2015/16 Business Plan

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2015/16

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The Money Advice Service: 2015/16 Business Plan

Money Advice Service: Debt Advice Quality Framework 2

Section Section

moneyadviceservice.org.uk

Key highlights 3 Chairman’s foreword 4

Chief Executive’s introduction 6

Our purpose 8

The Financial Capability Strategy for the UK:

a long-term plan, working with others 12

How we did in 2014/15 15

Our priorities for 2015/16: 18

Priority 1: Effective leadership 22

Priority 2: Driving improved financial resilience 25

Priority 3: Tackling crisis debt 28

Evaluating our performance 31

Resource summary 2015/16 38

The devolved nations: how we will make a difference

all across the UK 46

Northern Ireland 47

Scotland 50

Wales 53

Stakeholder consultation 56

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3 Key highlights

Key highlights

work with partners and stakeholders

to lead and co-ordinate a new Financial Capability Strategy for the UK;

take forward recommendations

from the Independent Review of our Service conducted by Christine Farnish and published in March 2015;

work openly with other players in

the sector to make sure people are getting the support they need, when they need it, and scale back our own service where others are better placed to give people the help or advice they need;

work with providers, creditors

and other funders of debt advice, to pursue a range of initiatives to improve the availability, quality and consistency of debt advice services across the UK;

further develop our insights into

how best to influence people’s financial behaviours and, by sharing these insights with

stakeholders, lead efforts across the sector to help people manage their money more effectively;

ensure that millions of customers

take action to increase their financial resilience – with a target of 11.5 million actions;

consolidate and stabilise the broad

reach of our services – our aim is to achieve 21.5 million customer contacts over the course of the year;

increase funding for debt advice,

enabling our partners to deliver 370,000 high-quality sessions – 47% more than in 2014/15;1

provide a one-off, specialised

service as a contingency plan for clients affected by further changes in the debt management market;

continue to work with the

governments of Scotland, Wales and Northern Ireland to ensure we complement existing provision and that the service we provide reflects the different needs and demands in those nations.

In 2015/16 we will:

1. In this plan, where 2015/16 targets are expressed as a percentage increase on 2014/15, these are based on projected out-turn figures, extrapolated from the most recent data available for the current year. Full year-end performance figures will be published in our Annual Review later in the year.

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4 Chairman’s foreword

Andy Briscoe Chairman, the Money Advice Service

Chairman’s

foreword

The last year has seen three major developments for the Money Advice Service which have laid firm foundations for our future activities. In 2015/16 we will build on these foundations to ensure our impact on financial

capability is wider and deeper than ever before.

In 2015/16 the new Financial Capability Strategy for the UK will be put in place to deliver a step change in the financial capability of the UK population over the next 10 years. Our aim is for a strategy that will deliver significant improvements in people’s ability to manage money well day to day and to anticipate the impact of significant life events on their personal financial situation.2

We know that to achieve a shift on this scale we need to work with many organisations – financial institutions, consumer groups, charities, government and regulators. Indeed throughout 2014/15, we worked with key partners to develop the Draft

Financial Capability Strategy for the UK, which we published in September 2014. This was a major collaborative effort, hopefully setting the scene for a decade of sector-wide co-operation.

In 2015/16 we will develop and publish the final Strategy and continue working together to deliver it. In this plan you will see the ways in which the Money Advice Service will contribute to the delivery of the Strategy.

The second major development was the publication of the Independent Review of our Service by Christine Farnish. I would like to thank Christine and to welcome her report. It is right that we constantly look at the changing world around us and continue to challenge ourselves to find better ways of meeting our customers’ needs. The Review has confirmed the continuing unique role and importance of the Money Advice Service, both in our debt advice work and in our work to improve financial understanding and capability. The report sets out a clear vision for debt advice, delivered on a much greater scale, based on increasing insights into customer needs and sector-wide co-ordination.

The Review has raised some valid questions about the operating model for the money advice side of our service and we are committed to rising to the challenges posed. Many of the recommendations are already being implemented. But there are a few that require further evaluation to ensure they are the best way to meet current and future consumer needs. Rest assured we are committed to conducting this evaluation rigorously and with external oversight.

2. Financial capability – the ability to manage money – is a key determinant of people’s financial wellbeing, alongside their financial means and external pressures (such as the economic environment). A financially capable person keeps track of their money, plans ahead, and is able to make informed decisions about their finances, understanding the risks and benefits of particular options.

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5 Chairman’s foreword

Finally, we signed three-year funding agreements in England and Wales with our lead organisations for free debt advice, which puts our work with them on a strategic footing rather than the previous year-by-year approach. We hope to duplicate this long-term, stable arrangement in Northern Ireland and Scotland as soon as possible. During 2014/15 this new approach has resulted in far greater volumes of high-quality debt advice; I am delighted to say that in 2015/16 we will be able to deliver 47% more debt advice sessions while increasing the debt advice delivery budget by just 13%.3

This is a tremendous tribute to the strong and productive partnerships that now exist in the debt advice arena, a theme I hope to see widened in many directions in 2015/16 and beyond.

Andy Briscoe

Chairman, the Money Advice Service

“The Review has confirmed the continuing

unique role and importance of the Money

Advice Service, both in our debt advice work

and in our work to improve financial

understanding and capability.”

3. Excluding one-off costs as a contingency plan for clients impacted by further changes in the debt management market.

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6 Chief Executive’s introduction

Caroline Rookes Chief Executive, the Money Advice Service

Chief Executive’s

introduction

Consumers in the UK have a wide range of needs for financial advice at different points in their lives. At the Money Advice Service we want to meet their needs in the most cost-effective way possible and in so doing help them to build their financial capability. This plan sets out how we will do that over 2015/16 working openly and collaboratively with partners across all sectors.

The plan is structured according to three priorities.

Our first priority is leading and influencing the sector. The guiding light for our leadership will be the Financial Capability Strategy for the UK. The Strategy has many strands involving many organisations. The Money Advice Service will lead and co-ordinate the development of the strategy and play a key role in delivery. I believe that every activity described in this business plan will advance the goals of the Financial Capability Strategy. We will focus on helping people with budgeting and encouraging them to build up a savings buffer or pay down their debts. We will lead the work to increase the scale of free and high-quality debt advice.

