The first allocation of £37.8m of extra funding to support debt advice has gone into action.
Allocated by the Money and Pensions Service (MaPS), up to £7.5m is being assigned to three debt advice providers – Christians Against Poverty (CAP), PayPlan and StepChange. MaPS has taken this action to ensure these providers can maintain much of their pre-pandemic capacity for customers who need debt advice.
The extra funding is in addition to the existing MaPS budget for debt advice in 2020/21 of £64.6m.
This is the first time MaPS has provided funding to CAP and PayPlan. The funding will cover lost income from a key voluntary funding stream known as “Fair Share”. FairShare is a funding mechanism linked to debt management plans, where a percentage of each repayment a creditor receives is repaid to the advice provider. As customers have stopped or reduced debt repayments during the pandemic, the level of funding going to agencies has also reduced.
Ahead of the expected increase in the need for debt advice, a separate funding stream has been established to employ hundreds of extra debt advisers. This is hoped to bring 500 new debt advisors into the sector.
Caroline Siarkiewicz, chief executive at MaPS, said: “The toll of coronavirus on some people’s financial wellbeing will be severe and long-lasting. We are taking steps now to ensure the support needed by people dealing with money problems will be available at the crucial time, whether that’s right now or in the months to come.
“In the wake of coronavirus, our first priority has been to maintain capacity in existing debt services and it’s great news we’ve been able to agree a funding package to support three major operators to maintain much of their pre-pandemic service levels.”