Author: jamie.evans

MaPS recommissioning of debt advice services: will it meet the needs of clients in vulnerable situations?

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By Jamie Evans

In recent weeks, debate has been raging about the provision of face-to-face debt advice services in England. Over 1,700 people – many of whom are frontline debt advisers – have signed a petition calling for ‘an immediate pause to the Money and Pensions Service (MaPS) recommissioning of debt advice’, which the authors of the petition, the Unite Debt Advice Network, argue ‘is likely to result in cuts to funding for debt advice of up to 50%, with face-to-face debt advice particularly affected’.

MaPS, on the other hand, believes that its recommissioning exercise ‘will increase the amount of debt advice available to people in England’ and will ‘ensure services are built around customers’ needs’. It says that it has not commissioned based on channel, instead asking debt advice providers to suggest how best to meet the needs of clients using a range of different channels (including but not limited to telephony, face-to-face, virtual appointments, and webchat). In a recent meeting with We Are Debt Advisers (a network of 500 frontline debt advisers), Caroline Siarkiewicz (MaPS Chief Executive) intimated that face-to-face advice would receive 20% of the total funding allocation. We Are Debt Advisers estimates that this would be equivalent to a 16% cut in funding for face-to-face advice services.

The issue has attracted national attention, leading to a Westminster Hall debate on 1st December. A number of MPs advocated passionately for protecting face-to-face services, with Emma Hardy (MP for Kingston Upon Hull West and Hessle) arguing that ‘face-to-face advice is the only way of supporting a significant proportion of people in debt, and… a reduction in capacity and coverage will fail some of the most vulnerable in our society.’

Advisers know channel matters a lot for vulnerable clients

It certainly shouldn’t be controversial to say that different people have different needs when seeking support – whether with debt problems or any other issue they face. This means that some people will prefer digital methods of communication, others will prefer (or only be able to access) more traditional methods, and some might be perfectly happy with a combination of both.

This is something that debt advisers are well aware of.

In 2018, the Personal Finance Research Centre received grant funding from the then Money Advice Service to conduct research on debt advisers’ experiences of working with and supporting clients in vulnerable situations – including mental health problems, addictions and a range of other situations. We surveyed more than 1,500 advisers and, as part of the research, we asked if there were particular groups of clients who might be affected (negatively or positively) by a shift to digital debt advice services. What advisers told us is summarised below:

Potential impacts of digital debt advice on vulnerable client groups, according to debt advisers we surveyed (read the research here)

The results demonstrate widespread concern among frontline debt advisers about the potential impact on vulnerable clients of a shift to digital methods of debt advice. They highlighted a range of practical issues that their clients might face in accessing digital debt advice:

“Many of the people I see can’t maintain the same phone number because they can’t afford ongoing phone contracts.”

“Vulnerable clients benefit from building up a relationship with the advisor to be able to trust them enough act on the advice – which they could never get via digital delivery.”

“Clients who can’t afford to eat can’t afford internet… or [can’t afford the] fares to get to free internet.”

“[Face-to-face] we are better able to gauge their needs and abilities, e.g. via email a client can agree to carry out an action but face-to-face we can see that this causes them distress so we can support them to do it.”

Advisers reported that clients with mental health problems, cognitive impairments or learning disabilities may need information explained several times or in different ways. Advisers also highlighted the considerable challenges that clients can face in gathering or understanding paperwork, which are often dealt with quickest in-person.

The scale of vulnerability in debt advice

There are almost always pros and cons to the introduction of new technologies, as we see in long-running debates on issues like access to cash and bank branch closures. Debt advice faces many of the same fundamental questions – but a big difference is the scale of vulnerability encountered by debt advisers.

Based on our survey, we estimate that just under a third of the clients supported by advisers remotely (i.e. telephony or webchat) had disclosed a mental health problem. This rises to half of clients supported by face-to-face advice. In the Westminster Hall debate it was reported that this may rise to as much as 82% for some advisers.

Of course, not all mental health problems are necessarily incompatible with digital advice delivery. Indeed, many people with conditions like social anxiety might be unable to access advice in-person or over the phone, so methods such as webchat offer a hugely important lifeline (see, for example, research from the Money and Mental Health Policy Institute).

Getting the balance right

Getting the balance right requires a comprehensive understanding of demand for debt advice via different channels (including how well demand is actually being met at the moment). This is no easy feat, particularly when we have insufficient data on what the whole debt advice sector actually looks like. Investment to build this data would greatly improve MaPS’ ability to forecast accurately and might improve their chances of obtaining a more representative sample when consulting with advisers from different parts of the sector. It is also important to ensure research on these topics properly involves those who are digitally excluded. This is something we can all improve on.

In the meantime, it would be good to see the evidence on which decisions are currently based. MaPS is yet to publish its formal Equalities and Vulnerability Impact Assessment, so this seems a good place to start.

There are elements of MaPS’ proposals which are (hopefully) welcome from the perspective of vulnerable clients. Caroline Siarkiewicz describes how MaPS hope the new funding approach will get advisers off the ‘hamster wheel’ of dealing with one client after another, leading to more time spent with individual clients rather than simply chasing high volumes.

