Financial Guidance and Claims Bill [HL]

  W ritten evidence submitted by Citizens Advice (FGCB19)

1. About Citizens Advice

1.1 The Citizens Advice service is a network of nearly 300 independent local charities which provide free, impartial advice from more than 2,900 locations in England and Wales. We are powered by 23,000 volunteers.

1.2 We provide free, impartial and confidential advice and guidance to help people overcome their problems. We give advice through a range of channels, including face to face, online, phone and webchat. In 2016/17, we advised 2.7 million people directly, with an additional 43 million visits to our website.

1.3 Our aims are:

To provide the advice people need for the problems they face.

To improve the policies and practices that affect people’s lives.

1.4 Citizens Advice plays an important role in the provision of free, impartial money, debt and pensions advice and guidance in England and Wales.

1.5 Last year we provided debt advice to more than 350,000 people, and made 44,000 targeted financial capability interventions to help people to avoid money problems and gain knowledge, skills and confidence with their personal finances.

1.6 We also helped 325,000 people to make informed decisions about pension-related issues. 100,000 people sought our help through our local services (including Pension Wise) and 225,000 visited the pension pages on our website.

2. Reason for submitting evidence

2.1 We support the creation of a single financial guidance body, and the Government’s aim that this will enable more people to get the help they need with their finances.

2.2 For 11 years Citizens Advice has been commissioned, first through the Financial Inclusion Fund and for the last 5 years by the Money Advice Service, to deliver money and debt advice services across England and Wales.

2.3 Since 2015 we have received funding from the Government to deliver the face to face element of Pension Wise in England and Wales. We offer the service in around 300 locations and have delivered over 100,000 sessions.

2.4 At Citizens Advice we are committed to understanding what works and ensuring resources are responsibly invested into worthwhile services.

2.5 As well as supporting thousands of people each year with money problems, we conduct research and run pilots to help us understand the complex nature of our clients’ problems and how more holistic services can help people find a way forward.

2.6 This work gives us a unique insight into people’s experience of money, debt and pensions advice and guidance, and how the best outcomes can be achieved. As such we are well placed to provide evidence to the Bill Committee on how the new body can both commission effectively and deliver good outcomes for people in need of support.

3. Executive summary

3.1 Citizens Advice supports the creation of a single financial guidance body, and the Government’s aim that this will enable more people to get the help they need with their finances.

3.2 In the Bill’s current form, we’re pleased that the new body will be required to:

Provide information, advice and guidance that is free at the point of use and independent from commercial interests

Ensure that services are available to the people most in need of them, particularly those who are vulnerable

Support joined up services, so that people are helped to get the advice and guidance they need with a full range of money issues

Focus on filling gaps in current provision and avoiding duplication of existing services, to ensure resources are used effectively.

To make sure the body is effective, we would like to see the Bill:

Make sure that as much funding as possible is directed to front line delivery

Ensure that commissioning standards are designed around people’s needs, focused on outcomes, and receive effective scrutiny and oversight

Avoid giving the new body additional duties which would compromise its ability to ensure provision of advice and guidance.

4. Submission

4.1 Citizens Advice supports the creation of a single financial guidance body, and the Government’s aim that this will enable more people to get the help they need with their finances. Guidance is important because our research suggests that people find making financial decisions very challenging [1] .

4.3 We support the Government’s intentions, as set out in its response to the consultation [2] , that the new body should direct more of the existing funding to frontline guidance services, provide holistic, joined up services, and avoid duplication and focus on filling gaps in existing provision.

4.4 In the Bill’s current form, the remit given to the new single guidance body will be significantly improved. We’re particularly pleased that the new body will be required to:

4.5 Provide information, advice and guidance that is free at the point of use and independent from commercial interests

4.51 From providing advice and guidance to more than 2.7 million people each year, Citizens Advice sees the benefit to individuals, and more more generally, of free and independent advice and guidance.

4.52 When people get advice and guidance it is effective. Last year we helped 7 in 10 people who came to us to resolve their problems and 77% said they couldn’t have done it without our help [3] . Our experience delivering Pension Wise shows the direct impact of free and impartial advice and guidance services:

93% of people who’d had Pension Wise appointments felt more informed of their pension options afterwards (vs 56% of non-users).

Those who get pension guidance are more likely to take positive steps on their future. 72% of customers calculated the income they needed in retirement, compared to 29% of non-users.

