Member News
By Yvonne Fovargue MP - 1st September 2011
There is uncertainty and confusion over the continuation of the £25m Financial Inclusion Fund (FIF) face to face debt advice project, says Yvonne Fovargue MP.
This article was first featured on February 8 2011, ahead of Yvonne Fovargue MP's Westminster Hall debate on the subject.
This is an important debate given the uncertainty and confusion over the continuation of the £25m Financial Inclusion Fund (FIF) face to face debt advice project coupled with the proposed removal of funding for debt advice in the current legal aid consultation paper.
The FIF project is due to end in March 2010 and a written answer on 25th January stated that the fund would close. However, a letter to Kate Green MP on 2nd February stated that no decision had been made.
Over 500 money advice workers in local Citizens' Advice Bureau (CAB) and advice agencies are under notice of redundancy and have stopped taking on new clients due to this uncertainty.
This just does not make sense when unemployment is rising, the economy continues to falter and there is an increasing demand for debt advice. Specialist advisers are trained to deal with complex cases and represent clients to their lenders.
People like John, who went to my local CAB in Wigan, will be left without help. John was receiving numerous letters from creditors and his debts were getting on top of him. He had mentioned suicide to his community psychiatric nurse and she arranged for an urgent home visit from a CAB specialist. They helped him to reinstate his entitlement to disability benefits, discussed his options and John decided that bankruptcy was his best cause of action. John no longer fears losing his home or goods and needs less input from his case co-ordinator.
He said, "Thanks to this wonderful help, I am no longer afraid to answer my telephone, or open my door or mail."
The government is suggesting a free financial advice service increasing levels of financial literacy and empowering consumers to take charge of their finances.
Whilst this is laudable, it will not help those in debt now or those who fall into debt in the future due to unforeseen events, loss of job, illness or disability. If the FIF project ceases and the legal aid reforms proceed, people will be forced into the hands of fee paying debt management companies – the subject of a damning report by the OFT who found that front line debt advisers, working for these companies, lacked competence and gave poor advice.
Last year 580,000 clients with £2.4m of debt used the CAB service. Citizens Advice Bureau deal with 70 per cent of debt relief orders. Changes in rules in April mean more people will be eligible for this solution.
With the withdrawal of the FIF funding, coupled with the other local funding cuts to advice agencies, access to specialist help will be severely restricted. It is imperative that the government review urgently all the funding for free independent debt advice and ensure that face to face access is available in trusted and competent advice agencies.
Yvonne Fovargue was elected as Labour MP for Makerfield in 2010. The first female MP for the former mining constituency, she currently sits on the House of Commons health committee.
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Article Comments
Are there any other companies you would like to mention, or is it just Integrity Debt Solutions of Shrewsbury?
At our bureau, and others in our county, we do advise people about IVAs as an option. We do not refer to any specific company, but clients are made aware that some will charge an up front fee. We most certainly do not receive any payments for referrals.
iand
9th Feb 2011 at 9:32 am
What the CAB failed to mention here is that their own debt advisors have been giving people some bad debt advice recently and also lacked competence. They also failed to mention that they regulary pass people to IVA companies in return for funding. So how is that free debt help when the person in debt would then have to pay the IVA company really high fees over 5 years to become debt free.
What this article doesn't mention is that there are some very good debt help companies out there that are not only highly recommended but also very competant and professional providing impartial paid for debt help. You only have to look at the likes of companies like Integrity Debt Solutions in Shrewsbury as an prime example of this. Read that companies real testimonials for proof...
Darren
8th Feb 2011 at 11:38 am
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