MaPS announced in November that it had signed contracts for debt services that will be effective from 1 February 2023. The two contracts for Debt Relief Order (DRO) hubs have been awarded to:
- Citizens Advice; and
- Gregory Pennington.
There is a lot of uncertainty in the debt advice community about how these new DRO hubs will work in practice. With less than two months before they start, I have talked to MaPS to try to answer some questions.
This article is written for debt advisers.
If you have debt problems and want to know about a DRO, this article isn’t relevant for you – it is about the back office systems that debt advisers use.
Instead read What is a DRO? and then talk to a debt adviser as that article suggests.
Debt adviser questions about how the hubs should work
Does a MaPS-funded debt advice agency have to use a hub?
There is no requirement for MaPS-funded debt advice agencies to send all their clients to the hubs. MaPS wants advisers and advice organisations to decide whether the client is best served by them or referred to a DRO hub.
If you feel a client would benefit from face-to-face appointments because of their English, literacy, mental health or other vulnerability issues, that is fine.
Anna Hall, Head of Money and Debt Operations at MaPS says:
For most clients the hubs will get them to a DRO quicker and more efficiently, and I hope advisers will view them as a valuable option, especially where their own capacity is limited. But of course for some, the continuing support of their debt adviser will be the best way to access a DRO.
It seems to me that there are potentially a large number of reasons why an adviser may prefer to do an in-house DRO. Where you are having ongoing work with a client eg to make benefit or grant applications, there may not be much gain in referring your client for a DRO – and the client may prefer to just deal with one adviser.
Can we choose which hub to refer to?
Yes – it’s up to you which DRO hub to refer to.
You will be able to refer into both hubs and MaPS is aiming to provide information on wait times so you can select the right DRO hub for your client at any time. MaPS will be providing more details on this as things develop.
Originally the MaPS tender for three DRO hubs was expected to work on a regional basis, but that was dropped when the number of hubs was reduced to two.
There is no suggestion at the moment that any “load sharing” provisions will be introduced if the two hubs get very unequal numbers of cases referred. However MaPS will be keeping the operation of the two hubs under review and will make changes if it’s right to do so to respond to client need.
Who is legally liable for any errors in a DRO?
The liability rests with the hub that submitted the DRO – they should respond to any complaints from the client.
It is the adviser at the hub’s job to check everything on the application they are submitting. This includes checking that no debts are omitted that are on credit reports or that the client is aware of.
What is the point if the referring agency has to do all the work first?
The referring agency has to give advice on the client’s debt options, including a DRO, and the pros and cons of them before a referral. So as the adviser you need to know a lot about your client’s situation.
But you don’t have to do all the checks that make DROs so time-consuming to set up, eg checking credit reports and making sure that the balances and reference numbers for the debts are correct.
A hub should not return the case to you if a debt is omitted, unless the missing debt makes the client no longer eligible for a DRO. A case should only be returned if the hub feels the original advice that a DRO was suitable may not be in the client’s best interest.
Isn’t this just de-skilling, so debt advice agencies won’t have to employ AIs?
That isn’t the aim. The advice is being given by the referring agency. The adviser needs to be familiar not just with the simple DRO limits but with the complications that can arise in less usual situations so they can give proper advice so being an AI or having one in your team will help.
Also a local advice agency may well have many clients who would struggle with phone advice and are at risk of dropping out, so these will still need to be handled in-house.
Can someone in debt contact a hub directly?
No. There will be no advertising of the hubs directly to clients. Hubs are only set up to take cases where full debt advice has already been given and it appears that a DRO is very likely to be the best option – it isn’t their job to advise a client on their other options.
The transition to the hubs
From 1 February, MaPS previous DRO funding will stop and it will only be funding the DRO hubs. Any current arrangements can continue but there will be no funding. I understand MaPS and those currently funded for DROs are working closely together on the transition and discussions are ongoing.
That seems to me to be a short time for debt advice agencies to get new referral agreements and systems in place:
- local Citizens Advice will be best placed as the CitA DRO hub has already been operating for some years;
- StepChange’s DRO section will be closing by the end of March and will presumably stop taking internal referrals before then;
- both DRO hubs will presumably need to recruit some staff.