“I believe that every activity described in this

business plan will advance the goals of the

Financial Capability Strategy.”

We will also focus on children and young people. We plan to work alongside existing parental interventions to pilot help for parents in improving the financial behaviours of their children, particularly the very young. In addition we will take forward the

recommendation in the Independent Review that we provide a more active and strategic role in co-ordinating the significant spend devoted to financial education in schools. Also in support of the Strategy, we will be gathering and sharing evidence about what works in the field of financial capability, and disseminating it through an online ‘Evidence Hub’.

Our second priority is driving actions that improve financial resilience. Through our website and our partnerships, we have been able to generate greater reach year on year. We have gathered ever more detailed evidence about the actions people take in response to services offered on all our channels. Our plan for 2015/16 is to continue this approach and explore new partnerships to carry out co-ordinated activity that could further amplify our impact.

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7 Chief Executive’s introduction

We recognise that the Independent Review has proposed an operating model for money advice that could, in time, produce even greater cost efficiency.

We welcome this challenge from the Review, while recognising that it would represent major changes to the way we undertake our money advice work. So we will lead a thorough assessment during the year, working closely with the Financial Conduct Authority (FCA), to gain a fuller understanding of consumer advice needs in the current market place and how we and the wider sector can meet these. As part of this work we will also consider the practicalities of implementing the changes; how we would measure the value they add to consumers; and what type of organisation would be needed to deliver them.

Our third priority is increasing the scale and efficiency of our crisis debt work. There are great opportunities in this area, because of the strength of our partnerships and the obvious social and sectoral benefits that this work delivers. We have made great strides in productivity and channel shift and we are delighted that we are able to channel savings from our money advice efficiencies into increasing the number of debt advice sessions planned next year by 120,000. The Independent Review has underlined the importance of this work, especially the need to convene and chair a new Debt Advice Steering Group, which will help us to reach agreement on new initiatives to support the sector, including effective triage, and will continue to ensure funding rises to meet demand. We will also focus efforts on the prevention of crisis debt, and ensuring that more people tackle their financial problems by actively seeking debt advice.

Caroline Rookes

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8 Section

Our purpose

“We aim to help people increase

their financial capability and reduce

levels of over-indebtedness.”

8 The Money Advice Service: 2015/16 Business Plan

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9 Our purpose

Our purpose

The Money Advice Service is the UK-wide organisation with responsibility for helping people to manage their money better. We are an independent body set up by Parliament under the Financial Services Act 2010.

We aim to help people increase their financial capability and reduce levels of over-indebtedness. We do this by working with a wide range of partners across the public, private and voluntary sectors to make good information and guidance available to their customers and clients, as well as providing information and services through our own direct delivery channels. We also have a wider leadership role, bringing together organisations which share our goal of improving the nation’s financial capability. We are the largest single funder of face-to-face debt advice in the UK. Under the Financial Services Act 2012, we have responsibility for working across the sector to improve the availability, quality and consistency of debt services.

In everything we do, whether it is the services we provide, or through our wider leadership role, we don’t simply help people in the short term, but encourage them to take action and change their long-term attitudes and behaviours towards money. Our funding comes from levies on the financial services industry collected by the Financial Conduct Authority.

In 2015/16, there is also a voluntary £2 million contribution from the utilities sector towards our debt advice work.

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10 Our purpose

The Independent Review and our 2015/16 Business Plan

On 20 March 2015, the Government published the findings of Christine Farnish’s Independent Review of the Money Advice Service. The report contained 25 wide-ranging recommendations concerning all areas of our organisation. Implementing the recommendations, and undertaking greater analysis to assess the practicalities of doing so, will form a significant part of our work during 2015/16.

Key activities include: n

nThe establishment of a Debt Advice Steering Group, comprising senior

representatives from creditors together with the chief executives of Citizens Advice, StepChange Debt Charity and the Money Advice Trust, to help improve the

efficiency, effectiveness and reach of free debt advice. It will include representatives from the water and energy industry, who are for the first time making a voluntary contribution in 2015/16 to support the Service’s debt advice work. The Steering Group will consider some of the other recommendations of the review in relation to debt advice. In particular, it will help us reach agreement on new initiatives to support the sector, including effective triage; ensure sufficient funds are in place for debt advice; and make sure those funds are deployed as effectively as possible. Membership and terms of reference will be published shortly, with the first meeting taking place early in 2015/16.

n

nWe will consider the fundamental changes to our operating model proposed by the Review, and report our findings to HM Treasury in autumn 2015.

n

nThe work will take the form of an assessment of consumer advice needs in the current market place and how we and the wider sector can meet these. We will consider the practicalities of implementing the changes suggested by the report to ensure they would add more value to consumers. We will assess what type of organisation we will need to be to deliver our revised objectives – in terms of size, budget, skillset and delivery mechanisms – how we move towards that model, and in what timeframe.

n

nAs part of that work we will also explore the recommendation that we create a specialist telephone helpline on financial products and that we give grants to provide seedcorn funding for new initiatives.

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11 Our purpose

n

nWe will be guided in this work by a panel of stakeholders who will advise us in addressing the Review’s recommendations, help shape the investigation, consider any emerging findings, and provide robust scrutiny and challenge. This will consist of experts and practitioners from industry, the consumer groups, the voluntary sector and academia.

n

nStrengthening our role in co-ordinating and embedding financial education in schools. We will publish a plan on this by the summer, building on the outcomes of a summit for funders of financial education which we are holding in April. We will also deliver a financial capability evaluation framework for teachers and parents, helping those who deliver and fund financial capability interventions to understand, provide and measure best practice.

n

nA range of activities to strengthen our relationship with the FCA and wider FCA family, which will include better sharing of our insight to help inform the FCA’s regulatory activities, inviting the Financial Ombudsman Service and Financial Services Consumer Panel to join our Research and Evaluation Group.

n

nContinuously reviewing our money advice content to ensure we are adequately filling gaps and not duplicating others in the market place.

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12 Section

The Financial

Capability Strategy

for the UK

48% of people reported that they

were concerned about their

finances, and 50% of people don’t

make a personal budget.

