polluter pays’ approach does not extend to all creditors; and (2) the risk that financial services may not continue to fund the infrastructure required to deliver quality debt advice.

8. We think that the MAS should incorporate a Systems Thinking approach into its plans for the future delivery of debt advice.


9. AdviceUK is the largest network of independent advice centres in the UK, with a membership of over 800 voluntary organisations. All members are not-for-profit and most are registered charities. They are very diverse: many are providers of specialist advice, e.g. in the fields of debt, benefits, housing or immigration advice, whilst others offer generalist services. The total number of clients seen by AdviceUK agencies across all areas of social welfare law is in the region of two million per year.

10. Nearly 400 AdviceUK members provide money advice services to the general public. The Money Advice Trust estimates that they account for 25% of face to face debt advice provision in the UK. The total amount of debt dealt with by members who use AdvicePro, our web-based case management system, is in excess of £1.7 billion. As well as debt advice, many members also provide money guidance, financial capability and financial inclusion services. Almost half work in the 50 poorest local authority areas; over a quarter specifically serve the most socially and financially excluded communities.

11. Some AdviceUK members are very small community-based organisations, whilst others are among the largest providers of face to face debt advice in the UK. Many of our debt advice members are funded by local authorities and the Legal Services Commission as well as by the Face to Face Debt Advice Project previously managed by the Department for Business Innovation & Skills (BIS) and now managed by the MAS.

12. Three of the Face to Face Debt Advice Projects are led by AdviceUK members: Capitalise in London, the East Midlands Money Advice Partnership, and Bristol Debt Advice Centre. Some AdviceUK members are also part of projects led by Citizens Advice.

13. Our primary focus in this submission relates to the MAS’s remit in relation to debt advice. However, our evidence is also relevant and applicable in relation to the MAS’s remit in relation to money guidance.

14. Our comments are based on the Systems Thinking analyses we have conducted into advice services in recent years, which consistently demonstrate that the traditional ways of designing and measuring services are at odds with the reality of advice service demand, when looked at from a customer perspective. Our work shows that: -

a. Between 30-40% of the demand for advice is caused by the failure of other organisations, such as benefits services or the finance industry, to get things right for their customers in the first place. Acting on the drivers of this preventable demand would result in better services and release capacity to operate in a more preventative way;

b. The use of arbitrary activity targets focuses providers’ attention on hitting the targets rather than doing the right thing for customers. Instead, measures should help commissioners and providers to continuously improve the service and to minimise preventable demand and waste;

c. Bureaucratic and onerous reporting regimes also deflect attention and resources away from the delivery of services to meet customer demand.


Are these the right objectives for the MAS to have?

15. Yes, we agree that the two stated objectives [1] are the right ones for the MAS to have.

How effective is the MAS’s internal administration and expenditure on staff and other resources?

16. We have several concerns in this area. We welcome the MAS’s commitment to ensuring sustainable funding for debt advice going forward. However, we are alarmed at the way in which the cost of administering the Face to Face Debt Advice Project has grown. We understand that it cost BIS approximately £150,000 a year to administer the £27 million FIF project in England and Wales. According to the MAS Business Plan, these costs have now risen to £2,161,000. As the earlier National Audit Office report Helping over-indebted consumers demonstrated, the ‘light touch’ approach adopted by BIS was extremely effective: the project exceeded its targets, came in under budget, and achieved high levels of customer satisfaction. [2]

17. We are disappointed that the new grant agreements for the Face to Face Debt Advice Project for 2012/13 are much more bureaucratic than those under BIS. Targets have been increased by 50%, which appears to be an arbitrary figure not linked to demand, reporting mechanisms are now more onerous and payment arrangements more complex. We agree that it is important to demonstrate value for money and be accountable. However, care must be taken to avoid increasing the administrative burden on advice centres which inhibits innovation and flexibility and increases expenditure on administration at the MAS. Light touch reporting means more money being spent on those needing support.

18. There have been significant reductions in funding for debt advice in the last 12-18 months and this downward funding trend will continue. Legal Aid cuts to debt advice funding and significant reductions in local authority spending are having a major impact. Meanwhile, demand is rising due to high levels of unemployment, welfare changes and the downward pressure on disposable income levels. Funding is a major issue, but so is how funding decisions are being made, including procurement processes and contract specifications.

