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Debt Advisors Stop Taking Cases As Funding Ends

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http://www.bbc.co.uk/news/business-12330429

Hundreds of debt advisers have stopped taking on new cases because their funding is to be axed next month.

For the past five years, the £25m-a-year Financial Inclusion Fund has been paying for about 500 specialists in England and Wales to give free advice.

But the cash is due to run out in March and the government has said it will not renew the fund.

The news means that advisers face redundancy at a time when demand for their advice is forecast to grow.

The debt advisers affected have been sent redundancy letters and been told to stop taking on any new clients, other than those with the simplest problems.

The Money Advice Trust, a charity which promotes independent help for people with debt problems, forecasts that 200,000 extra requests for free debt advice are expected this year, taking the total to a record 1.6 million.

I wonder what is deemed a simple problem?

http://www.citizensadvice.org.uk/index/partnerships/financialskillsforlife/fsfl_projects/fsfl_projects_fif.htm

The Financial Inclusion Fund (FIF) is a government initiative to tackle financial exclusion. It has been designed to target three priority areas: access to free face-to-face money advice; access to banking services; and access to affordable credit.

Another bit of govt spending axed, has there been any info published as to the advisor's track record in solving debt problems? I wonder how many of the 500 will be having to use their own advice now?

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http://www.bbc.co.uk/news/business-12330429

I wonder what is deemed a simple problem?

http://www.citizensadvice.org.uk/index/partnerships/financialskillsforlife/fsfl_projects/fsfl_projects_fif.htm

Another bit of govt spending axed, has there been any info published as to the advisor's track record in solving debt problems? I wonder how many of the 500 will be having to use their own advice now?

Isnt it the Government that needs debt advice?

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If they are trained and qualified and there's still a need for their service then they need to learn how to make money from it.

I have spotted the fatal flaw in your plan - selling things (ie the skills and training you have in debt management) to people who are heavily in debt and probably struggled to find the bus fare to see you or phone credit to call you is great, until it come to asking them to pay your bill!

This kind of function can only ever be offered by charities or gov bodies, funded by someone other than the end client. Or have I missed something?

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I have spotted the fatal flaw in your plan - selling things (ie the skills and training you have in debt management) to people who are heavily in debt and probably struggled to find the bus fare to see you or phone credit to call you is great, until it come to asking them to pay your bill!

This kind of function can only ever be offered by charities or gov bodies, funded by someone other than the end client. Or have I missed something?

They can make money privately. I think that the extra money is earned because they appear to be on the side of the debtor, which can encourage the debtor to divert more of their income stream or assets towards repaying their obligations, than they would if there was no such advice. This means that the creditors can collect more money, from which they can afford to pay the debt advisor.

As you may have noticed, this deal does involve the debt advisor appearing to be on the side of the debtor, whilst being in the pay of the creditor. As a result the debtor is usually worse off as a result of taking advice from a debt advisor being paid for by creditors. IIRC, the FSA has taken some action against debt advice of this sort recently.

Of course if the state sponsored and charitable sector is unable to fill the gap, market forces have a way of filling the void no matter what the FSA might do.

Edited by leicestersq

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They can make money privately. I think that the extra money is earned because they appear to be on the side of the debtor, which can encourage the debtor to divert more of their income stream or assets towards repaying their obligations, than they would if there was no such advice. This means that the creditors can collect more money, from which they can afford to pay the debt advisor.

As you may have noticed, this deal does involve the debt advisor appearing to be on the side of the debtor, whilst being in the pay of the creditor. As a result the debtor is usually worse off as a result of taking advice from a debt advisor being paid for by creditors. IIRC, the FSA has taken some action against debt advice of this sort recently.

Of course if the state sponsored and charitable sector is unable to fill the gap, market forces have a way of filling the void no matter what the FSA might do.

Your premise is that the debtor will want or be able to pay something (from which the creditor will pass you a kickback).

But how will your freelance debt expert get paid if 99% of the advisees come in and ask for help to avoid paying anybody anything, by entering into an IVA or bankruptcy? Check out some of the threads on motley fool or MSE and see that few people really want to pay anyone these days, least of all greedy banks. It is a cultural change from "when I were a lad" - now there is no stigma or shame from avoiding debt repayments - in fact your mates will give you kudos and back slapping for being smart!

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I have spotted the fatal flaw in your plan - selling things (ie the skills and training you have in debt management) to people who are heavily in debt and probably struggled to find the bus fare to see you or phone credit to call you is great, until it come to asking them to pay your bill!

This kind of function can only ever be offered by charities or gov bodies, funded by someone other than the end client. Or have I missed something?

There's been a thriving debt industry that takes a % of what they get people to repay.

It's pretty horrid and doesn't give companies much money BUT there's a lot been doing it.

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There's been a thriving debt industry that takes a % of what they get people to repay.

It's pretty horrid and doesn't give companies much money BUT there's a lot been doing it.

Yes, they negotiate reduced monthly payments for CCs, and pocket a chunk of the difference! It's not small change - £50 per month is typical, sometimes with a large up front payment, for a job the debtor could do himself. Paypal and CCCS do the same job for free, but if their funding is to be axed then the commercial debt managers will probably benefit.

The main concern is over mortgage debt - CAB and the like provide more complex advice and are pretty useful to people who would otherwise go under.

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Labour govt creates situation where it is far too easy for poor people to get into debt, then sets up debt-funded advice service to help them out, passing on large amount of national debt to later generations of poor people in the process. At the same time they bail out the creditors whilst allowing them to take bonuses and continue to chase the poor people for accrued debts.

you couldn't make it up

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http://www.bbc.co.uk/news/business-12330429

Hundreds of debt advisers have stopped taking on new cases because their funding is to be axed next month.

For the past five years, the £25m-a-year Financial Inclusion Fund has been paying for about 500 specialists in England and Wales to give free advice.

But the cash is due to run out in March and the government has said it will not renew the fund.

The news means that advisers face redundancy at a time when demand for their advice is forecast to grow.

The debt advisers affected have been sent redundancy letters and been told to stop taking on any new clients, other than those with the simplest problems.

The Money Advice Trust, a charity which promotes independent help for people with debt problems, forecasts that 200,000 extra requests for free debt advice are expected this year, taking the total to a record 1.6 million.

Works out at £50k a year for each advisor.

I'm sure there are plenty of people who would be happy to be paid the average national wage to do the same job.

Edited by exiges

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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