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A new public financial guidance body: R3 responds to government consultation

At the 2016 Budget in March, the government announced that they would replace the Money Advice Service (MAS), Pensions Wise and The Pensions Advisory Service with a new public financial guidance body in April 2018. R3 believes that this new money guidance body provides a significant opportunity to improve access to debt advice and encourage consumers to deal with their debts at an early stage. R3’s views on the scope of the new money guidance body in relation to debt advice were set out in its response to the government’s recent consultation on the issue.  

MAS have played an important role in advising and sign-posting consumers who are seeking debt advice but we believe that more could be done through the new body. The new money guidance body should, for example, have the opportunity to carry out research into barriers for consumers seeking debt advice, looking at issues such as: when and how consumers seek advice to deal with their debts; and understanding more about the stigma associated with using a personal insolvency procedure. R3’s 2015 research on attitudes to debt showed that 48% of Britons believe that there is a social stigma attached to entering an insolvency procedure. Member research from 2014 also showed that 49% of R3 members said that it takes individuals more than a year from first showing signs of financial distress to approach them for advice.

R3 also believes that the new body should have a vital role to play in financial education related to dealing with debt. As well as research into the barriers to seeking debt advice, the money guidance body could also seek to more comprehensively publicise options for seeking debt advice on its website and through one-to-one advice, thereby addressing one of the major concerns previously expressed about MAS.
Looking more broadly, there is also a clear need for more to be done by government regulatory bodies to protect indebted individuals from misleading or incorrect debt and financial advice provided by unregulated advisers and organisations - R3 believes that providers of debt advice should be FCA authorised or regulated by an insolvency regulatory body.
R3 is, however, concerned that FCA authorisation of insolvency practitioners (who are already regulated for giving debt advice through their insolvency regulatory body) has led to dual regulation of insolvency practitioners. This has led to 9% of insolvency practitioners who had previously provided personal debt advice no longer doing so, thereby reducing the availability of regulated debt advice to consumers. Whilst the creation of a new financial advice body is a welcome step, care must also be taken to ensure that consumers have as wide a range of sources of advice as possible.
The insolvency profession – which in 2013/14 advised 135,000 people about their finances and helped 60,000 individuals through an insolvency procedure – has an important part to play in helping consumers deal with their debts. A co-ordinated effort from the new body, debt advice sector and insolvency profession, working collaboratively together, would help to ensure that consumers have even more opportunity to deal with their debts in the most appropriate way for their circumstances in future. We look forward to seeing the government’s response to the consultation in the autumn.  

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.