19. Too often the emphasis is on meeting targets which might appear productive but whose impact is unclear. There is no or little emphasis or payment for preventative and early intervention, both of which save money. AdviceUK’s work has shown that, far from achieving better value for money, a target-driven approach actually ends up with poorer services that fail to have the impact they could have if they were better designed. The advice sector’s experience of the way in which the Legal Services Commission has operated Legal Aid contracts is a case in point. As stated above, the MAS funding for face to face debt advice this year came with a requirement to deal with 50% more clients for the same money. Hitting the targets leaves little scope for acting on the systemic failings that advisers see every day. Agencies are funded to deal with symptoms, not causes.

20. We are also concerned at the amount of money that the MAS is spending on branding, marketing and consumer communications. Approximately £20 million is being spent on these activities, including money on expensive television campaigns. This compares to the £30,633,000 being spent on face to face debt advice delivery in the UK. According to the MAS’s own research, there are 4.3 million overindebted households in the UK but only 2.1 million actively seek debt advice. The problem for advice centres is capacity, i.e. meeting client demand. They do not need to advertise for new clients. We think that the marketing budget could be much better spent on expanding frontline delivery.

What accountability mechanisms are in place for the MAS? Are they sufficient? How can the effectiveness of the MAS be assessed?

21. We do not think that the MAS has consulted properly with the advice sector about its proposed new approach to debt advice. It has on several occasions publicly expressed a desire to work constructively with the sector. However, to date this has not been borne out in practice. There has been no consultation on the MAS’s overall debt strategy. We understand that no meetings with the whole sector took place in the three months following the launch and publication of its strategy on 22 February 2012. The new strategy proposed setting up seven working groups focussing on what the MAS has identified as its key areas of work. No working group meetings have taken place and we understand that this idea has now been abandoned.

22. We understand that the MAS is accountable to the board of the Financial Services Authority, which approves the MAS’s business plan and budget. However, it is not clear, how the MAS is accountable to many of its key stakeholders, including the advice sector and both users and potential users of the services it funds.

23. The effectiveness of the MAS should be based on a model of continuous improvement, through which services are designed bottom-up directly against customer demand, and not in a top-down way with arbitrary activity targets as the measure of success. The Systems Thinking approach which AdviceUK has adopted based on the work of Vanguard Consulting starts with understanding demand in customer terms, as well as what customers want from the service – how they want the service delivered and what they want to achieve. This would then enable MAS to articulate a clear purpose, reflecting customers’ articulated need, and develop the measures that would enable success in meeting purpose to be assessed. For example, recording the levels of value and failure demand would provide a clear measure of the extent to which services succeed in addressing preventable causes of people seeking advice.

To what extent are the services provided by the MAS also provided by other organisations? How does the MAS compare to these organisations?

24. We are pleased that MAS states that it intends to avoid duplicating existing services. However, we are not sure that this is happening in practice. For example, much policy work is already undertaken in the area of debt advice by the major advice providers and advice networks, including AdviceUK, CCCS, Citizens Advice and the Money Advice Trust. We are therefore unclear as to why the MAS considers it necessary to have its own in-house policy team.

25. We also have serious reservations about the name of the MAS. The debt advice sector is already a complex and sometimes confusing sector. In our view, adding another brand adds to that complexity and confusion, especially when the acronym is already used by Money Advice Scotland and when the words "money advice service" form part of the names of many well-established advice providers operating in the sector.

Is the MAS reaching its target audience? Are any groups unable to access the MAS’s services? Who is worst affected by a lack of knowledge of financial matters? Should the MAS have a greater role in financial education in schools?

26. We think that MAS’s ambitions in terms of reach are too broad. At a time of austerity, the MAS should be focussing its energies on ensuring that those who need its help most, i.e. people with the most complex problems and highest support needs, are reached.

27. Raised targets can make it more difficult to help clients with higher support needs. For example, Broadway, which assists single young homeless people in London, has withdrawn from the Face to Face Project because the complex support needs of its clients meant that it could not meet the 50% increase in targets imposed by the new grant agreements. This has meant that a particularly vulnerable client group is no longer receiving the support it needs. The MAS needs to develop a strategy to work with AdviceUK and other advice networks to meet the specific advice and support needs of similar vulnerable client groups.

