COMMUNITY SAFETY SCRUTINY
DEBT AND MONEY ADVICE
Cllr Jenny Hannaby
Cllr Charles Mathew
Cllr Olive McIntosh Stedman
Cllr Bill Service
CM6 – page 2
1. EXECUTIVE SUMMARY 3
2. INTRODUCTION 5
3. BACKGROUND 7
4. FINDINGS/ANALYSIS 11
5. CONCLUSIONS 19
CM6 – page 3
Community Safety Scrutiny Committee
2 February 2009
Debt and Money Advice
1. EXECUTIVE SUMMARY
Why the review took place
The Community Safety Scrutiny Committee appointed the Lead Group of Councillors to carry out this review because it was interested in exploring the range, quality and effectiveness of debt and money advice that is being provided by a host of different agencies across Oxfordshire. Oxfordshire County Council provides financial support to several agencies that offer debt and money advice and the impact of the recent “credit crunch” has seen an increase in the number of people seeking such advice. Consequently, this may put pressure on the funding sources for these services.
a) acknowledges the important part played by Citizens Advice
Bureaux and other agencies in supporting the local economy
during the recession and specifically in advising families who
fall into debt; and
b) commends to the Cabinet the adoption of a package of
measures which will support and strengthen the current range
of debt and money advice services provided in the county, as
1. To invite the relevant agencies to join together in supporting a
consumer awareness campaign which:
a) draws attention to the growing problems of household debt
and financial exclusion in the county;
b) warns of the dangers of illegal money lending; and
c) highlights the range of debt and money advice services
provided locally by the CAB and other agencies in the
2. To develop a more joined-up and sustainable approach to debt
and money advice and better support to the various agencies by:
CM6 – page 4
a) inviting provider agencies to enter into a Financial Inclusion
Partnership with a brief to offer better public access to a
comprehensive range of high quality debt and money advice
services for local people;
b) looking into the costs and practicalities of providing an on-line
library style information hub that enables better access to
information and facilitates a more assisted self-help service;
c) encouraging closer working links between the different
3. To develop a corporate debt policy which as far as possible offers
support to people who have fallen into debt, whilst maintaining
collection rates, and to discuss with the City and District Councils
their approach to debt management as the main creditors for a
range of public service debts (such as council tax, rent, benefits
4. To support the initiative taken by the Money Advice Trust in the
development of an accredited qualification nationally for debt and
money advisers working in the voluntary sector as a way of
quality assuring the service provided.
5. To develop a financial literacy programme for schools and young
people in consultation with the Children Young People & Families
and Community Safety Directorates.
6. To clarify with the Director of Social & Community Services the
present arrangements for monitoring the benefit to the Council of
the funding which it provides to advice services in Oxfordshire.
7. To enter into a protocol with Birmingham City Council to enable
the Council to make use of its Illegal Money Lending Unit where
necessary in enforcing consumer and credit legislation.
Recommendation 5: subject to consultation with the Cabinet Members for Schools Improvement and Children, Young People & Families.
Recommendation 6: subject to consultation with the Director for Social & Community Services
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The issues explored
The Lead Group and the scrutiny review officer undertook desk-based secondary research, primary research through consultations, face-to-face interviews, Member meetings and conducted site visits. Through these means, we identified themes that the Review wished to explore in more detail:
; Communication: The relationship between the agencies providing debt
and money advice and the local authority, including how partnerships
between the two could be developed in the interests of providing a more
transparent and effective service.
; Information technology and access to services: Benefits of new
information technology including that which was being trialled at an advice
centre in Oxford to help particular groups who were not accessing advice
services. We also wanted to enable better access to debt and money
advice and to find ways to overcome the discrepancies in accessing
services between those living in urban areas and rural villages.
; Premises: Concerns raised by voluntary groups about premises used to
provide debt and money advice. The Lead Member Group wanted to
explore these concerns further.
; Checks and balances: Research identified agencies in the public,
voluntary and private sectors that offered debt and money advice. The
Oxfordshire Trading Standards Service was aware that some people may
not have received the best advice, be it from the voluntary sector agencies,
the fee charging private sector agencies or credit card companies. Hence,
the Members wished to explore the consistency and quality of advice that
was being provided, the training for advisers, and agencies‟ internal quality
; Funding: County Council funding of CAB and advice centres for 2008/09
involved a commitment of ?431,280 by Social & Community Services.
