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A model of consistency for affordability

The Money Advice Service recently announced that its new income and expenditure format, the Standard Finance Statement (SFS), will go live on March 1 2017.

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This will be the first time that all major debt advice providers, creditors, and other debt bodies will use the same format to assess income and expenditure for over-indebted people.


The SFS, which has a single set of spending guidelines, is intended to replace the Common Financial Statement (CFS) and other financial statement formats in a bid to bring greater consistency to the way finances are considered in debt advice.


While many creditors will adopt it next year, there’s uncertainty over whether it will be adopted by the public sector and central government.


In response to whether or not government departments will also use the new format Lee Edmonds, who is leading the Debt Market Integrator programme within the Cabinet Office, said: “There is no central policy within government on the use of the new standard financial statement.”


Although many in the private sector remain hopeful of SFS adoption by the public sector, the new format (should) improve the process for individuals dealing with typical household debts.


Leigh Berkley, president of the Credit Services Association, said: “This new mechanism will help remove some ambiguity, and allow a more consistent and transparent approach across the industry.


“Personally, I would also like every single creditor, including local authorities and Government departments, to use SFS.”

A savings category has been introduced as part of the statement which will be included to help people build financial resilience while repaying their debts.


This addition is intended to help people in debt withstand unexpected costs and to give them a solid financial footing once they are debt free.


Debt advisers and creditors will also be able to pass people’s details more smoothly between different agencies, reducing the number of times affordability assessments are completed and making the journey through debt advice more straightforward.

The Money Advice Service will now continue to work with the governance group over the coming months to monitor the roll-out of the SFS and to extend the reach of the programme beyond the financial services sector.


See Credit Strategy’s October issue for the full article on p14.

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