Money Advice Service Financial Capability Survey

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13 The Financial Capability Strategy for the UK

The Financial Capability Strategy

for the UK: a long-term plan,

working with others

Financial capability gives people the power to make the most of their money and improve their lives.

The current financial capability of the UK is low. We know from our own Financial Capability Survey that 48% of people reported that they were concerned about their finances, and 50% of people don’t make a personal budget. In addition, nearly two-thirds of those of working age, equating to 25 million adults, cannot cover one month’s post-tax income from their savings.4_{This low capability leaves a huge part of}

the population without the financial resilience to deal with unexpected life events such as redundancy, bereavement, divorce or other major crises.

The Financial Capability Strategy for the UK (‘the Strategy’) aims to increase these low levels of financial capability so that people can make well-informed decisions and take positive action to achieve the best possible outcomes for themselves and their

families. Increasing financial capability needs to address all the factors that influence people’s financial behaviour – their skills and knowledge, their attitudes towards money, their motivation to take action, and the accessibility of financial services. Over 250 organisations are active in this area across the UK, as policy-makers, providers of financial services, financial advice or financial capability programmes, and researchers and evaluators. This includes government, financial institutions and the third sector. The Money Advice Service has been developing the Strategy with a wide range of those partner organisations. In 2014 we published A Draft Financial Capability Strategy

for the UK; and in March 2015 we published Financial Capability Strategy for the UK: the Consultation Response and Next Steps (available at fincap.org.uk). The final

Strategy will be published later in 2015.

The Strategy will provide a shared vision and priorities for action over a ten-year period, so that the efforts and resources of all involved can be targeted and co-ordinated, and the impact of the work can be measured. The design and implementation of the Strategy will be based on the powerful concept of ‘collective impact’, where large-scale social change is achieved through cross-sector

co-ordination, rather than through individual interventions. This will require a shared mission across sectors, commitment to specific goals and targets, and clearly defined roles and communication.

A commitment to the use and development of evidence and evaluation will be critical to the success of the Strategy. This will help all partners understand and contribute to what works best, and drive up the scale and effectiveness of interventions. It will include a more strategic approach to sharing existing evidence, and ensuring that all partners use a consistent methodology for measuring the impact on people’s financial behaviour.

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14 The Financial Capability Strategy for the UK

The success of the Strategy itself will be measured through improvements in the financial capability of targeted groups, measured through the annual Money Advice Service Financial Capability Survey, which has been aligned with the Strategy. The Strategy is central to the work of the Money Advice Service and will set the

direction for our future work. Everything we do will contribute to the Strategy, with the Money Advice Service either playing a leadership and co-ordination role, or delivering directly where necessary. In addition to providing the secretariat for the Strategy, which will drive and monitor action across the strategy partners, the Money Advice Service will have a central role in:

n

nco-ordinating debt advice and the prevention of crisis debt;

n

ncreating a sustainable model for financial education;

n

nacting as the evidence and evaluation hub on what works to improve financial capability; and

n

nmeasuring financial capability and the progress of the Strategy through its annual Financial Capability Survey.

In 2015, the Money Advice Service will set up and chair a new Financial Capability Board. This board will be responsible for driving the Strategy, supported by action groups to take forward specific programmes.

The Money Advice Service will also be running a Financial Education Funders’ Summit in April 2015, to bring together the major funders of financial education for children and young people from banks and other financial institutions. The aim will be to understand the current fragmented funding landscape, and work together to maximise the impact of programmes for school-age children. The summit is the first stage in a longer-term programme to develop a sustainable model for financial education that involves research, innovation, funding, campaigning and evaluation. The Money Advice Service will also convene and chair a new high-level Debt Advice Steering Group, which will help us to reach agreement on new initiatives to support the sector, including effective triage, and will continue to ensure funds are maximised; and deployed as effectively as possible.

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15 Section

How we did

in 2014/15

“We developed and launched a

range of new tools and content to

help people with everyday money

management, major purchases and

signiﬁcant life events.”

We reached

21 million

customers

Car Costs

Calculator

Mortgage

Affordability

Calculator

And finally…

our research revealed

something about teenagers.

We launched a new Debt

Advice Locator tool.

Helps people access free debt advice

services online and by telephone or

find face-to-face services near them.

Viewed more than 326,000 times

in 2014/15.

Payday Loan

Advice Tool

We helped

9.2 million

customers

take action

an increase of 20%

from 2013/14

more than double the

target of 4.5 million

How we did in 2014/15

How we made a real impact on people’s lives*

We developed and launched a range of new tools and content

to help people with everyday money management, major

purchases and significant life events.

High level of

customer satisfaction

said they would recommend

our service to others.

87%

of clients acted on

the advice received.

*The statistics presented are all year-to-date based on the figures up to and including 23/03/2015. We expect our final 2014/15 year-end figures to be higher.

88%

succeeded in

reducing their debt

within six months.

76%

Helps customers compare

the purchase and running

costs of second-hand car.

Used more than 220,000

times in 2014/2015.

Helps customers to

estimate how much they

can afford to borrow before

buying a house and the

running costs.

Used more than 557,000

times in 2014/15.

We funded more than

244,000 debt advice sessions*.

*sessions delivered by our partners using

MAS funding.

We implemented

three-year funding

agreements in England and

Wales to improve access to

debt advice.

Helps customers consider

alternatives to payday loans.

Used more than 100,000

times in 2014/15.

Our report ‘The Financial Capability of 15-17

year olds’ found that young people are

surprisingly good at saving, with 63% saving

regularly compared to only 53% of adults.

This research helps us understand attitudes

about money matters and financial behaviours

among young people, helping them make the

most of their money.

How we help

improve access

to debt advice

said they would use our

service again.

90%

said they were helped to

decide on a course of action.

63%

We developed a Common Initial

Assessment within our funded

debt advice organisations in

England and Wales.

The assessment diagnoses

client need and guides

them to the appropriate

advice channel. It is

operational in more than

200 of our English and

Welsh funded debt advice

providers.

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16 How we did in 2014/15

Car Costs

Calculator

Mortgage

Calculator

Payday Loan

Advice Tool

We developed and launched a range of new tools and content

to help people with everyday money management, major

purchases and significant life events.