This included funding for Age Concern, provision for Benefit Advice
Workers and „Phonelink; Banbury Benefits Project, Berinsfield Information
and Volunteer Centre, Blackbird Leys Good Neighbour Scheme, the
Oxfordshire Chinese Community and Advice Centre, Rose Hill and
Donnington Advice Centre, Oxfordshire Work Agency including Barton
Advice Centre, and the Oxford and West Oxfordshire CABs. The need for
checks and balances applies particularly to those agencies that the County
Council directly supports. (That support includes some provision for live
telephone advice, supply of leaflets and training required on relevant
legislation from Trading Standards).
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The Lead Member Group was satisfied that in undertaking its investigations according to its project plan, all of the above themes were comprehensively explored.
Before commencing the review process, we noted that the Northern Ireland Trading Standards Agency (Department for Enterprise, Trade & Industry) had carried out a review that resulted in a third party being contracted to provide financial and debt advice to residents. There are other models, such as in some of the Scottish local authorities, where Trading Standards‟ departments often have their own debt and money advice services. We did some research on these models to assess what lessons, if any, we could take from them.
Little was known about where and when bad advice occurred and what impact illegal money lending had on the client groups served by the debt and money advice agencies in Oxfordshire. This issue was relatively unexplored and the Lead Member Group was keen to do more research.
All of the issues that Members wished to investigate and the activities that
they were involved in were focused on identifying ways in which the relationship between the County Council and debt advice providers could be developed effectively.
The Lead Member Group gathered a range of evidence from various sources as outlined above and in the following sections we explain in more detail the background to this work, its findings and the analysis, conclusions and proposed options for development.
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The topic under investigation matched with the County Council‟s objectives to the extent that it addressed the corporate priority, “Healthy and Thriving Communities” which is also a priority of the Sustainable Community Strategy along with another priority of the Strategy, “Breaking the Cycle of Deprivation”.
There has been considerable public interest in the issue, as indicated in recent media coverage. For instance, simultaneous with the commencement of the review, the Local Government Association “First” included an article “Council support as credit crunch bites” and the Local Government Chronicle included a two page feature on local authority debt advice services. Other useful references included the aforementioned review by the Northern Ireland Trading Standards Agency (DETI) that resulted in debt and money advice being contracted out to a third party, awareness of the expanding number of agencies offering debt and money advice (both for free and for a fee), together with evidence of a higher incidence of people seeking such advice over recent months. Britain‟s personal debt level has been increasing at a rapid rate and current trends nationally relating to people‟s indebtedness
are a major cause for concern.
Figures illustrate (next page) how the consumer credit boom of the last decade, characterised by easy access to cheap credit and by people taking on more debt has “turned sour” for many. Personal debt can be a
consequence of a wide range of factors including unemployment, bereavement, mortgage repayments, increasing energy bills and family break-up. We have explored the methods that are being used by a range of key agencies in the private, public and voluntary (third) sectors to address the problem.
The National Context
This report does not attempt to understand or identify all the factors that have given rise to the recent debt problems in the County, and in the time available, it was not possible to cover all the agencies and support groups who deal with debt. Nevertheless, the report does provide a broad evidence-based insight into the current situation nationally and in Oxfordshire.
Drawing on some of the commentary later on in this report about the nature of debt and, as discussed in some of our case studies and good practice, a number of broad observations and definitions are provided:
CM6 – page 8
The Scale of the Problem
; Personal debt transcends social, geographic & economic
boundaries. Nevertheless, people on lower incomes are more
likely to be at risk.
; Debt has an impact on mental health; according to “Mind”, half of
the people affected by debt have mental health issues and one-
third of all people with mental health problems are in debt. Mind
has produced a booklet on managing personal finances which
includes self-help tools and “signposts” to other agencies that
can provide help.
; There are 2 types of debt: debt secured against an asset (eg a
mortgage) and unsecured debt (eg credit cards, retail finance
deals, overdrafts, unsecured personal loans). With respect to
credit cards, latest annual figures show that in the UK we borrow
twice as much per head on them as the rest of Europe. Personal
debt has almost quadrupled from approximately ?400bn in 1993,
to ?1,450 bn in 2008.
; There has been a four fold increase in the use of credit cards,
per second, since this time (December 2008) last year.
; Average household debt in the UK is ?9,633 (excluding
mortgages) and increases to ?21,952 if the average is based on
the number of households who have some form of unsecured
; Average household debt in the UK is ?59,630 (including
mortgages) (All statistics - Credit Action December 2008).
The Provider Agencies
Several agencies provide financial support for or directly deliver debt and
money advice across the UK. These include:
; The Department of Trade and Industry (now the Department for
Business, Enterprise and Regulatory Reform) which has very recently
granted additional funding over two years to increase the supply of free,
face-to-face money advice across England and Wales via several
agencies. The original commitment was ?45 million in 2004 and has
increased to an estimate of ?85 million through until April 2011.