There is never a convenient time for this sort of change.
But early 2023, with clients being badly hit by cost of living problems and many advice agencies already finding it difficult to manage demand seems like the worst possible time to divert any attention away from front-line needs and to have any delays in setting up DROs.
If I had been setting this up, I would have wanted a period of six months during which MaPS was funding both the old approach and the new hubs to facilitate a smooth transition. And I think longer term some specific funding arrangement needs to be put in place for DRO cases that are not suitable to go through the DRO hubs.
Will the hubs work well – my thoughts
The hubs could turn out to work well for many cases, saving front-line adviser time and getting DROs through faster. This is what MaPS is hoping for and what it saw when working with the Citizens Advice Durham DRO unit in 2019/20. That was effectively a pilot for the new hubs. The DRO unit in Durham has been in operation for over 6 years.
If many cases are not referred to the new hubs because the debt adviser feels they are unsuitable for the client, the hubs may not achieve much. And if there is a significant client dropout rate after a referral, or if a significant number of cases are returned to the referring agency by a hub, then this will be a very poor outcome.
It will be a year or more before we can tell how useful the hubs actually are.
Even if the hubs are helpful, they will only resolve some administration problems. The reasons for reforming DROs to make them more useful for more clients remain – including all debts not just those listed (or allowing debts to be added), changing the rules around debt limits and assets, facilitating a transfer between different forms of insolvency etc. If the Insolvency Service introduces significant changes, these may make the hubs much less useful or even irrelevant.
More information on MaPS recommissioning
Anna Hall will attend an IMA members’ meeting in January to discuss MaPS commissioning. IMA members will be emailed full details in the coming week.
Update – The new DRO hubs – what happened in 2023 looks at DRO numbers in 2023 and what they can (and can’t) tell us about the new hubs.
Nigel Henry Tucker says
Any news on iva payment reduction yet ?
Sara (Debt Camel) says
Do you mean generally? Or the StepChange mass variation – that isn’t voted on until 20 December.
Chris Bone says
Some general observations as an experienced AI (since DRO’s were introduced):-
– I would not necessarily agree that “hubs will get clients to a DRO quicker”. With the recently introduced facility in CA for advisers to order Experian reports instantly this can significantly reduce processing time for an in house adviser, it gives pretty much up to date balances and account references. If it is a relatively simple DRO a fortnight would be achievable if fee available.
– I would be interested to learn more details of the drop out rates after referral to a DRO processing unit. I have a personal belief that if the the exercise stays with the adviser the rate would be lower notwithstanding the units are efficient when a case is passed on.
– The potential and ongoing issue with some DRO’s is the extra onus on Intermediaries with changing guidelines which a processing unit would not deal with anyway ie recent Pension value guidelines, the numerous opinions and guidleines on how a DRO financial statement should be drawn up, how to apportion cost of living payments, rules re car valuations not on Parkers etc. If all of this is being laid at the door of the Intermediary, s/he may as well see it through to finality.
I am not knocking the processing HUBS in any way i just think the pendulum has kind of swung back in favour of in house processing.
Sean K says
The major problem, from a CA Debt Adviser’s point of view, is that the Hub staff will still only do half a job. It will still be the referring advisers who have to obtain proof of all income, do the PARV orders, fill out the referral form that duplicates information already known to the Hub, and contact the Hub to transfer the Breathing Space over (Durham always seem to forget).
It just seems like a massive waste of money that could be spent on frontline face-to-face debt advisers.
Sean K
Dean Russell says
Hi, good information provided Sara. Still not sure about GP. If a client is referred to them for a DRO can they turn it into a DMP or do they have to return the case to the organisation who done the referral.
If one hub sends the case back to the Adviser because they do not believe a DRO is the best option can the adviser then refer to the other hub if they believe that hub is not acting in the clients best interest?
Sara (Debt Camel) says
If a client is referred to them for a DRO can they turn it into a DMP or do they have to return the case to the organisation who done the referral.
