Capturing Experience of Debt Advice

13 March 2020

In this guest blog, we hear from Money Advice Scotland – Scotland’s Money Charity – about their latest piece of research, Capturing Experience of Debt Advice.

Over the past few months, we’ve been working on two new pieces of research for the money advice sector. The first, Capturing Experience of Debt Advice, has now been published and is available to read on our website.

The debt sector has a track record of engaging with various stakeholders including: advice agencies, creditors, insolvency practitioners, and credit unions. The voice that is regularly missing from these consultations belongs to the group with most at stake – people in debt.

Debt Advice Routemap

The Scottish Government’s recently launched Debt Advice Routemap sets out a commitment to developing a user-centred approach to debt advice. This research is the first step in building a strong evidence base through engagement with people who have had experience of problem debt.

This research involved two phases:

The first, an online poll with a demographically representative sample of over 1,000 adults in Scotland. This allowed us to gauge how well people are managing financially and determine the scenarios that would prompt them to seek debt help.

From the survey, we were able to identify people who had experienced problem debt. We then began the second phase of the research – 30 interviews with both those who had sought advice and those who hadn’t.

Our key findings are:

  • Income is the key indicator in determining whether someone will experience problem debt and access advice. 22% of the sample we surveyed found their level of personal debt to be unmanageable. People on lower incomes were almost three times less likely to agree with the statement that they manage well financially compared to people on higher incomes.
  • Stigma is a key barrier towards seeking help with debt. Advisers play a central role in alleviating this sense of shame and embarrassment. We found that almost a quarter of people surveyed were put off seeking debt help because it would mean talking to someone about their finances.
  • People will endure considerable hardship and make cutbacks to essential living costs before seeking advice. Worryingly, over half of respondents would go without essential spending before even considering seeking advice.
  • There is widespread uncertainty of what to expect from the debt advice process. A lack of awareness about what an adviser can do to help is evident.
  • Face-to-face remains the channel preference for the vast majority (65% prefer to access this type of advice when it reaches the detailed discussion stage), but scope exists to harness digital at the right moments.
  • People who receive debt advice are positive about the experience. But, we still don’t know enough about what happens after advice.

Recommendations to address these findings

Income is the key factor in determining if someone will experience problem debt. There is a real need to ensure that levy funding of advice services is directed towards organisations that are mainly helping low-income clients. This group are more likely to find it difficult to access advice anywhere else.

This research made clear that we don’t know enough about what happens to people after they’ve had advice. Including whether their plan is affordable. We found evidence of clients continuing to endure hardship in order to service repayments. Here, we recommend that the potential to incorporate check-in capability to funding models should be explored.

One theme that was apparent throughout all aspects of this research was that stigma continues to be a barrier to seeking advice. This in turn impacts how debt is talked about in a general sense. A multi-organisation campaign should be developed to raise awareness and reduce stigma of debt, including a tone of voice standard that aims to change the way we talk about debt and money issues. More information on our recommendations is in the report.

It’s important to note that this work is only a starting point. Our second piece of research, on adviser perspectives towards a new workforce strategy, is due to be published in the next few weeks.

Want to get involved?

If you have any questions about this piece, or would like to submit a guest blog then get in touch.

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