Debt Advice Handbook (13th edition)Chapter 1: Debt advice: an outline 1. Professional debt advice
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1. Professional debt advice
Debt advice is a set of tools and strategies used to help clients with financial difficulties. Debt advice provides help to clients by:
    •explaining the implications of non-payment of each of their debts and, on this basis, deciding which are priorities;
    •establishing whether or not they are liable for their debts, and assisting them to challenge their creditors if appropriate;
    •enabling them to maximise their disposable income;
    •assisting them to plan their budgets;
    •helping them choose a strategy (usually, but not necessarily, to reduce or stop payments) that will minimise the effects of their debt on their financial, social or personal wellbeing by giving them impartial, independent and confidential advice to enable them to make an informed choice about the options available;
    •preserving their home, essential goods and services, and liberty;
    •assisting by advice or representation with the implementation of whatever strategy is chosen.
Debt advice is a professional activity. There is a package of attitudes, skills and strategies that are part of any debt advice service. This guarantees consistency and quality assurance.
Debt advice can be provided by specialists or by professionals whose job primarily involves other activities – eg, housing officers. It can be provided by paid or voluntary workers. In recent years there has also been a growth in debt management companies, which charge clients a fee for setting up and handling debt repayment programmes.
Ensuring good practice
A professional debt adviser needs a mixture of skills, knowledge and attitudes, which together form the basis of good practice. For many years there was no qualification that recognised the profession of money advice or acknowledged the wide range of skills and knowledge that money advisers have. However, in 2010, the Institute of Money Advisers (IMA) (the professional association for full-time, part-time or volunteer/trainee debt advisers in England, Wales and Northern Ireland who deliver or promote free, confidential, impartial and independent debt advice services), in partnership with Staffordshire University, introduced a Certificate in Money Advice Practice. Worth 15 higher education credits and broadly equivalent to an NVQ level 4, this award is offered to IMA members with at least 12 months’ full-time (or the equivalent part-time) experience in debt advice casework or a related activity. The award is gained by studying a combination of skills and knowledge based on the national occupational standards for legal advice. The course is delivered online and involves a number of modules, each ending with a formative assessment, and finally an examination, which is taken online. It is supported by a continuing professional development requirement to ensure advisers keep their skills and knowledge up to date.
In 2013, the Money Advice Service (now part of the Money and Pensions Service (MaPS)) introduced its Debt Advice Quality Framework, with the aim of raising the quality and consistency of debt advice. It comprises two parts: an organisational quality framework and an individual quality framework. The framework enables quality standards, membership codes, training and qualifications used by the money advice sector to be independently assessed and accredited the Money Advice Service. Debt advisers working in agencies holding a MaPS-accredited quality standard or membership code must be able to show that they meet the requirements of the Quality Framework for Individuals for the type of activites they undertake. Agencies must therefore review the training or qualifications undertaken by all their staff involved in delivering debt advice to ensure this is accredited. Note: it is the agency, rather than the individual adviser, which is accredited.
In 2018, the IMA launched its Networking and Information Sharing Project (funded by MaPS) to support advisers by sharing information provided by partner agencies, including updates and articles from Shelter’s Specialist Debt Advice Service. The IMA’s project ended on 31 March 2021 with the result that live webinars, recordings of Money Advice Group speaker presentations, the adviser discussion forum and the monthly blog have been discontinued. However, information items continue to be available to IMA members in the Networking and Information Resources Directory on the IMA’s website and in existing Shelter information resources. Shelter continues to provide its monthly e-bulletin, including Enquiry of the Month and Spotlight articles. The directory also continues to host the MaPS Good Practice Toolkit, which includes sample letters and forms, templates and prompt lists, and income maximisation resources, together with guidance on when and how advisers should use these resources. Non-members can access the toolkit at debtquality.org.uk. Updates are made and new materials added as they become available.
Shelter’s Specialist Debt Advice Service provides free, expert guidance on most client debt cases. The service is available to all local Citizens Advice, local authorities, housing associations, IMA members, AdviceUK members and other free sector agencies. The service is for advisers only. Advisers can submit an online enquiry at shelter.org.uk/debtadviceservice or call 0330 058 0404, 9am to 5pm, Monday to Friday.
The provision of debt advice as discussed in this Handbook is a regulated activity, which generally requires the adviser (or her/his employer) to be authorised by the Financial Conduct Authority (FCA). Guidance on good practice is in the FCA’s Consumer Credit Sourcebook (generally referred to by the abbreviation CONC which is part of the FCA Handbook and is available at handbook.fca.org.uk/handbook) and CONC and other parts of the FCA Handbook are referred to in this Handbook where relevant.1FCA Handbook, CONC 8. ‘Debt advice’ applies to debt counselling, debt adjusting and providing credit information services, by both profit-making and not-for-profit bodies. Local authorities and members of the legal profession are exempt from the requirement to be authorised. See also P Madge, ‘Debt Advice Rules - OK?’, Adviser 175.