High level of customer satisfaction

said they would recommend our service to others.

87%

Helps customers compare the purchase and running costs of a second-hand car. Used more than 220,000 times in 2014/15.

Helps customers to estimate how much they can afford to borrow before buying a house and the running costs. Used more than 557,000 times in 2014/15.

Helps customers consider alternatives to payday loans. Used more than 100,000 times in 2014/15.

said they would use our service again.

90%

said they were helped to decide on a course of action.

63%

We were

contacted

21 million

times by

customers*

an increase of 20%

from 2013/14

We helped

customers

to take action

9.2 million

times

more than double the

target of 4.5 million

How we made a real impact on people’s lives

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17 How we did in 2014/15

And finally… our research revealed

something about teenagers.

We launched a new Debt

Advice Locator tool.

Helps people access free debt advice services online and by telephone or find face-to-face services near them.

Viewed more than 326,000 times in 2014/15.

of clients acted on the advice received.

88%

succeeded in reducing their debt within six months.

76%

We funded more than

224,000 debt advice sessions.**

**sessions delivered by our partners using Money Advice Service funding.

We implemented

three-year funding

agreements in England and

Wales to improve access to

debt advice.

Our research ‘The Financial Capability of 15-17 year olds’ found that young people are

surprisingly good at saving, with 63% saving regularly compared to only 53% of adults.

This research helps us understand attitudes about money matters and financial behaviours among young people, helping them make the most of their money.

How we help

improve access

to debt advice

We developed a Common Initial

Assessment with our

funded

debt advice organisations in

England and Wales.

The assessment diagnoses client need and guides them to the appropriate advice channel. It is operational in more than 200 of our English and Welsh funded debt advice providers.

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18 Section

Our priorities

for 2015/16

Priority 1: Effective leadership

Priority 2: Driving improved

financial resilience

Priority 3: Tackling crisis debt

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19 Our priorities for 2015/16

Our priorities for 2015/16

Our aim in 2015/16 is to build on the foundations laid over previous years and to start to deliver on our longer-term ambitions.

This means meeting challenging targets to help more people get the support and guidance they need when they are over-indebted; and to help them to manage their money better.

It also means working together with, and providing leadership and co-ordination to, a wide range of organisations who share our goal of improving the nation’s financial resilience and wellbeing.

To achieve this we are organising our work under three main priorities:

We will lead efforts to improve financial capability across

the sector, building on the Financial Capability Strategy

for the UK.

We will work with stakeholders to develop a common

approach to evaluation, so that we can share evidence of

good practice and support more effective interventions.

We will begin to fill an important gap in provision,

around children and young people.

We will continue to carry out research to understand

which actions people take have the greatest benefit in

building up their long-term financial resilience.

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We will aim to increase the number and proportion of

people taking action after using our service to improve

and sustain their financial resilience.

In particular, we want to enable customers to take stock

of the longer-term costs of planned and unplanned

financial events.

We will seek to increase the number of people making

and sticking to a budget, and either saving or paying

down their debts, as these are great starting points to

protect against financial shocks.

We will seek to understand better what customers do

over the long term after using our service and support

more people to take action.

Complementing the Government’s new Pension Wise

service, we will provide holistic support to people in and

approaching retirement, recognising that retirement is

increasingly a journey with a number of stages, rather

than a one-off event.

We will also look to reduce the depth of our own service

where customers’ needs can be effectively met by other

services and providers.

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We will work to ensure that more people actively seek debt

advice and we will expand provision cost-effectively to

meet these needs whilst maintaining quality.

To achieve this we will work with partner organisations

across the UK to improve the scale, effectiveness and

efficiency of debt advice services, preventing crisis debt,

enabling people to overcome it quickly, and helping them

to stay out of difficulties in the future by providing

ongoing support with money management.

We will work with the sector to codify a shared

understanding of the symptoms of problem debt and what

action these symptoms should trigger.

We will work with creditors to help them identify those

most at risk of getting into crisis debt and develop effective

interventions to help them.

We will work with other funders of debt advice through a

high-level debt advice steering group to develop a

co-ordinated approach to commissioning.

We will also build the evidence base for the wider benefits

of debt advice to help build the case for greater funding

from a range of organisations.

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Priority 1: Be an effective leader and

influencer, driving insight-based change

and ﬁnancial wellbeing

As the statutory body charged with improving people’s knowledge of

financial affairs and helping them manage their money, we are ideally placed to lead the development and implementation of the Financial Capability Strategy for the UK.

Just as the Strategy has been developed in collaboration with a wide range of other organisations, so putting it into practice will require us to work together. A key priority in 2015/16 is to lead and co-ordinate that process, working with partners to explore what they can do to deliver on the aims of the Strategy, and supporting them to deliver on their commitments. During 2015 we will publish the final Strategy and

implementation plan, and establish its ongoing secretariat and governance.

The Independent Review recognised the successful role we have played to date in the leadership and co-ordination of debt advice. See page 30 for more information about how we are establishing a high-level steering group to further lead the sector.

In the domain of money advice, as well as taking the Strategy forward through the secretariat, we see the following three initiatives as taking forward our leadership and co-ordination roles.

Helping young people and children: We will scope out the leadership role the Independent Review has recommended we take in financial education and start to deliver it; and we will start to fill an important gap in provision by designing, piloting and testing financial capability interventions involving parents and young children.

The Independent Review recommended that we should play a strong strategic co-ordination and support role in embedding financial education in schools. We will publish a plan by the summer setting out how we intend to take this recommendation forward. This plan will build on the work we have already done for young people, and on the outcomes of a Funders’ Summit planned for April 2015.

For school-age children, over the next financial year, we will map out current initiatives in financial education and how they are funded. We will start to identify gaps and overlaps. We will begin to assess the quality of interventions through the delivery of a financial capability framework for teachers and parents, and look for opportunities to share best practice. In doing this, we will work closely with the Department for Education and other stakeholders to assess where we can add most value and build on existing initiatives.