I will check.
If one hub sends the case back to the Adviser because they do not believe a DRO is the best option can the adviser then refer to the other hub if they believe that hub is not acting in the clients best interest?
I can’t imagine why not – but if you are getting returned referrals that yuou don’t believe are correct, that sounds to me like is a major problem and I suggest you also follow that up with a complaint.
Sean K says
I work for a local CA, and once make a formal complaint against Durham regarding a similar issue when. Did not go down at all well.
Dean Russell says
Good for you. I had one dealing with the DRO Unit, after that did not see any point in making referrals to them.
Valerie says
It’s a shame some of this funding could not be used to raise the paltry sum that local CAs receive for a completed DRO – especially as it’s top sliced at the national level.
Debt Adviser says
If Citizens Advice builds a function (as has been mooted) to submit a DRO from within Casebook (as you can with breathing space), I see no point in referring to a DRO hub.
Interesting that the adviser can refer to the hub they want. I suspect Citizens Advice will expect their advisers to submit to the CA DRO hub! It will be interesting to see what information is required to make a referral.
Terry says
“Isn’t this just de-skilling, so debt advice agencies won’t have to employ AIs?”
Firstly thanks for writing an inciteful article. However please may I ask that you define abbreviations that not all of your readership may be familiar with.
“MaPS” – I couldn’t remember what it stood for and so did a Google search where it appeared on the second page. I acknowledge that I could’ve clicked on the link right next to the term.
“Als” in the question highlighted was more problematic. I associate AI with “artificial intelligence”. I think I’ve worked it out as “Authorised Individual” but still not certain. A Google search was no help whatsoever.
“IMA” could have been problematic (I associated it with Investment Management Association) but as you put a direct link on the term, was fine.
I hope this doesn’t come across as pedantic or unduly critical, as I appreciate all you do here.
Sara (Debt Camel) says
Hi Terry, I am glad you found it interesting. I guess you aren’t a debt adviser? This article was written for debt advisers who can be expected to know those terms and the background as well. It would have had to have been several thousand words longer if I had had to explain it in detail, and that would not have made it a better article for the debt advisers it was aimed at.
Terry says
Oops! Must admit I failed to take in the “This article is written for debt advisers” you’d clearly written towards the beginning of the article. Acknowledge your point and sorry to have troubled you.
Sara (Debt Camel) says
no problem.
Hugo says
Won’t be too long till D R O. Will only be processed by the two hubs clearly a cost cutting exercise in the present economic system centralised processes are always loved.
Dean Russell says
I noticed that the DRO Units are making sure they do not have to do too much work for referrals
No joint budgets
No unnamed creditors
Access to pensions are a no go, it seems
DRO has to be submitted in 8 weeks
See no point in them, I assume GP will be the same
Sara (Debt Camel) says
Access to pensions are a no go, it seems
Can you clarify this?
DRO has to be submitted in 8 weeks
And this?
Dean Russell says
MaPs Funded Debt Advice Project Bulletin plus the 8 weeks is part of the DRO Referral form
esther allnutt says
Hi,
Just heard that the MaPs DRO Unit will not take referrals from the Welsh Citizens Advice offices after 31st March 2023 due to be funded for England only.
What a shambles
Sara (Debt Camel) says
oh!
Dean Russell says
I have concerns with clients being referred to GP for a DRO and being pushed into a DMP.
If client has say 6 non priority creditors, monthly contractual payments are around £400 per month but is struggling to meet the payments and defaults he could be excluded from a DRO because of having more than £75 per month. I have a feeling that GP or others will not do a proper FS and push them into DMP which is not what they were referred for.
Just a thought
Sean Kilbride says
I absolutely agree with this. They are there to make money from people, not provide debt help.
Nigel says
I have a PARV order but Experian Transunion Equifax still showing my address on my credit file, what can I do
Sara (Debt Camel) says
I don’t think a PARV order affects your credit record. It prevent your address being shown on the insolvency register, which is searchable by anyone. But credit records aren’t. And your address would already have been on your credit records before the DRO.