A new Single Financial Guidance Body: What does it mean for personal debt and insolvency?

17 February 2017

In March 2016, the government announced that the Money Advice Service, set up in 2010 to provide independent advice to consumers on their finances, would close and be replaced by two separate bodies, one focussing on pensions and another, slimmed down money guidance body. Following a consultation on the proposals, which R3 responded to here, the government subsequently announced a consultation on plans to create one all-encompassing financial advice body – a Single Financial Guidance Body (SFGB). R3’s response to the latest government consultation can be found here; we were pleased to have the opportunity to set out our views and recommendations on the role of the new SFGB and public financial advice framework, as insolvency practitioners have a vital role to play in providing advice to those in financial difficulty.

In 2013-14, insolvency practitioners assisted more than 60,000 individuals through an insolvency procedure, advised more than 135,000 individuals, and started work on cases that will help individuals repay £5bn of debt to creditors within five years. Most insolvency practitioners also offer one hour free advice to debtors.

R3 would like to see the SFGB play a pro-active role in carrying out research into how indebted individuals deal with their debts, including considering the stigma associated with debt. We would encourage the SFGB to work closely with debt advice public, private and charity sector organisations, such as R3, to better understand the ‘debtor journey’ and break down the barriers to dealing with debt. This greater understanding of the experiences of indebted individuals would assist policymakers and debt advisers in understanding the behaviour of consumers and as a result identify barriers to dealing with debt, and establishing solutions that will ensure a better long term outcome for debtors.

There is also a clear need for improvements in financial education, particularly in relation to dealing with debts – not to mention education about the range of personal insolvency options available and what is involved in each one. The new body has a critical part to play in facilitating this improvement, and R3 has suggested that it could more comprehensively seek to publicise options for seeking debt advice on its website and through one-to-one advice. Further, the SFGB should act as a central point for all UK financial education initiatives and information, including providing its own advice and initiatives and signposting to relevant work and resources from other bodies.

With the consultation now closed, we are looking forward to seeing the government response and getting a clearer idea as to how Ministers see the new body operating in 2018.

R3 and the wider insolvency profession – which plays an important role in providing advice to those in financial difficulty – will be looking to work closely with the new body to help ensure that individuals in financial difficulty can get the advice and solutions that are right for them.