In Focus Consumer Credit
Progress on debt typically spiky, not smooth
Research reveals the impact of debt advice on the future prospects of different people in debt
John Griffith-Jones Chair, StepChange Debt Charity
Early findings from our new research, released as part of Debt Awareness Week, show what variations in progress typically arise among different groups of clients as they embark on resolving their difficulties after taking debt advice. Some of these confound expectations.
Understanding The new research tracks groups of clients three months, nine months, and 15 months after taking advice, and will be run on a continuous basis, allowing a clearer understanding to be built up over time. Overall, three months after advice, 12%
of clients said their debt problem was now completely sorted, with a further 63% saying they had made a lot of progress or some progress. However, 17% said they had made little progress and 9% said they had made no progress.
Negative budget The clients most likely to report progress tend to be those with a positive or balanced budget, if they have other vulnerabilities or not. It is the existence of a negative budget, rather than the existence of vulnerabilities, that appears to be the more significant barrier to making progress in resolving debts. Although clients with additional
vulnerabilities (such as physical or mental- health issues) typically experience greater difficulties than other clients, vulnerable clients with balanced budgets are more likely than any other group to say that their debt problems were completely sorted out at three months after advice, possibly reflecting a greater likelihood of debts being written off.
24 The same is not true for vulnerable clients
with negative budgets, who make less progress. This group is only half as likely as the client group overall to say they are dealing better with day-to-day life than before advice: 28% of negative-budget vulnerable clients, in contrast to 56% of clients overall.
By contrast, those who reported little
progress scored 4.8, and those who reported no progress scored 3.2. The findings will be used to help to
This group of clients is also only half as likely as the client group overall to say they are dealing better with day-to-day life than before they sought debt advice: 28% of negative- budget vulnerable clients, in contrast to 56% of clients overall
Indicators The research uses the Office for National Statistics’ personal wellbeing indicators as another way of comparing clients’ experiences by comparison with each other, and with the wider UK population. Reflecting the fact that debt is stressful,
clients’ scores were lower than average and there was a direct correlation between the amount of progress and reported wellbeing. When asked ‘how satisfied are you with
life nowadays?’ clients who said their debt problem was ‘completely sorted out’ scored 7.8 (out of 10), virtually identical to the 7.7 national average.
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pinpoint areas that need further research, to help focus our collaborative work with creditors on how best to help clients, and to help hone the debt-advice journey for clients with different characteristics, so that as many people as possible get the best possible help, tailored to their needs and characteristics.
Nuanced picture Over time, this new client tracking will help us build up a powerful understanding of the experience of different debt-advice client groups. We will be able to use this to refine our services, but also to show policymakers a more nuanced picture of the real experiences of people who take debt advice. We plan to provide regular updates and
to promote wider discussion within the debt-advice sector on the shared challenges we face in helping clients achieve successful debt resolution. The research clearly shows the overall
positive effect of debt advice on clients’ financial situations. Yet already, from the early findings of our tracking, we can see that progress in resolving debt does not follow a smooth, linear trajectory – reflecting the complex and shifting circumstances in people’s lives. The more insight we have into why this is
so, and who is particularly at risk, the more we will be able to help build services that work around the challenges that people face that may impair their progress. CCR
March 2019
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