Whatever happens, it is clear that at present many advisers are suffering poor wellbeing due to their workload – a recent IMA survey found that 68% of those working for MaPS-funded advice organisations were dissatisfied with their workload, with two-in-five (41%) reporting that they ‘often feel stressed and anxious at work’. Many are uncertain about their future and are tired of repeating the same things over and over again, both in relation to debt advice and in terms of wider social policy. They are the experts in this arena, so decision-makers need to start listening.

Read the research here: Vulnerability: the experience of debt advisers

Identifying vulnerable communities at risk of being left behind in a cash-lite society

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By Daniel Tischer, Sara Davies & Jamie Evans

These days it’s common to hear discussion of the UK being on the verge of becoming a ‘cashless’ society – but, for a range of reasons, this may be premature. For the foreseeable future, a more appropriate term may be ‘cash-lite’. In this blog, Dr Daniel Tischer reflects on our research in South Wales in which we explore a new method for identifying and protecting the most vulnerable communities in a ‘cash-lite’ society.

Much recent commentary suggests that the UK, and a number of other countries, are rapidly moving towards becoming ‘cashless’ societies – but there remain multiple hurdles standing in the way of ‘cashlessness’. One such hurdle is that digital payments do not yet quite match cash for reliability: technical ‘glitches’ too often stop us from paying digitally. The (partial) outage of the VISA network in June 2018, for example, left many Europeans unable to pay by card, and other, smaller-scale incidents are not infrequent either. There are also big hurdles related to consumer needs and preferences, or the unsuitability of digital in certain circumstances (for example, in areas with no / a poor internet connection).

This leads to the conclusion that, in the near future at least, the UK will not become cashless. Rather it seems we are becoming a ‘cash-lite’ society – one in which cash usage is forecasted to decrease to about 1 in 10 transactions by 2028 – mirroring the experience of other low-cash countries, such as Sweden and Canada.

Vulnerability & the poverty premium in a cash-lite society

So what does a cash-lite society mean for consumers? Well for most people, most of the time, there will be few problems – but that does not mean that there are not significant risks that need to be mitigated. As fewer transactions are made in cash, more ATMs will be closed down or switched from free to fee-charging – and, as we saw both in our case study of Bristol’s cash network published in May last year and in national research from Which? in September, the latter of these is an issue which disproportionately affects more deprived areas.

Paying to access cash was a component of the University of Bristol’s ‘poverty premium’ calculations in 2016, albeit a relatively small one, and this suggests that vulnerable communities may be left even further behind. Even a small charge of £1 per transaction present a significant cost to low-income households, especially when only small sums—£10 or £20—are taken out to purchase basic food items or pay bills.

Identifying and supporting potentially vulnerable communities

As our society becomes more cash-lite, there is a danger of increasingly uneven access to cash across the country. This makes it important that we are able to map and identify those areas that are not only losing their ability to access cash but are also less resilient to such changes taking place.

Our second report on access to cash, published in January 2020, therefore advances our methodology from our Bristol case study to identify communities in South Wales that are most ‘vulnerable’ in terms of access to cash. We identify vulnerability in two steps: 1) by considering their current ability to access cash – where AvCash Index scores under 5 highlight communities with a low number of ATMs or other cash infrastructure within a 1km radius; and 2) by taking into account communities’ ability to cope without such access. The latter involves the construction of a measure of travel difficulty, indicating that a high proportion of residents in an area may find it difficult to travel far to access cash (or other essential services, for that matter). This measure incorporates: levels of car ownership, disability, age, income and access to public transport (in the form of nearby bus stops).

Looking at communities with poor access to cash and a high proportion of residents who may struggle to travel to access their money, provides us with a clearer idea of where poor cash infrastructures may have the highest negative impact. While this of course does not mean that there will not be individuals in other areas for whom access to cash is a problem, it does offer a useful tool for the industry to prioritise need – for example, when evaluating communities’ requests for a new ATM or identifying which ATMs to protect through additional subsidies. Indeed, as shown in the map below, there are many vulnerable areas without protected ATMs which may benefit from them:

Map of vulnerable areas & protected ATMs

Overall, we find that over a quarter (27 per cent) of neighbourhoods in our case study fall within the 20 per cent worst areas nationally for travel difficulty and have an AvCash Index score of less than 10. Similarly, 8 per cent of areas score poorly for travel difficulty and have no free ATM, while a further 12 per cent of areas have just one free ATM and high travel difficulty. These neighbourhoods are not solely rural; many are located on the outskirts of towns. Taken together, we find that over 100,000 people in this region (out of approximately 500,000) live in vulnerable neighbourhoods and do not currently benefit from a protected ATM.

Our geographical mapping approach therefore presents a potentially valuable tool to identify vulnerability by taking a community-based perspective. It raises further questions about the sustainability of the UK cash infrastructure and the ability of LINK and regulators to reign in private and profit-driven actions by providers of access to cash.

