The Wyman Report: A review of debt advice funding

Peter Wyman’s review into the funding of the debt Advice sector in England, Wales, Northern Ireland, and Scotland, is disappointing. It contains few observations of note, is uninspiring and was not insightful.

The one statement I found myself agreeing with was when he stated: “However, as all good authors say, the opinions, conclusions and recommendations in this report are mine and mine alone.”

Hear, hear. I agree.

Just because a report is commissioned, doesn’t mean it’s recommendations must be adopted. In this case, Peter Wyman’s report fails to rise to the challenge of the problem it purports to address, whilst its recommendations are underpinned by an ideology which is now reaching the end of its shelf life in the UK. I would suggest therefore, that is where his report should be left: on the shelf.

The report makes 20 recommendations, which when I read them, made me wish the author had stopped at 5. At least that way he would have embraced the ideological spirit of the austerity that he seems so keen to accept in his report.

The Cost of Free Advice Services in the UK

He estimates the cost of free debt advice services in the UK is £200 million. He then calls for this to be increased in 2018/19 across the UK, albeit only for a temporary period, by £10 million. This is a 5% increase, just under double the rate of inflation. However, coming after years of funding cuts and stagnation in the free sector, this would still be poor compensation and an inadequate response to a personal debt sector where the level of personal debt jumped by 10% last year and is expected to continue increasing in years to come.

In a country which has one of the largest financial sectors in the world and in which Peter Wyman acknowledges the demand for free sector money advice services is currently outstripping supply, it was disappointing to note that he finds the current costs unsustainable and makes recommendations to improve the efficiency of services by reducing duplication and encouraging, wherever possible, greater use of technology and the lowest cost delivery channels.

It must be asked what duplication is he referring to? Even in the areas where I work, there may be agencies doing the same thing, but no-one is idle. Demand outstrips supply. Where that demand is greatest is in relation to face to face services.

There also appears to be no shortage of supply in telephone and online services, and certainly some of the largest free sector providers of these services currently have the reserves to increase capacity if so required. Why, therefore, suggest other free services should further increase delivery using these channels, whilst cutting face to face delivery? This appears to an argument for further duplication, not the curtailment of it.

Banks may be abandoning their customers by closing branches, but this should not mean the advice sector must follow suit.

Missed Opportunities in the Wyman Report

Peter Wyman also argues for an extension of those who pay under the Fair Share Scheme, which is where creditors agree to revert a percentage of the sum paid to them through free sector debt management plans back to the provider. He, however, does not argue for an extension of the providers that can participate in the scheme. This would be a novel and innovative solution to the challenge that publicly funded services are facing, by moving more to a creditor funded model.

It would also arguably, allow increased capacity to be introduced into the free sector by the private sector, to meet unmet demand. He also makes no recommendation it could be put on a statutory footing with the introduction of a statutory breathing space scheme, in England, Wales and Northern Ireland. That would allow the free sector to cope with the increase demand that scheme will place on them. There is also no suggestion that possibly the limited availability to access the Fair Share Scheme is possibly an area worthy of investigation by the Competition and Marketing Authority.

Furthermore, his proposal to transfer 100% of the fee from a Debt Relief Order application back to the advice provider is barely worth mentioning. It is effectively arguing for the poorest debtors to pay for the services they are being provided. In Scotland the £90 application fee for a Minimum Asset Bankruptcy, barely covers the costs involved in administering the solution. Transferring 100% back to the advice provider would only increase the cost somewhere else for the public sector and inevitably result in a fee increase elsewhere.

His recommendations fall vastly short of the recommendations of the Money Advice Service in their Report on UK Debt Solutions, which proposes reintroducing fee remissions for Bankruptcy.

Over anticipated and under delivered is how I would summarise Peter Wyman’s report. It’s clear he has little understanding of the sector and delivers what is a relatively bland, unambitious, and unimaginative report, that contributes nothing to the debate other than to argue for a continuation of the culture of cuts and austerity.

Another alternative is possible, however

Taking Scotland as an example, the Improvement Service estimates that the cost of local authority, publicly funded money advice services to be approximately £11 million. Based on Mr Wyman’s estimate of £200 million across the UK, this would suggest another £9 million is being spent in Scotland by other providers and funders (based on approximately 10% of that £200 million being spent in Scotland). The Accountant in Bankruptcy service then costs £12 million approximately (but the costs of which are largely recouped through the ingathering of fees). There is then approximately £81 million distributed to creditors through statutory debt solutions, after private sector fees and outlays are recovered. This leaves plenty of scope for a fee increase to be used to protect existing face to face services and arguably increase provision of it to meet the current demand Mr Wyman identifies. This is easily achievable and sustainable.

What Peter Wyman should have addressed in his report was the fact that creditors are currently getting debt advices services too cheap. Instead, it appears, he argued for the profits to be privatised, but for the costs associated with dealing with consumers struggling with debts to continue to be socialised. In return he offered us a short-term increase to pay for the new headsets for our phones.

The report can be accessed here.