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. And some clients will have major problems raising the £90 DRO fee within a short period.
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.