We already know that children’s money habits are largely formed by the age of seven, and that parents are the defining influence on their money attitudes and behaviours. We believe therefore that there needs to be more provision to support parents and carers, to equip and motivate them to talk to children about money. For younger children, we plan to pilot partnerships with family intervention providers, to help parents develop the confidence and capability they need, so that they in turn can help their children manage their money better in the future.

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5. It’s time to talk: young people and money regrets (Money Advice Service, 2014) 6. Financial capability and wellbeing (Money Advice Service, 2015)

The pilots will involve incorporating our resources into family intervention services, using their infrastructure and proven ability to impact upon family behaviour, which will connect with new and hard-to-reach parents. We will be formally evaluating these interventions to understand what works best and will share our learnings with

the sector.

We want to identify ways to help young people feel proud to be good with money. We know from our innovative ‘Money Regrets’ research that many young people do not aspire to this.5

We will carry out further research to understand how best to build capability for each age group, drawing together existing research and commissioning new studies that we can share with the sector.

Understanding the consumer actions that drive longer-term resilience: We

will carry out research to understand which of the actions consumers take to improve their money management are most effective at raising their long-term resilience and reducing their risk of becoming over-indebted.

We believe that building up an understanding of what builds long-term financial resilience is fundamental to our work and that of the sector. We have already built up a body of evidence using innovative research techniques such as ethnography and the application of behavioural economics. We will continue to act as a focal point for consumer insight including:

n

nOur annual Financial Capability Survey – the essential barometer of the nation’s financial capability and behaviour, which has underpinned measurement and understanding since 2006. The 2015 Survey has been aligned with the new Framework and will identify a range of financial behaviours, as well as the key barriers and drivers. We will share the findings of this study with the sector later in 2015 and place the results at ukdataservice.ac.uk for widespread access.

n

nWe will use the learnings from the Financial Capability Survey to refine our target market definition. This will help us to focus our activities and those of the broader sector on those consumers who can benefit most from interventions – be they around better use of credit, building up a savings buffer or taking out various types of insurance.

n

nWe will supplement the core tracking programme with targeted pieces of research. As an example, at the end of 2014, we conducted qualitative work which examined the impact of life events on consumer perceptions of financial wellbeing.6_{We plan}

to do further in-depth research on the impact of life ‘shocks’ such as divorce, redundancy and early bereavement.

n

nWe plan to explore the ‘retirement journey’, tracking a sample of consumers as they navigate their retirement options – understanding what information sources they use, how they make decisions and their overall satisfaction with the process.

n

nWe will make wider and deeper use of our Customer Insight Database, which monitors customer behaviour on our own delivery channels, and share the insights and findings across the sector as a whole.

n

nWe also intend to mine other sources of longitudinal data to build the broadest possible understanding of consumers’ financial behaviour.

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Measurement and evaluation: We will help the financial capability sector to

measure impact more effectively.

As part of our work to co-ordinate the Financial Capability Strategy for the UK we will be helping organisations that provide, fund and commission financial capability interventions to measure the impact of their programmes in a more robust and consistent way – to use evidence more effectively when commissioning and making delivery decisions.

We have created an online resource (the ‘Evidence Hub’, available at fincap.org.uk) to bring together and summarise the best and most relevant evaluations and studies from financial capability interventions across the world. We expect this hub to be at the heart of a wide range of activities to gather and share evidence about what works. During 2015/16 we will add to the evidence gathered on the hub.

We will deliver a financial capability evaluation framework for teachers and parents, helping those who deliver and fund financial capability interventions to understand, provide and measure best practice.

We are also developing an evaluation toolkit, providing frameworks and resources that organisations can use to evaluate their programmes according to common measures. We will pilot the toolkit with more than a dozen organisations in 2015/16, then refine and formally launch it towards the end of the financial year.

These initiatives will help the wider sector to focus funding in the right place and should drive up the impact of financial capability interventions. This initiative has been widely welcomed by stakeholders inputting to the Financial Capability Strategy consultation.

We will also monitor and evaluate our own delivery activities through a range of surveys and data measurements, so that we can be fully accountable for our own performance and understand where to target improvement. This will include questions in our stakeholder engagement survey to track perceptions of our leadership of the sector.

We will continue to chair a Research and Evaluation Group (REG) that reviews best practice in financial capability research and evaluation. We are currently reviewing the remit and membership of this group, which already includes leading academics and research professionals. We believe that this will further our role as the focal point for insight and evaluation in the sector. It is also our intention to host an annual event where new insights can be shared and debated.

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Priority 2: Increase the number and proportion

of people taking action to improve and sustain

ﬁnancial resilience

Helping people to manage their money better is at the heart of our service. Since the Money Advice Service was established the number of people using our service has grown significantly – and this has resulted in millions of people getting the help they need to make better financial decisions for themselves and their families.

Partnership will continue to be central to our approach in 2015/16; we feel privileged that a whole range of partners from the financial services, public and not-for-profit sectors have chosen to work with us to maximise the number of people benefiting from money advice. In the year ahead, we will continue to expand the range of organisations partnering with us to make sure even more people are getting the help they need, when and where they need it.

Building on our core business activity, in 2015/16 the Service will:

n

nensure that as a result of our services 11.5 million actions are taken, raising the proportion of actions taken in relation to contacts, despite a 21% decrease in the amount of money advice funding;

n

nserve 21.5 million contacts through all our channels: digital, webchat, phone, email and face to face.

The focus of our everyday money advice will not be on increasing our numbers of customers, but on getting the customers we reach to improve the way they manage their money over the long term, by:

n

nCapturing customers’ attention as they do everyday money management. We want

customers to make the most of the vibrant market of commentators and services that can help them with everyday money choices, especially when they are comparing products. We will not only want to refer customers to these providers, but to work with those providers to get customers to focus on beginning to save, especially for a rainy day.

n

nMoving the attention of customers to longer-term risks and needs. People are often

more open to new ideas when they are planning or experiencing a significant life event (such as marriage, having a baby, redundancy, separation or death of a loved one) or making a major purchase (for example a car or a house). These all have financial implications and we will actively work to ‘nudge’ customers at these moments to take stock of their finances and build up preventative measures.

n

nBringing about measurable actions. Although there are many behaviours that will

demonstrate customers are making long-term planning decisions, we believe some of the most helpful behaviours are making a budget, spending accordingly, and using any surplus to either save or pay down high-cost debts. We see these activities as central, and we want them to lead on to careful consideration of protection products such as insurance. Our ‘actions tracker’ specifically monitors whether or not customers take these actions.

