at the service of Britons in debt annual review 2007 Foundation for Credit Counselling Foundation for Credit Counselling 2007 1 Britain’s leading charity for people with debt problems contents The warning signs in 2007 came not from lending or borrowing but from telltale signs that the economy THE RIGHT PATH 4 was beginning to creak - in particular rapid increases in the costs of utilities and housing. WIDER AND DEEPER 6 Direct demand for our counselling service was Benefi ts, Repossessions down, even as the storm clouds were gathering, but and Self-employed that gave us the opportunity to recast our service so we could offer more people specialised help. THEY CAME THROUGH 8 First we met the need to help the growing number of people who prefer the speed and anonymity of THE TOUGHER CHOICES 10 online help to counselling by telephone or face- Insolvency to-face. Our world-leading Debt Remedy (tailored also for Scotland and Northern Ireland) became the FRIEND OR FOE 12 At the time of writing, when underlending channel of choice for a third of our clients. - at the height of the credit crunch - makes Secondly we galvanised the banks to confront the IN SAFE HANDS 14 its appearance as a consumer woe, it is hard high-profi t Individual Voluntary Arrangement (IVA) to recall 2007 as a year when consumer credit model introduced by a number of “factories” whose appeared to be relatively under control. margins enabled them to seduce consumers. With our In the perspective of time it may appear as a period calming and transparent presence in the market, the of calm between creditmania and the crunch whose IVA is returning to its correct place in the quiver effects may be with us for some time. of solutions. 2 Foundation for Credit Counselling 2007 Presciently we foresaw demand for advice about domain and not used to target vulnerable consumers. credit crunch added to the spiralling costs of utilities mortgages and repossessions and set up a centre in We are a consumer service, recognised as such and other everyday costs, we can expect more bad Leeds. Nottingham now houses a centre for welfare when we were invited by Consumers International to debt, more repossession and more insolvencies. We benefi ts counselling and Birmingham a centre for address their members in Sydney last year. Now we make it our task to help people through such bitter bankruptcy counselling. Self-employed clients have are taking CCCS Debt Remedy worldwide. processes. That it can be done is shown in the pages a specialist centre in Newcastle. But as our clients struggle to repay their debts, we of this review in two different client accounts of being All these initiatives are targeted at the clients must ensure that pressures on creditors do not restrict in debt. I thank the Taylors and the Swainstons for who come to us but we are developing skills and our ability to help. The ready availability of cheap being willing to share their painful experience with us. knowledge with which we will be able to reach more credit may be over for the moment, but lenders are people and infl uence public policy. committed to a new regime of treating customers To date we have let our statistics speak for fairly. There is much nonsense talked about the impact themselves. Now we will be able to complement of the credit crunch but it is foolish to pretend that the work of Citizens Advice in giving a voice to we are going to transform overnight into a nation Britons in debt. of savers, growing our own vegetables and sewing Successive governments have overemphasised the our own clothes. Credit is essential to the smooth signifi cance of home ownership. It has given cover to running of society but it is only one element in the reckless lenders, shown a fata morgana to consumers fi nances of individual households. Let us hope that and fuelled the credit crunch in the UK. the implementation of the recommendations of Otto The multidisciplinary research of credit card Thoresen by the FSA and others will help consumers to companies (illustrated by Elizabeth Warrant of the manage their money better in the longer term. Harvard Law School) must be placed in the public As for the immediate future, with the impact of the Foundation for Credit Counselling 2007 3 the right path People who need help with their debts are best availability of our service reaches those who need it. helped if it can be offered to them in the right Many for-profi t organisations are setting out their way for them. wares, often with the prime intent of making money Otto Thoresen’s review of generic fi nancial advice, rather than helping people. This reality is obscured by commissioned by the Treasury in 2007, concluded clever marketing. that by 2020, 65 percent of people would want help However, trust is worth more than marketing online rather than face to face or over the telephone. spend and people can now reach Debt Remedy Here our clients are fortunate in that our online through electronic links on the websites of partner Debt Remedy is easily available, free and anonymous, organisations. so much so that a third of our clients are choosing As Debt Remedy is derived from the experiences it. They like most people lead complicated lives and of counselling one million people with every receive messages from a multiplicity of sources. conceivable debt problem, we are confi dent, even This is the double bind created by the explosion in in these fast moving times, that it will be some time new communications technology: it has never been before anyone can replicate this service. Thus for the cheaper or easier to communicate with thousands, moment we have a unique facility which allows other even tens of thousands, of people but the very scale organisations, who enjoy trust, to offer their website of the information available to them, makes it harder users immediate access to free and anonymous debt Access to Debt Remedy on MSN Money site is kept free of advertising than ever to ensure that information about the counselling. 4 Foundation for Credit Counselling 2007 One such partnership is with Microsoft whose MSN curve for us as a charity. Money hosts a branded version of Debt Remedy on Such activity requires time and specialist input from its site. Since its launch in September, nearly 1,000 staff. We have recently appointed a head of e-services clients have completed the online counselling process and maintain a dedicated ‘social networking’ team through this service (which is free of all advertising) including four experienced counsellors. and volumes are expected to increase considerably This is a huge job: there is an untold number of throughout 2008. websites and blogs out there claiming to offer help A similar approach has been taken with Community in a variety of ways. Some attract a vast number of Legal Advice where a joint branded version of Debt visitors, others amount to little more than individual Remedy is available on its website. Other organisations hobby horses. Obviously we have to be selective have positioned links to CCCS Debt Remedy including but using fully trained counsellors has allowed us to the Royal Bank of Scotland’s MoneySense service. assume the role of official responders on the blogs CCCS page on Facebook With the issue of improving financial capability of some popular websites such as moneysavings across the population now firmly in the political expert.com which has over two million regular users foreground and given the apparently unlimited annually. Given the uncontrolled and random nature capacity of Debt Remedy, many people now reach of blogs, website providers are only too happy to have us online. responses to debt queries from our experts. mortgage arrears. In addition people who want to be The partnership with MSN included a social This engagement with the new is not being done counselled face to face will have their own version of networking site. With the skills and experience at the expense of the old. It is largely down to the Debt Remedy, supported by trustworthy intermediaries acquired developing this we now engage in social success of Debt Remedy, which can effectively counsel such as general advice agencies and church groups. networking on our own behalf. There is an active 30 times as many people as one “offline” counsellor, It is our aim that everybody in need of help should be CCCS presence on several of the most popular sites, that we have been able to establish our specialist able to reach us in the way most convenient to them, including Facebook. Visitors are not that numerous at services, allocating counsellors to cope with more because that will ensure we can be most effective in the moment but it is all part of an important learning complicated problems such as self-employment and our help. Foundation for Credit Counselling 2007 5 wider and deeper benefi ts, repossessions and self-employed As demand for counselling moderated, we INFO POINT took the opportunity to widen and deepen our • Reviewing benefi ts and welfare advice and support. entitlement earned clients referred Our counsellors have always been able to advise an extra £75 per family per week across the whole gamut of debt solutions and this on average. year we were able to build up specialist teams of counsellors to deal with particular problems, providing an expert source of advice for both new and existing clients as well as counsellors and our own staff supporting people on debt repayment plans.