The creation of a Single Financial Guidance Body could help break down barriers stopping indebted individuals from receiving free and impartial advice, says insolvency trade body R3 ahead of a key parliamentary debate on the issue.
On Wednesday (5th July), the House of Lords will debate the Government’s Financial Guidance and Claims Bill, which could lead to the creation of a new financial advice body for consumers. This body is intended to replace existing government agencies, including the Money Advice Service, Pensions Advisory Service and Pension Wise.
Adrian Hyde, President of R3 said: “The creation of a single body for financial guidance is a great opportunity to tackle issues with debt and personal finance in the UK. A one-stop-shop for free, impartial advice will help remove some of the artificial barriers that get in the way of people dealing with problem debt.
“There are some key objectives the new body needs to work towards. It needs to work closely with existing debt experts in the private and charity sector, including R3, to understand an indebted individual’s ‘debt journey’ and it should help shed light on the barriers people face when dealing with debt – including the stigma associated with debt and insolvency.”
The new body is also expected to play a critical part in improving financial education.
Hyde adds: “Education on personal finance and debt among young people and adults is an often-overlooked area that could benefit from the new body. Recent research from R3 found that only one in ten (10%) British adults said they have received useful advice about personal finance through their school or college. By sign-posting to appropriate debt advice options and offering one-to-one guidance, the new body can make significant headway towards much-needed improvements on financial education in the UK.”
The new Single Financial Guidance Body should be introduced alongside a 28-day ‘Breathing Space’ period for indebted individuals, says R3. A Breathing Space should allow indebted individuals to make decisions about dealing with their debts free from creditor action and with debt repayments, interest, and charges frozen.
Despite plans for a ‘Breathing Space’-style procedure being included in the Conservative and Labour general election manifestos, Breathing Space plans were not included in last month’s Queen’s Speech.
Adrian Hyde said “It was disappointing to see the government omit a ‘Breathing Space’ scheme from the Bill. It’s vitally important that indebted individuals end up in a debt solution appropriate to their situation. This doesn’t always happen, and the difficulty of being able to get professional, independent advice in a relatively unpressured environment is a factor. A short ‘Breathing Space’ would give people in debt the chance to seek advice and deal with their debts effectively.
“Combining the introduction of a new advice body with the introduction of a ‘Breathing Space’ would give those in financial difficulties a significantly better chance of turning their situation around.”