Measuring the long-term impacts of debt advice, 2021

• Description of the programme
• The study
• Key findings
• Points to consider

Description of the programme

As part its UK Strategy for Financial Wellbeing 2020-2030, the Money and Pensions Service aims to increase the number of people who access and receive high quality debt advice when they need it, by 2 million by 2030 (from 1.7 million in 2018). While it is important that people are able to access debt advice to support them, there is little robust evidence of the impact of debt advice on improving outcomes, particularly over the medium- and long-term.

The programme involved the participation of three debt advice providers: Citizens Advice; Debt Free London (formerly Capitalise); and StepChange Debt Charity. People identified as being in need for debt advice, via a survey, were pro-actively encouraged to seek debt advice (described in the study as ‘the encouragement intervention’). The encouragement intervention, which used the form of written communications and proactive calls, was developed and refined for the study using best practice and behavioural techniques and used a combination of direct mailing letters, email and text messages, and telephone calls from the debt advice organisations. It was multichannel and customised (per adviser) resulting in nearly 40 different versions of the intervention materials.

The study

As part its UK Strategy for Financial Wellbeing 2020-2030, the Money and Pensions Service aims to increase the number of people who access and receive high quality debt advice when they need it, by 2 million by 2030 (from 1.7 million in 2018). While it is important that people are able to access debt advice to support them, there is little robust evidence of the impact of debt advice on improving outcomes, particularly over the medium- and long-term.

The programme involved the participation of three debt advice providers: Citizens Advice; Debt Free London (formerly Capitalise); and StepChange Debt Charity. People identified as being in need for debt advice, via a survey, were pro-actively encouraged to seek debt advice (described in the study as ‘the encouragement intervention’). The encouragement intervention, which used the form of written communications and proactive calls, was developed and refined for the study using best practice and behavioural techniques and used a combination of direct mailing letters, email and text messages, and telephone calls from the debt advice organisations. It was multichannel and customised (per adviser) resulting in nearly 40 different versions of the intervention materials.

Key findings

• Methodological feasibility: The final eligibility rate, which factored in over-indebtedness, not having received debt advice in the last 6 months and being willing to participate in the study, was 4.3% of the respondents from the initial recruitment survey.
  • Response rates at wave 2 were 50-58% and at wave 3 were 33-45%.
  • The encouragement condition did not affect attrition rates, which increases confidence that differential outcomes can be attributed to the encouragement intervention.
• Methodological lessons learnt: The survey design is effective, but tests and improvements are needed, including tightening of eligibility criteria.
  • Some demographic groups are under-represented.
  • The survey design keeps attrition low; the observed attrition is not systematic and allows for robust analysis.
  • Survey recruitment modes are important.
  • Operationally, additional levels of participant consent and watertight quality control and data protection are needed.
• Effects of encouragement on advice seeking: There was a 5% and 6% increase in the likelihood of seeking informal debt advice following encouragement at waves 2 and 3 respectively.
  • The existing encouragement protocol does not result in people seeking formal debt advice.
• Advice outcomes (preliminary evidence): Informal help does not address the causes of debt
  • Informal help increases subjective wellbeing, especially after more than a year after the encouragement (by 0.63 on the index score for a worthwhile life, 0.45 for happiness, and 0.59 for positive wellbeing).
  • Receiving encouragement helps people focus on their existing debt, but they do not reduce their spending.
  • Formal debt advice appears to increase the likelihood of reducing spending, increases knowledge and understanding of how to get out of debt and self-reported wellbeing. It decreases the likelihood of being turned down for credit.

Points to consider

• Methodological strengths/weaknesses: The authors note that the preliminary findings which relate to debt advice outcomes should be treated with caution.
  • As a feasibility study, the authors note implementation challenges and problems which reduced the apparent effectiveness of the intervention.
• Generalisability/ transferability: The evaluation is of significant interest to those looking to commission or deliver debt advice interventions or services.
• Relevance: This report is relevant to funders and providers of debt advice, and anyone with an interest in improving the debt advice sector.