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In 2015/16, we have five main initiatives to improve financial resilience.

Budgeting: We will test a range of initiatives to get more people budgeting,

sticking to a budget, and either building up a savings buffer or reducing their unsecured debt, with a focus on partnering with the Department for Work and Pensions (DWP) to reach people through the changes coming about under Universal Credit.

Retirement: We will meet the needs of customers arising from the new

pension reforms with tailored information and materials which complement the Pension Wise service.

Through our actions tracker, we have excellent knowledge of discrete actions that people are taking that support budgeting behaviour; our task in 2015/16 will be to join up the sequence of these actions in a way that increases resilience for the individual concerned.

In 2015/16 we will focus particularly on providing budgeting support for people entering or transitioning onto Universal Credit. This provides a viable channel to reach 500,000 people at high risk of over-indebtedness during the course of 2015/16. In future years, as more and more people transfer into Universal Credit, the number of people coming within the scope of this partnership arrangement will approach 11 million per year, and we anticipate that the majority of them will be within our target market.

Adding value: We will reduce the depth of – or stop developing – our own

services where we identify others in the sector who are successful in helping people take the right action, and provide appropriate signposting.

The pension reforms announced by the Government in March 2014 will give people much greater choice as to how they use their private pension savings. We have played an essential role in helping establish the new Pension Wise guidance service, which will help consumers understand the options open to them. Over the last year we have been developing a ‘Retirement Journey’ to offer people support and guidance across a wide range of issues as they approach retirement and into later life. The resources we are developing complement Pension Wise.

Helping people to budget and plan ahead for the reduced income most people will face in retirement is at the heart of this journey. We aim to help people consider all of their options and take into account all of the issues they are likely to face including pension drawdown, state pension income, equity release and potential long-term care needs.

To date, we have launched a new annuity comparison table, and a directory of registered advisers, focusing on the retirement market. For Pension Wise customers who need to know more after their guidance sessions, these will help them to access regulated advice and narrow down their search for specific products.

This work will continue into 2015/16 as we continue to refine the tools and guidance we offer. We will need to respond to changing customer needs in the light of changes to the economic landscape, and help people to prepare for changes brought about by further policy decisions by government or regulators.

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Focusing on our target audience: by understanding even better what people

do after using our website, we will be able to optimise further our digital service to increase the proportion of target customers taking action with money or debt advice.

We aim to complement and add to the services and resources provided by others. In order to ensure we focus our own efforts and resources on areas where we can add the most value, we will be much more active in referring our customers to alternative sources, such as insurance comparison websites. We will also fill clear-cut gaps in the market, as for example with our annuity comparison table. We will link these choices to the recommendations made in the Independent Review suggesting that over the longer-term, we could operate our digital service within a different business model that makes more use of referral and less direct provision.

Targeting our offline channels: we will ensure that our phone, webchat and

face-to-face services are focused on our target customers, with the higher-cost channels serving people we can help the most.

Our target customers are those whose financial resilience we can most improve, by reducing the risk that they will find themselves in serious or crisis debt. In order to make continuous improvements to our service, we need to develop a better

understanding of what this group does with the information, support and guidance we offer. One means of doing this is by increasing the proportion of target customers who are registered with us, and doing this is an important initiative for 2015/16. This will enable us to understand which parts of the site are most effective in leading target customers to take action and which sections are not.

Another means is to use our actions tracker to return to customers some months after they have used the Service, to explore what long-term changes they have made, following their contact with the Service, and why.

In line with the “adding value” approach highlighted above, we can then use this understanding to evolve our online content and the user experience our customers have so that the advice we provide is best designed to encourage target customers to take action. This will build towards our goal of ensuring customers take 11.5 million positive financial capability actions in 2015/16.

In 2015/16 we will continue to deliver our face-to-face, telephone and webchat services. As the contracts to run them reach their end dates, we will also consider what arrangements should succeed them, taking into account our work exploring the Independent Review’s recommendations.

This design has been informed by learnings from pilots we ran in 2014/15. The aim of the new process will be to ensure that:

n

nmore of our target customers take actions that have a long-term effect on financial resilience;

n

nreferrals from our website draw in the people who can really benefit from help through other channels;

n

nwhen people contact us, their needs are rapidly assessed so that they can be directed to the most appropriate channel;

n

nwe use consistent behaviour change principles to address customer needs; and

n

nwe use strategic partnerships to ensure that customers in the greatest need are signposted from us to other sources of advice.

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Priority 3: Improve the scale, effectiveness and

efficiency of the sector at preventing crisis debt,

enabling people to overcome it quickly, and

helping them to avoid returning

The Money Advice Service is the largest single funder of debt advice across the UK and it is an important part of our statutory function to work with partners to improve the availability, quality and consistency of debt advice services.

Debt advice services make a real difference to the lives of the people who use them, including some of the most vulnerable in society. People who have had debt advice get out of debt more quickly and are more likely to be able to cope with future income shocks.

There are now more than nine million over-indebted people in the UK but research indicates that fewer than one in five of those actively seek advice and those who do wait almost a year before doing so. Our five-year ambition is to double the proportion of over-indebted people who seek debt advice. This ambition is supported by the numerous recommendations in the Independent Review about further co-ordinating the sector to ensure that more people tackle their financial difficulties and can access the advice they need.

In 2014/15 we put in place new three-year funding agreements in England and Wales, and in so doing have transformed the way we commission services.7

The challenge in 2015/16 will be to embed the new approach and build on the foundations those agreements provide. We will also look to implement similar long-term arrangements with our partners in Scotland and Northern Ireland as early as practicable.

To meet increased levels of need in line with our longer-term ambition it will be necessary to continue to increase provision of face-to-face services, but it will also be even more important to facilitate a shift towards telephone and online channels where this is the most appropriate way to meet clients’ needs. When working to raise

provision, our focus will be on providers that do not charge fees.8

As part of this shift, we will explore changes to improve the customer experience, working through a high-level debt advice steering group to alter policies as required. This will include exploring a common front-end system to triage customers into free debt advice and into the most appropriate channel for their needs, in line with a recommendation made by the Independent Review.

