Introduction
The Debt Advice Handbook is the most comprehensive guide to the practice and process of money advice in England and Wales. It contains the essential information needed by advisers dealing with debt problems – including on how to establish liability, prioritise debts and prepare a financial statement. It also contains detailed information on how debts are enforced in the courts.
This 14th edition is fully updated to cover the latest legislation, caselaw, guidance, and court procedure and practice. It includes completely new sections covering benefit overpayments and the breathing space scheme, including information on mental health crisis moratoriums.
The Handbook is fully indexed and cross-referenced to relevant publications, as well as to the law and guidance. It is the set text for the Institute of Money Advisers’ Certificate in Money Advice Practice, delivered in partnership with Staffordshire University.
What is debt advice?
Debt advice is defined by the Financial Conduct Authority as:
giving an opinion as a guide to action to be taken, in this case the liquidation of debts. It either explicitly or implicitly steers the customer to a particular course of action… In the Financial Conduct Authority’s view, advice requires an element of opinion on the part of the adviser or something that might be taken by the debtor, expressly or by implication, to suggest or influence a course of action. Information, on the other hand, involves statements of facts or figures.
Debt advice is one component of what is now called money advice, which also comprises financial capability (the skills, knowledge and understanding to manage money). Virtually everyone has debts. But when debt becomes unmanageable, the need for debt advice arises.
Debt advice should be distinguished from ’money management’ and ’financial capability’. While debt advice does include a comprehensive check of a person’s entitlement to state benefits, it goes much further than welfare rights. Debt advice is, essentially, crisis management, and the other components can hopefully prevent the need for debt advice recurring or even occurring in the first place. An ideal money advice model integrates all the various components.
In the past, the words ’debt counselling’ and ’money advice’ have been used almost interchangeably to describe what we shall call ’debt advice’. We prefer this term to ’money advice’ because of the issues discussed above. ’Debt counselling’, on the other hand, can appear to suggest that debt is a problem about which individuals merely need counselling. Counselling may sometimes be important in the early stages of debt advice, but is not a substitute for the work of the debt adviser. Financial capability interventions alone cannot resolve problem debt. Debt advice is not just about making offers (token or otherwise) to the client’s creditors. The processes described in this Handbook are not set in stone and advisers should not be afraid to step outside them in order to help their clients. Advisers should not assume that creditors and courts always get it right, but should examine their practices and their paperwork to protect their clients from inappropriate recovery and enforcement action.