Foreword
Members of the Institute of Money Advisers (IMA) recognise the importance of investing in their continuing professional development if they are to give accurate, high-quality advice to people with unmanageable debt. It can, however, be challenging to keep up to date with the many changes in law, practice, policy and guidance that can affect the options available to clients. I therefore welcome this new edition of the Debt Advice Handbook, which incorporates the essential developments since the last edition two years ago.
One of the most significant is the Consumer Duty, introduced by the Financial Conduct Authority (FCA) in July 2023. Intended to improve customer outcomes by requiring firms to aim to meet their customers’ needs, the Duty gives advisers a powerful tool to help clients with complaints about creditors. Of course, as the Duty applies to all authorised firms (and not just to the creditor-client relationship), debt advice providers must ensure that they also deliver good client outcomes. This may require some advice services to adapt and change their working practices, something those working in the debt advice sector are well-used to, but which may add to the increased pressures many service providers feel.
Breathing space was one of many recent developments when the last Handbook was published, and while take-up has been below expectations, the use of the standard breathing space moratorium has increased year-on-year. Take-up of the mental health crisis moratorium, however, has been much lower than expected. This is likely to be compounded following several High Court decisions and subsequent HM Treasury guidance about the debt adviser’s role.
The guidance potentially imposes more onerous obligations on debt advisers entering clients into a mental health crisis moratorium, causing concern among many debt advice services. At the time of writing, we are waiting to hear whether the government will respond favourably to calls from sector bodies to amend the regulations and avoid increasing the demands on advisers whose work is already being challenged by the impacts of the cost-of-living crisis.
A number of initiatives introduced to ease the financial pressures caused by the increased cost of living were temporary and have been withdrawn, exacerbating the difficulties of indebted clients. One initiative to be welcomed is from the FCA, which has confirmed that its tailored support guidance to help borrowers manage the financial impact of the pandemic is also applicable to the cost-of-living crisis and that lenders should provide support to borrowers struggling with payments.
Another initiative, suspending the involuntary installation of prepayment meters by energy suppliers, has been partly incorporated into new rules that protect some vulnerable groups, but the eligibility criteria exclude many potentially vulnerable people whose gas and electricity will be disconnected when they have no money to top-up the meter.
And the reality is that, for increasing numbers of clients, the money does run out on a regular basis. In my foreword to the 12th edition of this Handbook, I highlighted the increasing prevalence of clients with deficit budgets as follows: ‘not only do many people have no disposable income to offer creditors, but their essential needs are often being met only with the support of food banks and charitable grants.’ Unfortunately, seven years later, the situation has worsened beyond comprehension, with Citizens Advice recently reporting that 50 per cent of its debt clients have a deficit budget.
In January 2024, an IMA report, Casework Requirements and Workloads in the Money Advice Sector, found that 90 per cent of IMA members regularly advise clients with deficit budgets. Our report also found that debt advisers are experiencing an increase in the complexity of client problems, together with a greater number of vulnerable clients needing support. Therefore, it is more important than ever that advisers have access to the comprehensive and accurate information provided by the Debt Advice Handbook, an essential resource for everyone committed to delivering high-quality debt advice.
Robert Wilson
Chief Executive
Institute of Money Advisers