Research Library
Free-to-client UK debt advice
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Description of the programme
In 2010, the free-to-client debt advice sector served 1.4 million individuals in the UK. There was a relatively even split between use of face-to-face and telephone services, with 45% of clients accessing advice via each of these channels, and a further 9% accessing it online.
The study
This research was commissioned by the Money Advice Trust, and funded by Friends Provident Foundation and Provident Financial, to explore how outcomes and experiences differ between different channels of advice, the dynamics of channel choice and the potential for channel shift.
It was undertaken by Policis in 2011 and involved a rapid evidence review, four focus groups with clients of free-to-client debt advice services and a bespoke telephone survey with a sample of 504 debt advice clients, to achieve a representative mix of channels. In addition, an online survey was conducted with a self-selected sample of 128 online debt advice clients to provide further insight into experiences of this channel.
Key findings
Channel choice is not a meaningful concept in the context of debt advice. Clients tend to contact the first provider they become aware of without considering issues relating to channel. Subsequent interactions tend to occur in the same channel used for the initial meeting, regardless of channel preference or willingness to use other channels.
Across all channels, a majority of clients experienced positive outcomes as a result of receiving debt advice (including soft outcomes such as financial capability and resilience). Allowing for differences in client profiles, outcomes differed little by channel. Some differences were, however, found in relation to channel usage:
- In a little over half of the cases studied involving face-to-face or online channels, debt advice worked in the first instance to prevent court action or repossession. These outcomes were less relevant for clients accessing advice via phone as they tended to seek help at an earlier stage.
- There was a higher level of both debt write-off and bankruptcy amongst the face-to-face channel clients as they had the lowest average income and therefore the least capacity to repay their debts.
- Face-to-face clients were slightly less likely to keep to repayment plans than those using other channels. Amongst those who failed to keep them up, face-to-face clients were almost twice as likely as phone clients not to make any payments or to only sustain payments for a short while
Points to consider
The research provides interesting findings for providers of debt advice, including the potential for channel shift (covered primarily in volume 2), which could be used to inform future channel configuration.