7. The partnerships and organisations involved are: Citizens Advice; East Midlands Money Advice, led by Community Advice and Law Service (Leicester); Greater Merseyside Money Advice Partnership, led by the Knowsley Citizens Advice Bureau; Money Advice West, led by Talking Money (Bristol); Capitalise, led by Toynbee Hall (London).

8. The Money Advice Service acknowledges the role played by fee-charging companies in the advice sector and takes into account the services they provide when assessing gaps in provision. We will continue to work with the fee-charging sector to improve the quality and consistency of the advice they deliver to clients, but will not make any referrals to these companies because charging fees increases the length of time it takes a client to repay their debts.

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While availability of debt advice remains a key focus, it is vital at the same time that the services we commission are of the highest possible quality to ensure clients are able to access the best help and support available. Following the recommendations of the Independent Review, we will continue to share standards and good practice more widely across the sector, based on research and stakeholder communications. To this end we have already introduced new sector-wide quality frameworks, covering both organisations and individuals delivering debt advice. In spring 2015, following consultation with the sector, we will introduce a new peer review scheme to

complement our existing frameworks. The projects we fund will initially participate in peer review before we begin taking steps to roll this out more widely across the sector. As well as helping more over-indebted people get the advice and support they need, we want to reduce the number of people becoming over-indebted – and to prevent those who have resolved their debt problems from falling back into difficulties. To achieve this, it is crucial that there is strong integration of services that support people in crisis and those that help them build resilience for the future. In 2015/16 we will continue the work we have done to build money management support into debt advice interventions and to provide ongoing money management support to clients after they have received debt advice.

As the FCA has implemented its new regulatory regime for consumer credit, a number of debt management firms left the market over the past year. We have worked closely with leading debt advice charities across the UK to co-ordinate contingency plans for consumers in case further firms stop offering debt management services. We will closely monitor whether further firms choose to leave the market and will ensure that clients continue to be able to access high-quality, effective debt advice. This has started with a telephone triage service directing clients, as appropriate, to advice that will determine what solution is best for their needs.

Our debt advice work will play a key part in the delivery of the Financial Capability Strategy for the UK. We propose to take forward the following specific initiatives in 2015/16 to support our role in delivering the Strategy.

Supporting early intervention

We will work to identify a consistent set of data and behavioural indicators for over-indebtedness. This will inform how we design our services, and form the basis of discussions with creditors as to how they can best support their customers and encourage them to seek advice where appropriate.

We will also conduct a trial with a range of commercial organisations (such as financial services companies and utilities providers) and non-commercial bodies (such as local authorities and housing associations) to identify those people who are at risk of falling into problem debt, and help those organisations make use of the data they hold, and ‘nudge’ techniques, to develop more effective interventions to prevent this from happening.

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High-level steering group for debt advice

In view of the anticipated increase in demand, it is more important than ever that all organisations that fund debt advice work together in a co-ordinated way to ensure that services are available in the right locations, and that we are serving people in the most effective way with minimal duplication. The Independent Review emphasised the importance of this, and, responding to its recommendations, we will establish a Debt Advice Steering Group, bringing together the principal organisations that fund debt advice. In 2015/16, we will work through and with this group to:

n

nexplore changes that would improve the customer experience;

n

nreview debt advice funding levels from all sources against the need for debt advice, seeking to maximise them where needed;

n

nensure funding into the debt advice sector is deployed most effectively; and

n

ndetermine and promote the interventions that have the greatest effect on reducing over-indebtedness.

New formal solutions

The steering group will work with the sector to understand the limits of existing solutions to meet the needs of over-indebted people in the UK. If we find any client needs that are not met by the current set of solutions we will make recommendations for the implementation of new formal solutions as required. This will include a specific focus on the potential for a statutory debt repayment system across the UK, building on the success of the debt arrangement scheme in Scotland.

The steering group will also contribute to the Government’s review of a ‘breathing space’, suggested by the Independent Review, that would freeze interest and charges for consumers who agree to specified debt repayment schemes.

Showing the benefits

Building on existing research in the sector – most recently from StepChange Debt Charity – we will work with stakeholders to produce robust modelling of the social and economic benefits of debt advice. This will strengthen the evidence base and help support the case for increased funding for debt advice.

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31 Section

Evaluating our

performance

“Over the course of 2015/16 we will

complete and embed within the

Service our target market definition.”

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32 Evaluating our performance

Evaluating our performance

Measuring the impact we have on our customers’ lives is essential to demonstrating the value of our service, and helping us to deliver continuous improvement.

The Financial Capability Strategy for the UK puts evaluation at its heart and the Money Advice Service aims to lead by example. By developing our understanding of which approaches are most effective in helping people take action, we can target our resources more effectively. Robust evaluation also serves to inform the work other organisations do to help people manage their money more effectively.

For 2015/16 we are proposing to build on the existing Key Performance Indicators (KPIs) from 2014/15. The ambitious targets we are proposing for 2015/16 reflect the progress we have made in previous years to establish our service, build effective partnerships across the money and debt advice sectors, and help customers take action.

We are also proposing a number of new baselines in 2015/16 to allow measurement of progress in future years:

n

nReflecting our co-ordination role for debt advice – including projects we do not fund directly – we will measure the number of debt advice sessions completed across the sector as a whole.

n

nFor the debt advice projects we fund, we will measure the ‘repeat rate’ – the proportion of clients who have recourse to further debt advice – with a view to bringing that rate down.

n

nIn respect of our role as a leader and influencer, we will use our annual stakeholder survey to gauge perceptions of how effectively we carry out this role. This will provide a more concrete measure of our effectiveness and how we are perceived than in previous years.