 
1     FCA Handbook, CONC 8. ‘Debt advice’ applies to debt counselling, debt adjusting and providing credit information services, by both profit-making and not-for-profit bodies. Local authorities and members of the legal profession are exempt from the requirement to be authorised. See also P Madge, ‘Debt Advice Rules - OK?’, Adviser 175. »
The client’s best interests
In any situation where money is owed, there are two parties whose interests may conflict. As a professional debt adviser, you should know that you cannot advise both parties in such a situation, and so you must be clear that you are working only for the interests of the client. This is true even if your employment is funded by the finance industry or another creditor, such as a local authority, or if you work for an organisation that seeks to be impartial.
The FCA’s Consumer Credit Sourcebook makes it clear that all advice given and action taken must consider the best interests of the client and must take into account:1FCA Handbook, CONC 8.3.2R(1) and 8.3.7R(2)
    •her/his financial circumstances;
    •her/his personal circumstances, including the reasons for her/his financial difficulty and whether they are temporary or long term; and
    •any other relevant factors, including any known or reasonably foreseeable changes in the client’s circumstances.
You should also take into account whether the client is a vulnerable person, the powers of the creditor and whether interest or other charges have been frozen.2FCA Handbook, CONC 8.2.7R and 8.2.8G. See also A Chisholm, ‘Consumer Vulnerability’, Adviser 176, and G O’Malley, ‘Advising Vulnerable Clients’, Quarterly Account 41, IMA. A useful resource on treating clients in vulnerable situations fairly, Vulnerability: a guide for advice agencies, is available at the Money Advice Trust website, moneyadvicetrust.org.
 
1     FCA Handbook, CONC 8.3.2R(1) and 8.3.7R(2) »
2     FCA Handbook, CONC 8.2.7R and 8.2.8G. See also A Chisholm, ‘Consumer Vulnerability’, Adviser 176, and G O’Malley, ‘Advising Vulnerable Clients’, Quarterly Account 41, IMA. »
A professional attitude
As a professional debt adviser, you should be aware of your past experiences from which you may have developed a judgemental attitude towards some clients and/or creditors. Consciously avoid any personal bias and adopt a professional approach to the work.
You should also offer a high-quality, accessible service to all groups in society and should work towards understanding that debt can affect clients from different backgrounds in different ways.
A commitment to social policy
As a professional debt adviser, you should not allow the same recurring problems you encounter with clients to adversely affect the lives of others also, but should make known the lessons that can be learnt from your work to as wide an audience of policymakers as possible.
A sound knowledge of law and procedures
As a professional debt adviser, you should be knowledgeable and imaginative about the ways in which the law can be applied to mitigate the effects of debt. You should be able to offer and explain these to your clients.
A commitment to developing the service
As a professional debt adviser, you should take regular opportunities to enhance your skills through training, research and education, and should participate in offering this to others, so that the practice of debt advice continues to be refined and developed.
You should subscribe to periodicals (see Appendix 2), such as Quarterly Account, to keep up to date with developments in debt advice law and practice. Try to attend your local Money Advice Group meetings. These usually have updating and information exchange sessions, as well as presentations by creditors or representatives from other relevant organisations.
A systematic approach
As a professional debt adviser, you should apply a single systematic approach to each individual client. Also ensure that the advice you give is:
    •in the best interests of that particular client;
    •appropriate to her/his individual circumstances;
    •realistic; and
    •where an offer of payment is made, sustainable and based on a true and accurate assessment of the client’s circumstances.
An ability to involve the client in informed choices
As a professional debt adviser, you should always try to involve the client, ensuring that s/he understands the implications of her/his situation and the steps you propose be taken. You can assist the client to make an informed choice by giving her/him all her/his available options and explaining their consequences before anything is done. Do not assume that a client is seeking a particular outcome, but establish what s/he wants and recognise that it may not necessarily be realistic or achievable.
Many advisers tend to put pressure on themselves to solve their clients’ problems, and clients’ expectations can add to this. Although advisers should always do the best they can for their clients, there may be times when the options are limited because matters have simply gone too far and you cannot make the problem go away. You should not feel that you have somehow ’failed’ the client, as s/he is still likely to need supporting through the situation.
Many debt cases involve distressing facts, so make sure you can share and discuss these sorts of issues with colleagues and your supervisor/manager.