SFS launch date announced
The Money Advice Service has today announced that the first Standard Financial Statement (SFS), will go live on 1st March 2017, marking the beginning of a transition period during which creditors and debt advice providers will move to using the new format.
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, bringing greater consistency to the way finances are considered in debt advice.
The SFS provides a single set of income and expenditure categories with spending guidelines which will be used across the sector, in a single format. A savings category will also be included to help people build financial resilience while repaying their debts. This important addition is intended to help people in debt to withstand unexpected costs and giving them a solid financial footing once they are debt free.
The increased consistency provided by the SFS will help debt advisers and creditors in a number of ways. Currently, there are different formats and spending guidelines in use. The SFS will bring greater consistency in the way affordability assessments when considering repayments are recorded and considered. 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 development of the SFS has been co-ordinated by the Money Advice Service which has brought the debt sector together to form the SFS governance group*. This group represents key organisations including major advice providers, creditors, trade associations and insolvency agencies. The group collaborated to share their insights into the circumstances of those in debt to ensure that the SFS is effective in a debt advice setting and reflects a realistic view of levels of expenditure and the affordability of debt repayments.
The Money Advice Service will continue to work with the governance group over the coming months to monitor the roll-out of the tool and to extend the reach of the programme beyond the financial services sector. More information can be found on the SFS Website at: sfs.moneyadviceservice.org.uk.
Sheila Wheeler, Director of UK Debt Advice at the Money Advice Service comments:
“The launch of the Standard Financial Statement (SFS) will be a major landmark in bringing consistency to the way organisations consider the budgets of over-indebted people. Consistency when assessing income and expenditure is critical and this single framework will have benefits for debt advisers, clients and creditors alike.
“The SFS has been developed in partnership with key organisations across the debt advice and creditor sectors. Their continued support will be vital as we call on all debt advice providers and creditor organisations including Government, Local Authorities and utilities to use the SFS.”
Supportive comments
Eric Leenders, the BBA’s Managing Director for Retail and Commercial Banking, said:
“The banking industry is committed to supporting those struggling with their finances by working in partnership with debt advisors and other organisations. It’s vital that people in debt receive a consistent standard of advice and the SFS is an important framework that will help to deliver this outcome.”
Joanna Elson OBE, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, comments:
“The Standard Financial Statement (SFS) provides the sector with an excellent opportunity to improve consistency and deliver better journeys and ultimately better outcomes for our clients. We are particularly pleased that the SFS will include a savings element, with creditors acknowledging the importance of helping people to build up rainy day savings to guard against unexpected costs.”
As operators of the Common Financial Statement (CFS) we have long advocated the use of a single sector-wide budgeting tool, and we are hopeful that all advice agencies and creditors will now come on board with the new SFS. Crucially, this must include public sector creditors too – and there is more work to do to persuade local councils and government departments to adopt this common approach. We look forward to working with Money Advice Service to support the implementation of the SFS, and to support CFS users with the transition as the rollout progresses.”
Francis McGee, Director of External Affairs for StepChange Debt Charity comments:
“The SFS has been a major project for the sector, and I’m glad to see it move into the next phase. The debt sector is showing leadership with this new tool, and I hope to see other crucial stakeholders quickly follow suit, including Government departments, essential service providers and insolvency services.”
John Fairhurst, Policy and External Affairs Director for PayPlan comments:
“We are very pleased to be 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. 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. PayPlan look forward to being early adopters of the Standard Financial Statement.”