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By Simon Howard, MICM FACP, Business Development Director, TALKINGTECH

For the first time, organisations can now use the same format to assess people’s finances when they are in debt.


Newly-launched by the Money Advice Service, the‘Standard Financial Statement’ (SFS), is a common framework to be used by debt advice providers and creditors to provide a more accurate picture of consumer income, outgoings and debt.  As it’s phased in over the next year, the tool will also deliver a single set of spending guidelines based on that evaluation. 

Human approaches

Until now, consumers could face many different types of affordability assessments. The commonality of the new framework, devised and agreed by over 22 organisations, should ensure a smoother, confidential transfer of information about clients between different organisations. This will reduce the number of times affordability assessments are completed and provide the consumer with more accurate and united debt advice.


The SFS is a much-needed change to a process that requires a common approach for better outcomes. The FCA’s Lending Guidelines state that organisations must ‘pay due regard to the interests of its customers and treat them fairly’.Income and Expenditure (I&E) assessments are fundamental to responsible lending, as set out by the FCA and are central to the SFS. The main issue is that I&E forms are often inefficient and can deliver a poor customer journey.

Unravelling complexity

There are millions of people in the UK struggling to pay their bills, according to the Debt Advisory Centre -nine million adults think they owe too much and four and a half million people find it difficult to keep up with essential bills. A joined-up process will deliver better clarity and understanding with a single set of spending guidelines.  It will also reduce the need for stakeholders to question details of individual budgets, making the process less stressful and invasive.



The need for a more cohesive approach is one of the reasons why the debt industry discussion forum, the Money Advice Liaison Group, has supported the development of a new piece of research called ‘Vulnerability; a guide for debt collection – 21 questions, 21 steps’.  Released in March 2017, it collates the experiences of 1,600 collections and specialist staff at 27 UK lenders and debt collection firms.  The research produced over 20 practical and commercially realistic steps and adapted for use in the utilities, telecoms, retail and government sectors.  Bob Winnington, Executive Officer at MALG, said: “It’s easy to treat people as anonymous entities, especially when companies hold so much data on every customer and customer type.  Our challenge to the debt and service provider industries is for each to regularly analyse and improve their processes, communications and channels to design meaningful and efficient, digital-first, customer experiences.  The introduction of the Standard Financial Statement is another opportune time to do this.”

The savings section in the SFS, designed to build financial resilience, encourages a longer-term view beyond each consumer’s debts and spending commitments.

Providing for digital natives

The current I&E mechanism is not conducive to today’s digital world. For better outcomes, assessments need to deliver more positive experiences. Even back in 2015, three of the top five areas that consumers identified as leading to a positive experience with a company[1] were:

  • Fast response to enquiries or complaints;
  • Clarity and simplicity of information across channels; and the
  • Ability to interact with a company over multiple channels.


Consumers are used to interacting with organisations and service providers over numerous channels. According to Mintel, one third (34 percent) of consumers with a bank account interact with financial services companies via mobile websites and apps, including the majority (55 percent) of Millennials.The SFS framework will ensure that every customer no longer needs to repeat each creditor’s own I&E process. We urge creditors to make the experience even more intuitive with digital and self-service options in the I&E process.

We know that an average I&E analysis can tie up agents and customers for an average of 45 minutes. This is frustrating for the customer and the cost for the provider to conduct each I&E is between £40-80. These phone-based interactions can lead to more errors as the client might not have the necessary data while speaking to an agent, or they may feel embarrassment in discussing their situation.

Humanising the collections process means interacting with customers in a way that they feel comfortable with. Research commissioned by Experian[2] showed that people struggling with debt prefer to create their repayment plans online:

  • 62% say managing debt online is easier and more convenient
  • 56% agree that managing it online would enable them to retake control more easily
  • 49% don’t want to be hassled by phone calls and overdue letters
  • 26% believe having to talk to someone would add to their stress about the debt

We work with creditors to deliver a multi-channel approach so that the agent, customer or both can complete I&E forms across multiple devices, including smartphones, tablets and PCs, as well as on the phone. Completion rates and accuracy are increased because the process allows the consumer to check details and input those facts via the channel of their choice.

The result is that data is validated, error rates are reduced and the affordability assessment is more accurate. Crucially, this approach secures consumer buy-in and accountability.

[1] Research by Economist Intelligence Unit in 2015

[2] *Survey conducted by Opinium Research 23 to 25 September 2015 amongst 2002 respondents to a nationally representative sample.

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