The Credit Services Association (CSA) has expressed dismay at suggestions that seemingly only the Financial Services community should be ploughing even more money into the debt advice before current concerns have been properly addressed.
The CSA says that calls from Sir Hector Sants for creditors to pay more than the ‘£80 million’ they already contribute is ‘putting the cart before the horse’ when there is little or no transparency on how effectively current funding is spent, who actually pays or understanding of why other sectors which contribute to the household debt position are not also paying.
Peter Wallwork, Chief Executive of the CSA says that there are clearly firms and organisations that benefit from debt advice, but who currently contribute nothing towards it, and this is being ignored: “To have a proper conversation about the future funding of debt advice, and what a future funding model could look like, we need to better understand the here and now. If we don’t have transparency, and if the funding burden is not fairly distributed, then why should members accept that they have to pay more?”
Wallwork was responding to a recent interview, in which Sir Hector said that the FS sector needed to spend more money on what he called ‘prevention’, and equipping individuals to become financially empowered. He said there needed to be a strategic shift in the balance of engagement from remediation to prevention.
But as one commentator put it, that was akin to suggesting that greengrocers should pay for people to be educated about the benefits of fresh fruit and veg: “We are agreed that any future funding contributions should be fair, equitable and transparent, and we fully support having a debt advice sector which can provide assistance to all consumers in need, but any future thinking must remember that it is not only financial services businesses that ‘benefit’ from debt advice and informal debt repayment plans.”
“It is the elephant in the room and Sir Hector appears to be unaware of its presence. No-one has yet attempted to address the very real concerns and questions the CSA and its members have raised in relation to how the funding is being spent.”
The CSA is continuing to make representations to the Money Advice and Pensions Service (MaPS) through the Chief Executive John Govett, and a further discussion is planned for June 13th.
“We are led to believe that the authorities/regulators are in listening mode, though this is not an auspicious start,” Peter concludes. “Let us hope that is the case, for if we are expected to ‘foot the bill’ on any future budget that MaPS decides to set, then we should have an input into what that budget may look like and how it is actually being spent.”