The Money Advice Service has announced that the first Standard Financial Statement (SFS), will go live on 1st March 2017, marking the beginning of a transition period during which creditors and debt advice providers will move to using the new format. This will be the first time that all major debt advice providers, creditors, and other debt bodies will use the same format to assess income and expenditure for over-indebted people, bringing greater consistency to the way finances are considered in debt advice.
The SFS provides a single set of income and expenditure categories with spending guidelines which will be used across the sector, in a single format. A savings category will also be included to help people build financial resilience while repaying their debts. This important addition is intended to help people in debt to withstand unexpected costs and giving them a solid financial footing once they are debt free.
The increased consistency provided by the SFS will help debt advisers and creditors in a number of ways. Currently, there are different formats and spending guidelines in use. The SFS will bring greater consistency in the way affordability assessments when considering repayments are recorded and considered. Debt advisers and creditors will also be able to pass people’s details more smoothly between different agencies, reducing the number of times affordability assessments are completed and making the journey through debt advice more straightforward.
The development of the SFS has been co-ordinated by the Money Advice Service which has brought the debt sector together to form the SFS governance group*. This group represents key organisations including major advice providers, creditors, trade associations and insolvency agencies. The group collaborated to share their insights into the circumstances of those in debt to ensure that the SFS is effective in a debt advice setting and reflects a realistic view of levels of expenditure and the affordability of debt repayments.
The Money Advice Service will continue to work with the governance group over the coming months to monitor the roll-out of the tool and to extend the reach of the programme beyond the financial services sector.
More information can be found on the SFS Website at: sfs.moneyadviceservice.org.uk.