As our industries and governing bodies continue to work towards a more financially capable nation her is an overview of the top six topics to watch in 2019.

1. New year, new government body
The Single Financial Guidance Body (SFGB) officially began operating in January and replaces the Money Advice Service (MAS), the Pensions Advisory Service and Pension Wise. The new body is sponsored by the Department for Work and Pensions, but will also work closely with Treasury. It has been tasked to improve the public’s financial capability and provide free-to-user support on all aspects of people’s financial lives. The SFGB will support the UK’s Financial Capability Strategy’s five calls to action, where the 2021 ambition is for 500,000 more people a year to get free and effective debt advice. Currently, 8.3m people in the UK are over-indebted, but less than 1.1m people seek help.

What are the possible effects?
For the first time, the new body combines debt advice, money guidance and pension guidance. According to the Financial Conduct Authority (FCA), businesses contributing to the cost of debt advice in the UK will continue to do so but through split levies – one administered by devolved authorities in Scotland, Wales and Ireland and one for the new SFGB. As part of this regional devolution plan, PayPlan is in conversations with the Limavady Community Development Initiative (LCDI) to form a debt advice partnership in Northern Ireland. This new partnership will provide LCDI with stability while funding changes in the country begin to take place.

2. Breathing Space
During October 2018, the Chancellor put forward a series of new measures to help protect people in problem debt, allowing them to ‘take back control of their finances’. The government is currently consulting on the details of the Breathing Space scheme and Statutory Debt Repayment Plans (SDRPs), which closes on Tuesday, 29 January.
The consultation covers three main areas:

  • Eligibility criteria for entering Breathing Space and SDRPs
  • Protections of Breathing Space and SDRPs
  • Details of how the two policies would be administered, including funding of the scheme.

What are the possible effects?

Breathing Space is the period of time during which an individual in problem debt is provided with respite from creditor action in order to fully engage with advice and seek a sustainable solution. The new policy will formalise this process and broaden the scope to include creditors who fall outside of FCA regulation and so fall outside the current scheme. This will make Breathing Space much more effective, particularly for people with arrears of priority debts.
A new Statutory Debt Repayment Plan will incorporate many of the features of a DMP but will provide additional protections against enforcement activity and the charging of interest making it a much more attractive alternative. PayPlan believes that clearer and more certain protection for consumers at both the advice stage and beyond will encourage more consumers to seek advice and to do so earlier in the process. Because of this we very much welcome the proposed changes.

3. Changes to Individual Voluntary Arrangements
The amount of people seeking an Individual Voluntary Arrangement (IVA) over the past 10 years has increased, with numbers in 2017 exceeding 59,000. Due to this growth, the Insolvency Practitioners Association (IPA) has announced its new regulatory framework to change the way high-volume IVA providers are monitored and to ensure that IVAs are recommended to clients as they provide the best advice outcome.

What are the possible effects?
This rise in demand, coupled with the change in regulation, could spark the industry to look at reforming the wider IVA process to simplify the customer journey.
The new regulatory framework will see high-volume IVA providers move towards the IPA’s vision of a continuous, real-time monitoring system.

4. High-cost credit products and funding reviews
The Financial Conduct Authority (FCA) is looking to bring about radical changes to how banks charge for overdrafts and reform buy now pay later offers. The two consultations are open until Monday, 18 March 2019 and policy statements will be published in June.

What are the possible effects?
The FCA’s reforms will help to improve consumer understanding and awareness of the high-cost credit products. The policies will help to protect consumers who use home-collected credit (doorstep lending); catalogue credit, store cards and buy now pay later offers.

5. A changing attitude towards problem debt
A recent client survey showed almost 30% of PayPlan’s clients in financial difficulty said they wait 3 to 4 years before reaching out for debt advice. This was due to experiencing feelings of being worried (73%), scared (40%), embarrassed (51%) and ashamed (41%) before seeking debt advice. PayPlan’s research highlights that debt is still a taboo subject and the importance of its ‘Let’s Talk about Debt’ campaign, which is designed to normalise the subject of debt and encourage more people to actively seek the advice and confidence they need to look forward to a debt-free future.

What are the possible effects?
The number of people seeking debt advice in the UK is estimated to double by the year 2020, according to an independent review of debt advice funding by Peter Wyman CBE. PayPlan has already seen double the level of new clients in 2019 compared to 2018. If its ‘Let’s Talk about Debt’ campaign is as successful expected in continuing to remove the stigma of problem debt, this will only serve to increase demand further.

6. The UK is set to leave the EU
We still don’t know the details of how Brexit might affect things such as the employment and housing markets or personal finances. However, we do know that no matter what happens there are steps that we can all take to prepare for any potential financial instability. Key industry leaders such as Martin Lewis are urging people to, ‘instead of trying to second-guess economic shifts, focus on their own personal finances, which are more controllable and predictable.’

What are the possible effects?
With even more focus on personal finances, we’re likely to see client’s becoming more proactive to take control of their spending. Working towards being debt-free is likely to be at the forefront of people’s minds as we continue through 2019.
Keep up-to-date with free resources and news for debt advisers on the PayPlanPro website.

Alistair Chisholm, PayPlan, Head of Advice Sector Policy and Partnerships