House of Lords Debate
The CAB service
The CAB service provides free, independent, confidential and impartial advice to everyone on their rights and responsibilities. It values diversity, promotes equality and challenges discrimination. The service aims both to provide the advice people need for the problems they face, and to improve the policies and practices that affect people’s lives. The CAB service is known by 96 per of the public and 41 per cent of people have used the service at some point in their lives.
The CAB network is the largest independent network of free advice centres in Europe, providing advice from over 3,200 outlets throughout Wales, England and Northern Ireland. We provide advice from a range of outlets, including GPs’ surgeries, hospitals, community centres, county courts and magistrates’ courts, and mobile services both in rural areas and to serve particular dispersed groups.
In 2006/7, the CAB service dealt with 5.7 million problems. This included 1.7 million enquiries on debt. This represents an overall increase of 20 per cent over the last year and 100 per cent over the last ten years.
Introduction
Much of the work of the CAB service has a focus on reducing financial exclusion.
Financial capability work is central to this focus. The service is also taking a range of steps to increase its capacity to provide money advice and to diversify how that advice is delivered. We are currently looking to strengthen and expand our money advice provision through a number of new schemes, including the Financial Inclusion Fund and, potentially, steps to introduce a Generic Financial Advice service.
This briefing will give further information on these areas and includes some brief case studies as to how the service has made a difference.
Financial Capability
Citizens Advice is playing a lead role in the development and delivery of financial capability education, particularly to those most at risk of social exclusion. This preventative activity has been shown to help people budget, borrow and save more effectively. We want to expand this activity so that, working with local partners, we can reach one million people a year.
At present a minority of bureaux have sufficient resources to deliver financial capability education. Our vision is that by 2010 every Citizens Advice Bureau will be actively engaged. This is estimated to cost around £20 million a year and will require continued support from Government departments and the Financial Services Authority. It will also require a substantial step-change in the engagement of local authorities who do not typically see it as an issue for them. This is despite the fact that socially excluded groups with poor financial capability make particular demands on Councils’ housing and social services. We want to work with Councils and other partners to help ensure that, for example, these needs and potential benefits are better reflected in Local Area Agreements.
Many bureaux also work with schools to deliver financial education sessions to students with limited input from teachers, often creating training materials from scratch. Sessions are usually delivered to older students during Citizenship classes and focus on practical topics such as budgeting and managing debt. The scheme of work can be tailored to the needs of the pupils and designed to engage students.
Case studies
A CAB in the North West saw a client at their budgeting and keeping track of money sessions. The client is a widow with four young children. She has personal health issues and the children have behavioural issues. At the initial session the client said that she does not have a ‘strong grip on her purse’. The client was encouraged to record what she spends her money on every week, and also to categorise her purchases into essentials, regular, priority and non-priority. The client has been seen several times and she has said how this has helped her to monitor her spending. She is now controlling her frequent visits to fast food outlets and she is saving £60 per week.
A CAB in Wales saw a client who felt he was being abused by his bank over persistent unauthorised overdrafts caused by low income and a loss of control over direct debits. He was frightened to change his bank fearing legal reprisals. Following a session on banking and the legal recovery process at the CAB the client changed his banking facilities, rearranged the dates of his direct debits and now monitors his statements very closely. He has also assumed the role of ‘statement checker’ for another beneficiary with poor numeracy and literacy skills.
A CAB in the Midlands saw a client who has recently had to take responsibility for her two school age grandchildren, in addition to caring for her own teenage daughter. The client has recently lost her disability income as her DLA renewal was refused. The client experienced difficulties in budgeting on a reduced budget with a larger family. The client attended a budgeting skills workshop, and the costs of using sub-prime lenders were explained to her. As a result, the client was able to avoid taking out high interest loans and spent more wisely.
Financial Inclusion Fund
The Government's Financial Inclusion Action Plan released in December 2007 committed £76m from the Financial Inclusion Fund for free face to face money advice. This further builds upon thecommitmentannounced in the Spending Review 2004 toachieve a step change in the supply of free face-to-face money advice.
As a result of the Financial Inclusion Fund, Citizens Advice has received an investment of £33 million between 2006 and 2008, and will receive a further £49m over 2008/11. The initial injection of moneyenabled us to recruit and train 350new moneyadvisers to work in the most deprived communities across England and Wales. Over 2008/11 it is anticipated that the work of these new advisers will be developed further into a more holistic approach involving the introduction of a greater element of financial capability andfinancial inclusion work.
Case studies
A couple approached were referred to a Money Adviser at a CAB in the South West. The husband had been forced to give up work ten years previously due to a degenerating medical condition. He had always worked hard and found it extremely difficult not to be able to support his family. The wife had had to give up work to become his full time carer. The husband was suffering from severe depression. The main contributing factor to this was the debt they were in and the constant letters and phone calls they were receiving from creditors as they were unable to make the repayments required. The Adviser took all the creditors details from the client and a holding letter was sent to each one to take the pressure of the client. A benefits check was completed and the options available discussed;token offersor bankruptcy. Our clients felt they wouldn’t be able to cope with any further hassle from the creditors and would like the fresh start bankruptcy would provide. The couple have expressed what a difference the service provided has made to them by reducing the stress they felt under. Both feel their health has improved.
A client approached a CAB in Somerset. She had got married the week before and her husband had moved into her Housing Association home. She has 4 children by a previous partner. Both she and her husband are unemployed and in receipt of Jobseekers Allowance, Child Tax Credit and Child Benefit. She had rent arrears and a possession order, and other debts which included Council Tax arrears being recovered by the bailiffs, a debt to DWP and she had stopped paying her TV license. In total she owed over £8,000 spread between priority and non-priority debts. As a result of her seeing a FIF project worker, within a month she had claimed and had backdated Housing Benefit. This resulted in the possession order being suspended. Council Tax arrears payments were negotiated and agreed with the bailiff, TV license payments were reinstated, The Child Support Agency are now following up maintenance payments by the ex partner, excessive bank charges are being recovered. The client is taking control of her life again.
Generic Financial Advice
An HM Treasury-sponsored review on the feasibility of delivering a national approach to generic financial advice reported at the beginning of March. The Thoresen Review concluded that a system for delivering high quality, affordable, non-product specific financial advice for those most vulnerable to the consequences of poor financial decision-making should be established.
Citizens Advice considers that the development of such a service is essential in tackling debt problems in the long-term. This service could offer information and advice divorced from the sale of specific products, to help people understand the options open to them, such as the savings accounts, insurance and pension choices available in their particular circumstances. To establish a national generic financial advice service delivered through the existing Citizens Advice network would cost between £25 million – £35 million per year. This would enable us to provide advice over the telephone and face-to-face from local bureaux for up to one million people each year. Citizens Advice is keen to be closely involved in the development and delivery of this proposed national service.
Twenty eight bureaux have been participating in Citizens Advice’s pilot generic financial advice programme, Moneyplan. Thirty Independent Financial Advisers have signed up to volunteer their time to provide face-to-face generic financial advice at no charge to clients. Evidence released on the profile of those accessing the project, and the reasons for seeking advice, support Thoresen’s conclusion there is significant demand for a face-to-face GFA service to be provided across the country. Owner-occupiers aged over 50 who are on a relatively low income have made up the majority of clients using the service, with the trigger for seeking advice often being illness, retirement, bereavement or redundancy. Many clients may not normally consider seeking help from an Independent Financial Adviser or may not be able to afford it.
For further information, please contact: Faye Jordan, Press and Public Affairs Officer, tel: 020 7812 5481, email: faye.jordan@citizensadvice.org.uk
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