Who is Providing Money Advice in Scotland?

Despite experiencing cuts of up to 45% in funding between 2014 and 2017, new statistics produced by the Accountant in Bankruptcy (AIB), released under Freedom of Information legislation, shows that locally based, face to face money advice services across Scotland continue to be major providers of formal debt solutions.

By Agency Type

The statistics show, by agency, who is providing access to the Debt Arrangement Scheme (DAS) and issuing Certificates of Sequestration (COS) (the primary route used to enter bankruptcy).

Although the largest agency, by far, is Stepchange, the national debt charity, what is also revealed is that local, face to face money advice agencies (which includes local authority services, Citizen Advice Bureaux, and independent advice agencies) continue to provide more access to these debt solutions combined than any other agency type.

Also, as the AIB only list agencies by name where they have done more than 25 solutions within the last year, with 1,251 solutions not being attributed to any agency, the numbers for local, face to face service is likely to be higher.

 DASCOSTotal%
Stepchange 1,1515481,69930
Insolvency Practitoners52126778814
Local Face to Face3171,4021,71913
Sheltern/a29291
Payplann/a42421
Christians Against Povertyn/a70701
Other3299221,25122
Total2,3183,2805,598100

The breakdown for face to face advice agencies can be seen below:

 DASCOSTotal%
Local Authority 16457173543
Citizen Advice Bureaux15371186450
Independentn/a1201207
Total3171,4021,719100

National Providers

Interestingly, the statistics also show that (excluding private sector insolvency practitioners and Stepchange) national helplines and national debt charities provide very few solutions for clients in Scotland.

 DASCOSTotal%
Stepchange1,1515481,69989
Sheltern/a29292
Payplann/a42422
Christians Against Povertyn/a70704
Total3171,4021,719100

This is important, as it is believed up to half of the Financial Conduct Authority Debt Advice Levy for Scotland, historically has been going to fund national helpline providers.

Interestingly, organisations like Advice Direct Scotland (who operate Citizen Advice Direct) and the National Debt Line are absent from the statistics altogether and Christian Against Poverty’s statistic are not much more than those of many local advice agencies.

This is also important, as when The Common Financial Tool regulations were passing through the Scottish Parliament, the Scottish Government tried to argue the evidence led by many local, face to face advice agencies was unrepresentative of the sector. Instead they relied on evidence of organisations who either don’t appear in these statistics or only play a small part in providing clients with formal debt solutions in Scotland.

Informal Solutions

However, the true significance of the figures are only understood when they are viewed in the light of the statistics produced by the Improvement Services into local authority funded, money advice services in 2016-17 (this included Citizen Advice Bureaux, council services, and independent advice agencies).

These showed that across Scotland these services reported approximately 111,000 contacts with clients, and of those approximately 49,000 were with new clients.

However, of the 8,022 debt strategies agreed with clients in that year, sequestrations only accounted for 16% , and the Debt Arrangement Scheme 8%.

This clearly shows that formal debt solutions represent a small, albeit significant, percentage of the solutions that were suitable for clients who sought advice from free sector, face to face money advice services in Scotland.

Statistic produce by Improvement Service

FCA Debt Advice Levy

These figures don’t cover Trust Deeds, which are exclusively provided by insolvency practitioners (private sector ) (there were 5,958 protected in Scotland in 2017-18).

What is clear, however, is that local face to face money advice services continue to be a major provider of formal debt solutions across Scotland.

What is also clear is that with FCA Debt Advice Levy Funding now being devolved to the Scottish Government, and with suggestions that up to 50% of it historically has been going to national debt charities, it is now time for these spending committements to be reviewed.

The Scottish Government is  currently consulting on how the funding should be spent from 2020 onwards.

It can only be hoped the importance of locally based, face to face money advice services across Scotland will be acknowleged.

Statistics on Debt Arrangement Scheme 2017-18 can be found here.

Statistics on Certificates of Sequestration 2017-18 can be found here.

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