Standard Financial Statement launches
Today, 1 March 2017, sees the launch of the new Standard Financial Statement (SFS), an initiative designed to bring greater consistency to the way organisations assess people’s finances when they are in debt.
The SFS, the launch of which has been co-ordinated by the Money Advice Service, will be adopted by all major debt advice providers across commercial and not-for-profit sectors, including Citizens Advice, Money Advice Trust and StepChange. Payplan are one of the first agencies to start using it and will help more than 100,000 people each year. The Insolvency Service will also start using the new format and spending guidelines in March. Creditors have started building the SFS into their collections practices.
Today marks the start of a period of transition for the SFS as organisations begin to implement the scheme across their systems over the coming months. More organisations will use the statement as it is rolled out more widely over the year. The Money Advice Service expects the transition period to last for around 12 months.
The SFS marks a single debt sector wide view on how to approach the challenge of bringing greater consistency to the way information on people’s financial circumstances is gathered. Over 22 organisations* have come together to agree this single format for recording income, expenditure and arrears as well as agreeing a set of spending guidelines. Importantly, the statement will include a savings category which will help encourage people to build financial resilience while they deal with their problem debt.
Organisations who sign up to the SFS will agree to a code of conduct to ensure best practice usage, which will not only ensure that people’s affordability assessments are more consistent, but will enable smoother transfer of information between the organisations working with them.
Sheila Wheeler, Director of UK Debt Advice at the Money Advice Service said today:
“The “go live” for the Standard Financial Statement is a huge step forward for people in debt and the debt sector. A single framework will have positive benefits, ensuring a smoother transition for people between organisations and the savings category will, help people build their financial resilience as they repay their debts.
“Progress has been made possible only with the support of organisations from across the debt sector; advice providers, creditors, government departments and trade bodies. We would like to encourage any organisation involved in assessing over-indebted people’s financial situations to sign up to use the SFS. More information can be found at sfs.moneyadviceservice.org.uk.”
John Fairhurst, Policy and External Affairs Director for PayPlan said:
“We are very pleased to be one of the first organisations to get involved in this important initiative to improve the consistency with which financial information is used in the debt advice process and across different debt solutions, and we are looking forward to start using the new format.
“A clear, uniform approach will undoubtedly reduce the need for stakeholders to question details of individual budgets thus simplifying and smoothing the process of reaching agreement.”
Joanna Elson OBE, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said:
“The Standard Financial Statement provides the advice sector and creditors with a significant opportunity to improve the client journey, and ultimately, deliver better outcomes for people in financial difficulty.
“We hope that many more organisations will sign up to use the SFS in the months ahead – including local authorities, government departments and other public sector creditors, whose participation will be crucial. In the meantime, we look forward to supporting current users of the Common Financial Statement (CFS), which we operate on behalf of the sector, with the transition to the SFS as the rollout progresses.”
Francis McGee, Director of External Affairs at StepChange Debt Charity, said:
“This is an important and welcome initiative from MAS and the debt advice sector. Widespread recognition of this standard budget as a fair assessment of people's situation could bring better and more consistent treatment by all kinds of creditor of people in financial difficulty.”
Organisations who are interested in using the Standard Financial Statement can sign up and complete the online application on the website at sfs.moneyadviceservice.org.uk. CFS licence holders will not be transferred across to the SFS and will need to complete the short application to become a SFS user.