More than nine in ten Pension Wise customers (94%) felt confident in their ability to avoid scams (vs. 80% of non-users). [4]

4.53 When asked, consumers say that the independence of advice and guidance services is important. For instance, in interviews with people on their attitudes when approaching retirement, consumers told us that independence and trust were crucial factors when thinking about seeking help with their money. [5]

4.6 Ensure that services are available to the people most in need of them, particularly those who are vulnerable

4.61 Citizens Advice provides support on the full range of people’s money issues from crisis debt support, to financial capability, and pension decumulation guidance. To provide value of money, the new body should focus on supporting advice and guidance services for people who need them most.

4.62 That need, for free and independent advice and guidance, is broad and often unmet. The recent independent review of debt advice funding cited evidence that while an estimated 8.3 million people are over-indebted, the current supply of free debt advice can only serve 1.1 million people. [6]

4.63 People who receive debt advice from Citizens Advice are often vulnerable. 40% of people we helped with their debts last year had a disability or long-term health condition, compared to 18% of the population and they are nearly twice as likely than the general population to live in the social rented sector. With demand exceeding supply, advice and guidance services should be targeted at those who need them most.

4.64 In addition, advice and guidance is becoming more necessary as a result of pension freedoms. The amount people take from their pension pots as flexible income has more than doubled in the last five years [7] . With accessing pension pots early becoming what the Financial Conduct Authority has called a "new norm" [8] - and the risks associated - it’s important that everyone is able to access guidance before making a decision on their pension.

4.64 The risks of receiving poor pension advice or not speaking to anyone at all has been demonstrated by recent news stories about the British Steel pension scheme (the seriousness of which has led to scrutiny from the Work and Pensions Select Committee ). The ongoing Carillion crisis is another example of how vulnerable people’s pensions can be. By giving more people access to free, independent financial advice or guidance, we can help protect and support people who are at risk.

4.7 Support joined up services, so that people are helped to get the advice and guidance they need with a full range of money issues

4.71 When people seek advice or guidance they rarely have a single or discrete issue. Of people we helped with their debts last year, more than half had at least one other non-debt issue - 47% needed help with their benefits for example. [9]

4.72 People who get help with their pensions are similar. 1 in 4 Pension Wise clients identified having issues in other areas such as benefits or debt [10] . While for our general clients we can provide a holistic joined up service, the separate nature of Pension Wise guidance means that where someone has a number of issues, they have to be referred to another service.

4.73 The new body’s remit should mean that we, and other guidance providers, can address people’s problems holistically rather than in isolation, helping them to get better outcomes.

4.8 Focus on filling gaps in current provision and avoiding duplication of existing services, to ensure resources are used effectively

4.81 As well as targeting advice and guidance at the people who need it most, the new Bill will give the new body a remit to avoid duplication - ensuring advice and guidance is also targeted where it is needed.

4.82 The best way to fill gaps between provision is to support existing providers where possible. The aim of the new body should not be to replicate the work of the Money Advice Service, in trying to create a consumer facing organisation with widespread recognition, but to make sure advice and guidance are available where consumers go to seek those services.

5. Recommendations

5.1 To make sure the body is effective, we would like to see the Bill go further to:

Make sure as much funding as possible is directed to front line delivery

Ensure that standards of service delivery are based on people’s needs and receive effective scrutiny

Avoid giving the new body additional duties which would compromise its ability to ensure provision of advice and guidance.

Make sure as much funding as possible is directed to front line delivery

5.2 The Bill should:

Give the new body an explicit objective to direct as much funding as possible to front line delivery of advice and guidance services

Ensure that the body has a clear remit to focus on commissioning activities, and avoids spending large sums on building and marketing a new public-facing brand

Emphasise that the body should not duplicate existing services, and should instead focus on filling gaps using high quality existing providers.

Ensure that standards are based on people’s needs and receive effective scrutiny

5.3 The Bill should:

Ensure that relevant voluntary and private sector organisations are involved in co-designing the standards for providers under the new body

Require that these standards are designed around people’s needs, based on experience of what works, and focused on outcomes rather than volumes

Put in place a robust governance and oversight structure from the sponsoring department.

Avoid giving the new body additional duties which would compromise its ability to ensure provision of advice and guidance

5.4 The new body will be most effective if MPs can:

Push back against proposals which would give the new body additional duties (e.g. conducting research, raising awareness) which would compromise its ability to ensure provision of advice and guidance.

Keep the discussion focused on ensuring that the new body will use its resources effectively to commission high quality, independent services, which will help more people to avoid and overcome financial difficulties and reach those most in need.

February 2018

 

Prepared 6th February 2018