How appropriate is the model, using fees raised from financial services firms regulated by the FSA, by which the MAS is funded?

28. We welcome the application of a ‘polluter pays’ model for the funding of debt advice. However, the nature of the levy means that only some polluters are paying for debt advice while other polluters are let off the hook, including parts of central Government such as HM Revenue & Customs.

29. Applying our Systems Thinking approach, we would question where the incentive is for creditors to improve behaviour if they are not part of the model.

30. Finally, we think there is also a risk that the levy may mean that the credit industry no longer feels that it is under an obligation to work with the advice sector in improving best practice or in continuing to fund the infrastructure that is required to deliver quality debt advice, e.g. the wiseradviser money advice training programme, the technical help with client casework provided by Citizens Advice Specialist Support or strategic roles such as that of AdviceUK’s National Money Advice Co-ordinator.


31. We believe that there is a better approach to the designing and commissioning of debt advice services, one that is built around a whole person approach which seeks to tackle the underlying causes that create demand.

32. AdviceUK has worked with Portsmouth City Council and local advice services on a very different approach to advice service commissioning and design. This recognises that advice services sit within a wider system of welfare, housing, debt and justice administration. It requires new thinking about advice service design, purpose and measurement of success. Above all, it centres on the person who uses local advice services, what they need and what they expect from the services in terms of positive change for them.

33. In Portsmouth 41% of demand for advice was the result of the failure of public services such as Jobcentre Plus, the Pensions Service and HM Revenue & Customs. This is consistent with findings elsewhere. Debt advisers and creditors can point to numerous examples of systemic failings, e.g. it taking six months to resolve problems with payment plans that would never have arisen if a debt adviser had been involved earlier, poor and confusing letters from creditors with incorrect factual information, etc.

34. For advice services, these failures result in time-consuming casework that eats into available capacity. The way public service efficiency is measured and advice services are funded treats all work the same – whether it is avoidable or not – and so fails to identify the true costs in the system. However, advice services are in a unique position to understand where things go wrong, as they are often where people turn when they can’t get what they need from the system.

35. People who use advice services lead complex lives and when faced with problems such as redundancy or illness, many struggle to navigate the array of services, leading to an escalation of their problems and more intense and costly support in the long-term. Organisations tend to design services and expect the people who use them to become ‘service-shaped’, instead of designing against the true demand and making services ‘people-shaped’. Advice and other interventions are less likely to succeed if the wider problems impacting on people’s lives are not resolved.

36. Funding advice services in a way that encourages and requires them to understand demand, respond flexibly, work in active collaboration with other services and adopt a preventative and early intervention approach is essential. A service that is focused on the whole person, not on problems or output targets, will achieve better outcomes.

37. As an example, AdviceUK has recently worked with Portsmouth City Council to commission advice services based on Systems Thinking principles. Commissioners were actively engaged in a collaborative effort to understand local advice services and demand from a client perspective. They moved from an output-heavy Community Legal Advice Service jointly procured with the Legal Services Commission to commissioning a service with the over-riding principles of customer focus and continual improvement.

38. The new service is measured against successful access, end to end problem resolution times, the number of and reasons for repeat visits, the levels of failure dealt with and customer satisfaction. Contract management has become a partnership approach to solve problems, with a view to tackling the causes of demand of advice – with cost benefits across a range of public services. The MAS position between the credit industry and frontline advice services should enable it to take a pivotal role in enabling evidence of preventable demand to be acted on within the industry and root out problems at source, resulting in improved services, greater advice capacity and, ultimately, cost savings.

39. We therefore recommend that the MAS incorporate such thinking into its new approach for the delivery of debt advice and, at the very least, it run a pilot designed to test the effectiveness of a Systems Thinking model in a debt advice context.

May 2012

[1] (1) To enhance the understanding and knowledge of members of the public of financial matters (including the UK financial system), and (2) to enhance the ability of members of the public to manage their own financial affairs.

[2] HC 292, Session 2009–2010, 4 February 2010

Prepared 18th June 2012