Debt advice in the post-pandemic landscape

• Context
• The study
• Key findings
• Points to consider

Context

The Covid-19 pandemic created unprecedented changes in debt advice, as well as many other sectors, altering the economic landscape and the way that organisations were able to work and deliver their services. For clients and potential clients, the pandemic had a significant impact on the job market, causing a lot of people to lose or reduce their incomes. Now, after the pandemic, with the end of the government moratorium on creditors as well as the cost-of-living crisis, many more clients are now seeking debt advice than before and many people are struggling to pay their bills, let alone their debts.

By 2030, the UK Strategy for Financial Wellbeing has the aim that two million more people access debt advice services, who need them. Its aim is to improve provision through commissioning and ensure that services are meeting client need. MaPS commissioned this research to explore how the debt advice sector may have changed since the pandemic, to update its knowledge of debt advice clients and the debt advice landscape.

The study

The study used a mixed methods multi-phased approach.

Qualitative research with clients, organisations and creditors:

The research was conducted for MaPS by Revealing Reality.

• This comprised interviews, both in person and remote, with 80 clients, including 30 with additional needs, 20 frontline debt advisers and 20 senior staff at debt advice organisations, 10 site visits at debt advice organisations and 15 creditors.

Quantitative surveys with organisations and clients

• This comprised an online survey with 85 debt advice organisations as well as a customer survey with 750 panel respondents in the UK who were accessing debt advice or who had done so since the pandemic

Key findings

Demographic shifts

• Two Demographic shifts noted across the sector:
  • Deepening vulnerability and complexity, intensive cases
  • ‘Never been in debt before’ middle income, homeowners

The desires and needs of customers

Despite the pandemic, the fundamental desires and needs of these customers remain broadly the same.

• Improving clients’ financial situation: Finding effective and affordable debt solutions that are appropriate for clients, increasing their income through the budgeting process, and building savings to reduce reliance on credit.
• Enhancing clients’ financial skills and knowledge: Teaching clients how to budget, prioritise bills and payments, improving understanding of financial products, and how to deal with unexpected expenses.
• Fostering a more positive outlook: Helping clients to be confident in their own ability to improve their financial situation, feeling motivated to take responsibility, and teaching clients to maintain these changes over a long period of time.

The client experience was greatly influenced by the perceived impact of debt, their sense of obligation and how this is fulfilled or not by the advised solution and the customers financial capability.

The Sector responded quickly to the pandemic incorporating a variety of new channels into advice with the loss of in-person services.

While the channel diversity has been maintained since the end of the pandemic there is further opportunity to incorporate them in a more strategic way to optimise the client

Points to consider

• Methodological limitations: The report acknowledges some limitations with the quantitative methodology. The organisation survey used an opportunistic sampling strategy which means that the respondent base is unlikely to be representative of all debt advice services. However this was a pragmatic approach given the lack of a comprehensive list of such organisations. The customer survey was broadly representative of the population albeit with a skew towards younger people and those from lower socio-economic groups. As an online survey it also potentially excluded those who have limited internet access or literacy, as well as those with accessibility needs.
• Relevance: Highly relevant given the cost-of-living crisis and the likelihood of more people falling into debt.
• Generalisability/ transferability: The research applies to the UK although the insights about the type of people seeking debt advice are likely to apply in other markets.
• Applicability: Of interest to debt advice organisations, policymakers, service providers and any stakeholders interested in helping customers access debt advice.