Citizens Advice has chosen the Consumer Credit Counselling Service (CCCS) to be its debt management partner for a one-year pilot involving up to 100 bureaux.
CCCS won the contract in a competitive tendering process.
The partnership will mean that people who approach Citizens Advice for help with their debts will still receive a full debt advice service from the Bureau, but if they decide that the best way forward is to establish a debt management plan then they will be referred to CCCS. In this instance, the Bureau will transfer the client’s records to CCCS who will then set up the plan, negotiate with creditors and manage the client debt portfolio.
Citizens Advice currently fields 9,500 new debt enquiries every working day and last year the charity helped clients with 2.4 million debt enquiries. Debt advice accounts for around a third of its workload.
Those clients who choose to create a debt management plan have to navigate an increasingly crowded and complicated market of mainly private-sector providers, and so the charity wanted to simplify this step for clients by recommending a trusted supplier that does not charge the client for the service.
CCCS introduced debt management plans to the UK in the 1990s and currently has 100,000 clients using one. Chair Malcolm Hurlston said the combination of Citizens Advice’ face-to-face advice and CCCS’s expertise providing assistance on the phone and over the internet would “transform the landscape for people in debt”.
Both charities will share the revenue from the deal, which is derived from donations from lenders who recover their monies from people in debt as part of the debt management plans. These donations are usually around 10 per cent plus VAT, of the sums recovered, according to Hurlston.
CCCS will help Citizens Advice with the set-up costs to improve the client experience and increase capacity.
If the pilot is successful, the partnership will be rolled out to all nearly-500 CABs in due course.
Both charities see the pilot as the start of a closer working relationship, which Citizens Advice chair John Gladwin said has the “potential to influence the market and stimulate wider improvements for consumers in these financially straitened times”.
