New toolkit helps creditors to support people who fall behind on payments

A new toolkit to bring consistency to the way creditors work with debt advice agencies when collecting repayments from people who are in debt has been launched by the Money Advice Service today. This is the first time that all major debt advice agencies and creditors have worked together to raise standards of creditor practice by using a toolkit, benefiting both creditors and debt clients alike.

The ‘how-to’ operational toolkit, Working Collaboratively with Debt Advice Agencies encourages creditors to examine their debt collection strategies and collaborate with the debt advice sector to better support customers in financial difficulty.

Good creditor practice can provide a range of benefits for all creditors including local authorities, central government and new and emerging lenders. Creditors working in partnership with the debt advice sector tend to achieve fairer outcomes, better customer engagement, and sustainable repayments. Poor practice can have a detrimental impact, disrupting people’s financial circumstances which can lead to disengagement and damage to the creditor’s reputation.

Currently, creditors have varying practices when it comes to recognising, assessing and reviewing people’s ability to repay their debts. The toolkit has been created to provide flexibility to suit different types of creditors, presenting best practice processes and case studies from creditors that already have effective partnerships in place with the debt advice sector. This will ensure that people who can repay their debts do so and that creditors receive the money owed.

The toolkit was developed with active input from creditors, debt advice agencies, trade bodies and other organisations to compare examples of best practice. Seven areas where debt advice agencies could collaborate better with debt advice sector to support their customers were identified: 

• Debt advice interventions – creditors should track the benefits debt advice brings to customers as well as their ability to collect arrears payments.
• Customer affordability – creditors should apply the Standard Financial Statement (SFS) spending guidelines or equivalent industry guidance when agreeing affordable repayments.
• Debt advice referral strategies –creditors can use this toolkit to review all customer channels and help appropriate customers to easily access independent debt advice.
• Creditor oversight of referral partners – creditors want to have oversight of what happens to customers post debt advice referral. Use this toolkit to agree an approach with debt advice referral partners.
•  Engagement & Partnerships – creditors have day-to-day contact with debt advice agencies. We provide guidance on getting the most from the relationship.
• Target specific customer cohorts for debt advice intervention – we share some examples and case studies of innovative partnership working with debt advice agencies.
• Align to the Money Advice Service ‘supportive creditor standards’ – we have summarised the difference between ‘Minimum standards’, ‘Good practice support’ and ‘Going above and beyond’.

Sheila Wheeler, Director of UK Debt Advice at the Money Advice Service said “This is one of the first times that creditors and debt agencies have come together to articulate good practice for collaboration between the two sectors. It is important for debt clients to receive fair and consistent treatment when they fall behind on payments and this toolkit will provide a benchmark for creditors to work to. We would like to encourage creditors across all organisations to use the toolkit.

Bob Winnington, Executive Officer of the Money Advice Liaison Group (MALG) said “MALG has been working to bring together creditors and money advisers to help improve the lives of people in debt for 30 years and we welcome the launch of this practical toolkit, which includes useful best practice case studies for better collaboration. Signposting to sources of debt advice is not enough – creditors and advisers must work more collaboratively to ensure the best outcomes for each individual customer. We look forward to stimulating discussion amongst our members about the toolkit when it is launched at our Members’ Meeting on 5 July and encouraging creditors, advisers, and others to put it into action.”

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said “Many creditors have a long history of collaborating with advice agencies to support people who fall behind with their repayments, while others are near the start of this journey.  With an increasing range of organisations across different sectors now facing these challenges, it has never been more important to work together to identify and spread best practice.  This welcome new toolkit provides the practical guidance that many creditors are looking for.”

Leigh Berkley, Director of External Affairs at Arrow Global said “We were delighted to collaborate with the Money Advice Service on this useful and pragmatic toolkit.  Our case study clearly shows that working closely with a range of free debt advice providers can be a real win-win for the consumer and the creditor alike.  We are already an enthusiastic supporter of this initiative, and with our Debt Britain report forecasting further rises in unmanageable household debt by 2020, I hope the toolkit will enable creditors such as local and central government, utilities and landlords to fully embrace the benefits of working collaboratively with MAS and debt advice agencies.”

More information can be found at https://www.moneyadviceservice.org.uk/en/corporate/publications.