Debt Buyers show commitment to voluntary fairshare funding of debt advice to the tune of £25.5mil.
20 November 2018
Debt buyers contribute half of the entire amount paid by financial services firms
Fragmented debt advice sector needs reorganising
Debt Buying members of the Credit Services Association (CSA), the voice of the debt collection and debt purchase sectors, are on target to contribute at least £25.5 million in voluntary ‘Fair Share’ payments in 2018* to help fund free-to-customer debt advisers.
This is an increase on the 2017 total of £23 million which at the time represented 46% of the £50 million the Money Advice Service (MAS) reports as contributed by the financial services sector in its entirety to StepChange Debt Charity, PayPlan and Christians Against Poverty.
The contribution, which has risen from c£15 million in 2016, an increase of 70%, has led some senior debt industry executives to question both the existing funding model and whether the debt advice sector itself should be re-organised.
“The industry is paying more than its fair share of ‘Fair Share’, and not shirking its responsibilities,” says John Ricketts, President of the CSA. In fact our members voluntary Fairshare contributions, when added to the recent substantial increase in the Financial Conduct Authority levy on debt buyers to directly fund the Money Advice Service (MAS), means that debt buyers are being asked to contribute a total of £30 million to help fund debt advice in the UK.
“Where we should really be looking is at the effectiveness and efficiency of a fragmented debt advice sector who all fundamentally deliver the same thing. There certainly needs to be an ongoing review of how all free-to-use debt advice is funded in the future – it needs to be fair and proportionate funding from all sectors that benefit including Utilities, Local Authorities and Central Government.
“But there also needs to be a root and branch review of how debt advice is delivered and whether consolidating and therefore simplifying those activities will deliver a better, more cost-effective and more sustainable service to the consumer. We remain committed to working with the regulator, the MAS and the debt advice sector in finding a fair, workable and sustainable long-term funding solution.”
*Based on a Q1 to Q3 2018 survey of only the ten largest debt buying firms. The actual total will be higher.