But crucially, we believe that our approach provides policy-makers and regulators with additional insights into the impact current changes have on the most vulnerable communities, and to better understand what vulnerability means in particular contexts. We are hoping to work closely with stakeholders to map access to cash nationally to inform policies towards ensuring cash is available for free to those for rely on it.

 

Read the full report here:

Report: ‘Geographies of Access to Cash: Identifying vulnerable communities in a case study of South Wales.’

Making a difference in FinTech? Evaluating the impact of Nationwide’s Open Banking for Good programme

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By Sharon Collard & Jamie Evans

Nowadays, fintech startups often emerge with the ambition of ‘doing good’ and changing society for the better. This surely is to be welcomed – but what is the best way of ensuring it actually makes a positive difference to consumers? In this blog, we attempt to answer this question, outlining the first stage in our evaluation of Nationwide’s Open Banking for Good (OB4G) programme.

As its name suggests, OB4G was set-up with the ambition of being ‘for good’. Launched by Nationwide in 2018, it is a £3 million programme which aims to leverage Open Banking technology to create and scale new apps and services, all of which are designed to help the 12.7 million adults in the UK who are ‘financially squeezed’. The ambition to support this group of consumers – who tend to have high debt-to-income ratios, coupled with low savings – is clearly a positive one, but how can those designing innovation programmes turn this ambition into reality?

Moving the Dial report cover

That is the question Nationwide has asked us to explore through an independent evaluation of the OB4G programme.  We have already published a report outlining the lessons from the ideation and implementation of OB4G, and we share below three key lessons that we believe can inform the design of future ‘fintech for good’ efforts. We continue to support the successful OB4G fintechs (who we call Challengers) in measuring the financial and social impacts of their Open Banking-enabled products and services on end-users throughout, with a final report scheduled for Q2 2020.

 

Lesson #1: Problems looking for solutions, not solutions looking for problems

One of the early lessons of the programme is the importance of identifying real-world problems that might benefit from tech solutions – rather than retrospectively finding a socially useful purpose for an existing product or service.

To do this, the OB4G team at Nationwide involved charity partners from the very beginning to identify the real-life challenges facing people who are ‘financially squeezed’ that the programme could tackle. These charity partners – including Citizens Advice, Christians Against Poverty, the Money Advice Trust, the Money and Mental Health Policy Institute, and The Money Charity – have great insights into the needs of people living on a financial knife-edge, and so were well-placed to identify the issues facing consumers and help shape the programme. In the words of one challenger, this helped overcome the risk of ‘hipsters designing for hipsters’!

Lesson #2: Locking the ‘innovation cage’

Together, the charity partners and Nationwide’s OB4G team identified three pressing challenges for the OB4G programme to tackle:

  • Income Smoothing – helping the growing number of people who have irregular or unpredictable income to manage their regular outgoings
  • Income & Expenditure – making it easier for someone to produce an accurate statement of their income and expenditure
  • Money Management & Help – helping people to practice and maintain good money habits

In our qualitative interviews with OB4G Challengers, they emphasised the value of having well-defined real-life problems to solve, which kept them tightly focused on doing one thing well for a particular consumer segment. This was described by one as an ‘innovation cage’ that allows creative freedom and innovation but in a way that keeps the social purpose of OB4G front and centre.

Importantly, the startups were not alone in their ‘innovation cage’! They were partnered with a charity (or in some cases more than one charity), which could contribute its knowledge and insight about the target audience throughout the development process. This element of ‘co-creation’ was almost as valuable to the Challengers as funding.

Lesson #3: The challenge of different ways of working

Our evaluation not only sheds light on what works, but also on challenges that innovation programmes like OB4G invariably encounter. One such issue was the very different ways in which startups and established organisations work – whether charities or a large commercial organisation like Nationwide.

While ‘agile’ working is part and parcel of fintech startup culture, for charities – whose focus is often on fire-fighting and delivering their core purpose – this can be harder to achieve. The same is true for large commercial organisations, where there may be many layers of bureaucracy to navigate in order to get things done. So while the startups hugely valued the insight and support they got from OB4G, there were times when things didn’t move quite as quickly as they would have liked.

The key lesson for fintechs and innovation programme designers is that, yes, it is hugely beneficial to work with charities and people with lived experience to co-design products and services. BUT you need to build in sufficient time (and understanding) to make this happen.  Our evidence also indicates that programmes should routinely offer to fund Charity Partners for their contribution (even if Charity Partners aren’t always able to accept such funding).

What next?

So far, our evaluation has focused on the process of setting up and running the OB4G programme. We are now considering the impact that OB4G actually has on consumers. As such, we are working with the five remaining Challengers – Ducit, Openwrks, Toucan, Trezeo and Tully – to measure the effect of their products on consumers’ financial wellbeing. Our aim is to make a useful contribution to a growing body of evidence around how fintech startups can actually ‘do good’ and make a difference to the lives of their users.

Read the first stage of our evaluation here:

Report: ‘Open Banking for Good: Moving the Dial?’