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2015/16 target Measured as a KPI in 2014/15? 2014/15 year-to-date results Actions

Number of actions taken (in full or in part) as a result of money advice

Number of customers taking action as a result of debt advice sessions (Money Advice Service funded)

11,500,000 (53% of contacts) 326,000 (88% of advice sessions) Yes Yes 9,200,0009 197,00010 (88% of advice sessions) Contacts

Total customer contacts Number of debt customers (Money Advice Service funded)

21,500,000 370,000 Yes Yes 21,000,00011 224,00012

Quality and impact of service13

Number of times we have provided customers

with the help they required 12,000,000 Yes 11,000,000 Customers who would recommend

the Money Advice Service 89% Yes 87%

Customers who would revisit

the Money Advice Service 90% Yes 90%

Customers who agreed that they have been provided

with the help required 87% Yes 87%

Debt knowledge: the customer has a clear idea about the steps required to try and sort their debt problems (Money Advice Service funded)

93% Yes 93%

Debt action: the customer has taken the steps they should to sort out their debt problems

(Money Advice Service funded)

88% Yes 88%

Debt impact: the customer’s outstanding debt is

reducing (Money Advice Service funded) 76% Yes 76% Percentage of stakeholders that agree the Money

Advice Service is improving the quality, consistency, and availability of debt advice in the UK

60% Yes 53%

9. Performance up to end of December 2014 10. Performance up to end of February 2015 11. Performance up to 13th March 2015

12. Performance as follows: England and Wales, Northern Ireland: up to end of February 2015; Scotland up to end November 2014, with estimated figures up to end of February 2015

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New baselines to be established during 2015/16

Number of people receiving debt advice (across the debt sector)

Baseline to be set in 2015/16, used as a KPI from 2016/17

Repeat rate for debt advice customers (Money Advice Service funded)

Number of people receiving debt advice from organisations that meet our quality framework (across the debt sector)

Percentage of stakeholders that view Money Advice Service as an effective leader within the financial capability sector

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Target market: our work in 2015/16

Over the course of 2015/16 we will complete and embed within the Service our target market definition. Our service will continue to be a universal service: everyone will be able to access high-quality information on our website, 24 hours a day, seven days a week. However, to achieve the greatest success in helping people change their money management habits, we will need to focus on those for whom our interventions are most useful. So we will increasingly target our services and products on helping people who have the most to gain from improving their resilience – that is, people most at risk of becoming over-indebted, or those who are already in problem or crisis debt.

We already have very good knowledge, understanding and data from our Indebted

Lives research about the 9 million people who are already in problem or crisis debt.14

Our other target customers are those most at risk of becoming over-indebted – in other words, those people who have insufficient savings and do not have access to affordable credit to enable them to cope with unplanned and uninsured costs such as divorce, redundancy or unexpected bills. We will continue to refine our analysis of those people who have the most to gain from improving their resilience, so we can focus our interventions where they will have the most impact.

The target market definition and data indicators will help us measure and evaluate to what extent our target market is being served by our direct services or our partners’ services, improving our efficiency and effectiveness.

Measuring actions: our key to evaluating performance

We aim, in all of our work, to help consumers change their money habits. In terms of measuring our success, we do not just measure the numbers of people who visit our service or of debt advice sessions we fund, but also the actions people take after using the services we provide and fund.

For both money and debt advice, we measure actions in a similar way: we ask a sample of people what actions they have taken, a little while after they received advice. We extrapolate this to generate estimated totals of the numbers of actions taken.

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Money advice actions

To evaluate our money advice work, we survey customers 6-10 weeks after they have used the Service and track individual small actions that they say they have taken as a result. The actions we track are ones that contribute to achieving the longer-term better money habits of budgeting, managing debt well, saving regularly, being prepared for later life, and putting in place protection against the unknown. They are set out in the table below.

We compare these results against a control group of people who have not used the Service.

We ask customers whether, as a direct result of their interaction with Money Advice Service, they have …

Budgeting to live within means Managing debt well Saving regularly Being prepared for later life

Protection against the unknown

n

nSet a budget to make sure they don’t overspend each month n nStuck to a budget they have made n nSwitched to a cheaper supplier n nGone into arrears on their bills (less) n nApplied for benefit/tax credit n nShopped around for the best deals n nPlanned their spending in advance n nOnly put on credit cards what they can pay in full each month

n nSwitched credit card/loan company to get a cheaper rate n nTaken steps to reduce their amount of debt n nContacted people they owe money to n nSought independent debt advice n nStarted to save, or started to save more n nStarted to save in a pension (or not opted out of a pension they were enrolled into)

n

nIncreased the amount they are saving in a pension n nSought professional advice about pensions n nTaken steps to activate a pension n nMade specific plans (e.g. taken out insurance or started savings) to make sure they can pay for care in later life

n

nTaken out a new type of insurance n nIncreased the amount of their insurance cover

2015/16 Business Plan

2015/16

Contents

moneyadviceservice.org.uk

Key highlights

In 2015/16 we will:

Chairman’s

foreword

“The Review has confirmed the continuing

unique role and importance of the Money

Advice Service, both in our debt advice work

and in our work to improve financial

understanding and capability.”

Chief Executive’s

introduction

“I believe that every activity described in this

business plan will advance the goals of the

Financial Capability Strategy.”

Our purpose

“We aim to help people increase

their financial capability and reduce

levels of over-indebtedness.”

Our purpose

The Independent Review and our 2015/16 Business Plan

The Financial

Capability Strategy

for the UK

48% of people reported that they

were concerned about their

finances, and 50% of people don’t

make a personal budget.

Money Advice Service Financial Capability Survey

The Financial Capability Strategy

for the UK: a long-term plan,

working with others

How we did

in 2014/15

“We developed and launched a

range of new tools and content to

help people with everyday money

management, major purchases and

signiﬁcant life events.”

We reached

21 million

customers

Car Costs

Calculator

Mortgage

Affordability

Calculator

And finally…

our research revealed

something about teenagers.

We launched a new Debt

Advice Locator tool.

Helps people access free debt advice

services online and by telephone or

find face-to-face services near them.

Viewed more than 326,000 times

in 2014/15.

Payday Loan

Advice Tool

We helped

9.2 million

customers

take action

an increase of 20%

from 2013/14

more than double the

target of 4.5 million

How we did in 2014/15

How we made a real impact on people’s lives*

We developed and launched a range of new tools and content

to help people with everyday money management, major

purchases and significant life events.

High level of

customer satisfaction

said they would recommend

our service to others.

87%