Lack of trust 'major barrier' to financial inclusion ahead of universal credit roll-out
Published by Jon Land for 24dash.com in Central Government and also in Bill Payments, Housing, Local Government
Financial inclusion 'key concern' ahead of universal credit roll-out
People's reluctance to seek help before their finances reach crisis point is one of the biggest concerns facing housing providers and local authorities ahead of the roll-out of universal credit.
According to a report published today by the Department for Work and Pensions on findings from local authorities piloting the new benefit system, a lack of trust is proving a major barrier in encouraging claimants who may need financial inclusion help to come forward.
The report states: "Claimants seemed reluctant to explore options which may prevent them from reaching crisis point, only asking for help and recognising their position in extreme circumstances.
"The pilots have identified good practice but there is more work to do to really understand what additional support/services partnerships need to have in place to ensure effective engagement with customers to enable financial independence.
"In reality many of the customers engaging with the pilots failed to access the help offered. Several approaches were tested, for example use of landlords/housing officers to engage tenants; questionnaires to test claimants’ budgeting and financial awareness skills."
In one example relating to financial help offered to tenants affected by the bedroom tax, North Lanarkshire Council said: "We had concerns that tenants were not accepting support because the offer was made directly from the landlord. Our partner CAB sent 1,140 letters to tenants who stated they were not confident of dealing with impact of under-occupancy, offering a free financial health check. 4.64% responses, with no improvement on service uptake."
The council also revealed in a further survey last October of 450 tenants, of 11% who responded, 65% wanted to access the service but for many it was too late as they needed debt advice and repayment programmes.
One of the key failings identifed in the pilots was a lack of face-to-face appointments, recognised as crucial when engaging claimants in potentially awkward conversations about their finances.
"Pilots offered follow-up calls rather than face-to-face appointments and attempted to improve attendance at budgeting meetings and training sessions by sending reminder texts and emails," the report said.
"The pilots’ learning reinforces the fact that budgeting is very personal and the use of words can be critical when trying to engage claimants. In recognising this, the pilots developed alternative approaches to try and change the focus of the help they offered.
"A good example of this is offering a service to minimise outgoings, expenditure and bills, rather than labelling the help as “budgeting advice”. It is clear though that no one service is likely to meet all the needs of the local community. A range of services which complemented each other is seen as good practice."
The pilots agreed that three core elements were essential in tackling financial inclusion:
• A method to highlight financial weakness - to ensure the problem is recognised and before crisis point
• Follow up/casework - to ensure the advice received is put into practice
• Feedback & Monitoring - to ensure the provision is appropriate and adjusted when needed.
The report concluded that although the pilots have tested a variety of approaches to financial inclusion and highlighted key issues, it is clear that this area still requires further testing and trialling.
Key lessons from the pilots include:
• Customers much prefer to deal with a trusted intermediary/partner to discuss financial issues
• Customers are not happy to engage in a group session to discuss personal finances and prefer 1-2-1 engagement
• Customers tend to only seek help with their finances when they reach ‘crisis point’ and don’t tend to engage any earlier
• Budgeting support becomes debt advice as a result of customers not engaging or recognising their problems early enough
• Customers (new tenants) use budgeting tools if these are provided and walked through
• Monitoring and consistent engagement with a customer needs to continue after the initial contact to ensure that they remain in control of their finances, otherwise you will never be able to gauge effectivenes