Funding is slashed in spite of huge demand for debt advice services.
March will see the Financial Inclusion Fund run out of cash and the government have confirmed that it will not be renewed.
The fund has provided £25 million a year to pay for hundreds of specialists who assist people who can no longer manage their debts free of charge. Almost 500 hundred advisors across England and Wales have already started turning potential clients away as they brace themselves for redundancy.
Some advisors have received redundancy letters suggesting that they only take on new cases which will be quick and easy to compete before March’s deadline.
Citizens Advice has warned that this could not have come at a worse time as they too are losing their local authority funding.. Their director of policy, Teresa Perchard said that as unemployment is rising, the economy is in a difficult situation and there is an increasing demand for debt advice.
The Money Advice Trust is a charity which champions independent support and advice for people affected by their debts. They have predicted that an extra 200, 000 people will ask for free help this year.
Many fear that desperate individuals may turn to the debt management firms who charge for their services or even loan sharks.
Although the Office of Fair Trading is attempting to irradiate bad working practices in the industry there is still a number of firms who are quick to exploit those in need.
Should more money be spent on frontline services to help families get out of debt for free?