Context

The main objective of this study for the Money Advice Service is to provide an overview of the current debt advice sector in the UK in order to fully understand how the sector works and whether the delivery channels, tools and solutions currently meet the needs of service users and creditors.

The study

• The study maps the debt advice sector and identifies gaps in information on products, tools and solutions, with recommendations on further research needed to fill identified gaps.
• The study is based on desk research and consultation with debt advice providers and considers the entire UK, mapping demand in different areas, identifying similarities and differences where appropriate and reviews evidence on the effectiveness of debt advice.

Key findings

• The UK debt advice industry is fragmented with no comprehensive and comparable data collected to enable a robust analysis of the market. This makes it difficult to assess the extent to which there is a gap in the market which may call for a policy response
• The estimates of the demand for debt advice vary markedly. Estimates for the actual demand for debt advice range from 2.3 to 2.6 million individuals in 2009/10 and just over 1 million households in 2009/10, with total demand estimates (i.e. including latent demand) ranging from 1.9 to 4.9 million individuals in 2008 and 5.5 million households in 2009/10.
• Individuals seeking debt advice: are typically in the 35-49 age bracket; broadly balanced in terms of gender; have very low incomes; are often single parents; are mostly not in employment; are mostly in rented accommodation
• As a result of the fragmentation and lack of clear signposting, potential debt advice seekers do not necessarily have a good knowledge of the range of options and may not select the most appropriate provider.
• Face-to-face delivery is a very important one for certain customer groups or in certain circumstances but is not necessarily required for all customers. This could be explored further in future research to enable more effective use of resources.
• Evaluations of free-to-client debt advice providers have focused mainly on the short-term impact and suggest that 50-60% of those having received debt advice have reduced their debt or eliminate their debt after having received advice. Almost no information exists on the longer-term effect of such debt advice.
• There is a lack of information on which services and channels work best, with evaluations by debt advice providers providing limited and no comparative information
• A lack of comprehensive data on the different debt advice forms and delivery channels and on the needs of debt advice seekers means it is not possible to determine whether the current organisation and structure of the debt advice sector meets the needs of actual and potential clients.

Points to consider

• Limitations of the available data are clearly stated such as: methodological challenges in estimating demand; ambiguity about household/individual basis for survey data; limited information from provider evaluations
• • Provides overview of the debt advice sector as well as commenting on data challenges and identifying information gaps
  • Published in 2012 and draws on previously published data and so is somewhat out of date.
• Very useful overview of characteristics of those seeking debt advice, providers, type of delivery, products and solutions.

Full report

Debt advice in the UK - full report