Debt advice funding cut despite increase in demand
Wednesday, 02 February 2011 09:28
The funding of debt advisers is being cut at the end of March fuelling concerns that disreputable debt management companies will step in to fill the void to the detriment of members of the public with debt problems.
The Financial Inclusion Fund has been paying for about 500 specialist debt advisers in England and Wales for the last five years but funding is not being renewed when it runs out in March despite an increase in demand for the service.
Many of the debt advisers have already received redundancy notices in the post and been told to stop taking on new clients. However, the Money Advice Trust, a charity that helps people with debt problems, predicts that an extra 200,000 people are expected to ask for free debt advice this year.
The Citizens Advice Bureau (CAB) still offers free advice but they are struggling to cope with the demand for their services and have lost some of the funding they receive from local authorities. The loss of advisers funded through the Financial Inclusion Fund places more pressure on CAB.
The CAB’s Director of policy said: "It just doesn't stack up, unemployment is rising, the economy is in a difficult situation and there is an increasing demand for debt advice and at this time to lose frontline services in local communities doesn't seem to make sense.”
The treasury said that a new web and phone based service will replace the face to face help which is to have its funding stopped. There are concerns that the demand for debt advice will be taken on by debt management companies that charge fees and don’t always offer consumers the best advice.
Comments
Newsletter sign up