; Advice UK which has been awarded ?5.75 by the Big Lottery fund to
fund a 30 month project called Working Together for Advice.
; The Legal Services Commission (LSC) which received ?6 million to
pilot methods of money advice outreach. Over 8,000 people have been
advised, the vast majority of whom are financially excluded. The
Access to Justice Act gave rise to the Community Legal Service and
the subsequent development of a national network of quality marked
CM6 – page 9
; National Debtline (ND), a „phone line advice service, to which people in
Oxfordshire have access, helps approximately 4,500 people a month
; Legal Aid (LA): the focus of support for those people who are eligible
for Legal Aid (via the Legal Services Commission) has undergone
some changes since the creation of the Community Legal Service in
2000. The Access to Justice Act extended the provision of Legal Aid to
both the private and not-for-profit sectors. The LSC has reduced the
number of contracts with not-for-profit organisations (whom it deems to
be „preferred suppliers‟) and increased the targets required. It is now
considered cheaper by the LSC to contract with the private sector.
; Citizen‟s Advice (CAB) - nationally, the Citizen‟s Advice Bureau is
largely funded through the Legal Services Commission, County
Councils and other local authorities. Like other advice agencies, data
has revealed a sharp increase in demand at CAB‟s nationwide.
; Credit Unions (CU) – as provided for by the Credit Unions Act 1979
and regulated by the Financial Services Authority. A Credit Union
member saves in the form of shares in the Credit Union. These savings
then provide a fund from which loans are made to members “for
provident or productive purposes”. The interest charged on loans,
(which by law may not exceed a rate of 2% per month) pays for the
running costs, and members may receive a dividend on their share.
; Commercial Loan Organisations: By contrast large commercial loan
organisations often levy anything, as evidence indicates, from 177% to
800% APR. Doorstep borrowing is seen as a big problem and a key
priority for Credit Unions and others is to educate people into thinking
more about „affordable‟ credit.
; Housing Associations (HA) provide a vital welfare service and
increasingly they are linking up with CABs and credit unions.
; Financial Inclusion Partnerships (FIP). In some areas Citizen‟s Advice
Bureaux have linked up with credit unions and other agencies to
support “Financial Inclusion Partnerships”. These are discussed in
some detail later on.
The Oxfordshire context
Our analysis of a wide range of background material indicated that locally, there are numerous voluntary sector/not-for-profit and fee charging agencies offering debt and money advice in a range of ways. Those that we have been able to identify and in some instances from whom we received first hand evidence, are listed in Annex 1.
The Citizen‟s Advice Bureau is probably the most widely known and used provider of debt and money advice. Bureaux are characterised by small numbers of volunteer staff and part-time staff who undergo training leading to a recognised qualification (generally, it is the CAB Certificate in general advice). Some will go on to do more specialist training and qualifications in debt advice. (An additional reference to the recently formed “CAB
Oxfordshire” will follow in the final report).
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Typically funding is from the District and County Councils and from a wide variety of other sources including lottery grants and money that is gained by contracting to provide specific services for specific users.
Statistical returns indicate that “debt advice is the prevalent issue” dealt with at the CABs. There is a wide range of debt types, some of the consequences having been identified earlier in the report (p7) and including rent/mortgage arrears, court fines, benefit overpayment, utilities, Council Tax, non-priority debts, credit cards, loans, hire purchase etc.
The Oxford Advice Centres‟ Forum referred to in Annex 1, provides a useful
overview of the debt and money advice provision in Oxford city. All of the centres under its aegis are experiencing a growth in demand for debt and money advice; there is no provision for such advice in some areas of the city, notably Cutteslowe and Wood Farm. This is reflected in other areas of the County as the Lead Member Group noted that Abingdon CAB reports a lack of local solicitors offering Legal Services Commission services. West Oxfordshire CAB reports that there is only one local solicitor with a family law contract under which free debt and money advice might be offered.
The Forum is a voluntary organisation with no financial resources but it recognises that all of the advice centres it covers rely on financial support, have very tight budgets, and experience difficulties in securing their funding. Most of the centres in the Forum have the Community Legal Services Quality Mark.
A brief overview of the training regimes for advisers and referral processes for the Oxfordshire advice agencies and the district councils is provided in Annex
With respect to training and qualifications and as briefly alluded to elsewhere, there is a different model in Scottish local authorities where Trading Standards often have their own debt and money advice services; this is attributable to the qualification route in Trading Standards in Scotland which includes a more substantive element of debt and money advice training. There is an acknowledged NVQ qualification route to become a money adviser. Training and qualifications are areas that the review wished to explore in more detail with a view to making recommendations that can apply to Oxfordshire.