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Charging clients for advice provision
One of yesterday’s workshops at the London Advice Conference explored the morality and viability of independent advice services charging clients for advice provision.
You can listen to Phil Jew, Head of Policy and Campaigns at advice UK, discuss some of the issues coming out from the workshop - click here
I wondered what peoples’ views on here are on this thorny area? It is something that has been discussed previously, but with extreme funding pressures now coming to bear at all levels, its also one which appears to be actively under consideration in many organisations and networks currently.
Anyone?
This is a very difficult area of course. My first preference would be a ring-fenced council tax precept levied by an independent body. These already exist in the shape of fire authorities and police authorities, both of whom levy precepts (assuming Council Tax or whatever replaces it will still exist). Such a model would potentially have the advantage of being politically neutral and only accredited agencies would be supported by the funding pot.
I struggle with the concept of working on a commercial basis. Leaving aside the moral and ethical issues, how would the money be collected?
I can imagine endless problems and conflicts of interest.
The other point in relation to welfare benefits, is that a huge percentage of the work is failure driven demand, i.e.process failures by DWP and HMRC. These government departments indirectly and relentlessly pass on the cost of their failure to advice agencies who subsequently have to pick up the tab. Look forward to 2013 and Universal Credit. The system is designed to operate via the Web. This will cost only a third of the current level of admin: a huge saving for the DWP, but of course none of those savings will trickle down to the advice sector which will be swamped by clients when the UC software fails.
This is quite topical at the moment in CAB; - it is a difficult one for agencies which have for years promoted ‘free independant & impartial advice’. We of course have to accept advice is never ‘free’, it always comes at a cost. As far as the client is concerned, When you start to introduce the question of fees, the impartiality and independance meaning starts to fade.
In CAB, would fee paying clients expect a better and quicker service than non-fee paying clients? - I suspect that they would. My own view is that fee paying work is an area which CAB shouldn’t stray in to. There is arguably a case for making the donation box a little bit more prominent and perhaps making a charge for some costs which we currently don’t charge for such as photocopying, travelling to tribunal venues and so forth. In addition to which agencies could perhaps seek to raise some revenue through publications, training and presentations which may have a chargeable value.
I agree with you Steve that a lot of the work we do is neceesary as a direct result of official error. On the legal aid front (always dear to my heart!) there is a case for some application of the ‘polluter pays’ principle. Rather than allocate the sum of £425 million towards the DWP/HMRC into ‘reducing fraud & official error’; - some of this should be allocated to advice agencies who ultimately seek to challenge a huge number of defective decisions. It’s effective challenge which highlights where mistakes are being made, it’s also a mechanism by which you can guage whether official error is infact being reduced. I rather suspect all the accent will be on detecting fraud with very little emphasis on reducing the error.
The issue here shouldn’t be about getting money out of clients who frankly haven’t got it, it should be about funding advice agencies and so forth to do a proper job.
Steve; I note your point about problems arising when the UC software crashes, but are we not being somewhat optimistic in thinking they’ll be able to get it up and running in the first place?!
[ Edited: 8 Jul 2011 at 02:16 am by Nickd ]Apart from issues surrounding impartiality, surely there is a potential legal minefield should charging claimants for advice be introduced.
For example, if I went to an advice organisation such as CAB for assistance AND was charged, I would certainly expect that assistance to be appropriate and correct. And, if the advice turned out to be erroneous, isn’t there a real danger of advice organisations becoming embroiled in legal action for negligence?
It also begs the question of when, exactly, does such an approach mean the word “charity” becomes rather hollow? I’m well aware there are many “charitable” organisations that charge for services. But, it does leave a rather unpleasant taste in the mouth.
The bottom line is there is no money to be made in advice provision on benefits.
Our service users are typically low income households whereas the local premiership footballer or actor using advice services can afford to pay a little more be it for advice on speeding or super injunctions.
If there were money to be made, someone would already be doing it and doing it succesfully.
I’ve seen the model punted about where advice comes at a fixed fee (copying Belgium?) of something like £20 for any advice.
Re. John’s post: we produce a public information sheet of local advice providers. With a view to completeness we checked out fee charging solicitors (non LSC funded) who were listed in the Law Society database as providing welfare benefits support. In reality, none of them were. One actually said that they could see no way of getting their fees paid.
On Nick’s point: I’d hate you to think I was suggesting the software would work Nick! I’d like to put a link in here to John Seddon’s Vanguard Consulting Newsletter for **July**, but you do have to subscribe (free) to read the current issue at http://www.systemsthinking.co.uk/6.asp .
Maybe this is a good opportunity to hammer home the ‘polluter pays principle’ . It might actually create encourage the DWP & HMRC to cut out all the nonsense (sorry…was having a Friday fantasy moment just then).
People have tried that (and still do I think.)
It’s not a money spinner as the amounts involved are small so 20% of naff all is naff all.
RTA management is big business. PI compensation, loaded hire car fees, litigation and escalating costs with a clear outcome, one of you is going to pay.
Benefits are different, you may or may not be entitled. So cherry pick? Then string out the appeal process by not submitting evidence, adjournment/postponement requests? In the end 20% of say an 18month backdated award lump sum? circa £800? or £9 per week! Just how many ‘straightforward’ cases are you going to need to cover your costs? (on the bag of a fag packet) for a 35hr week you’d need 60 cases (each week) or so with little or no costs.
There are businesses that work on similar principles with business in the ‘pipeline.’
Estate agents charge anywhere between 1-3% of sale value (and they’re having a hard time) UK average house price is £230k therefore their fee is £2300 - £6900 on average without VAT and the extras.
You’d have to charge way more than 20% more like 50% plus and you would still struggle.
Then you have the moral arguments…...
[ Edited: 8 Jul 2011 at 10:27 am by John Birks ]I stand by my fag packet calculations - I’m out.
Apart from issues surrounding impartiality, surely there is a potential legal minefield should charging claimants for advice be introduced.
For example, if I went to an advice organisation such as CAB for assistance AND was charged, I would certainly expect that assistance to be appropriate and correct. And, if the advice turned out to be erroneous, isn’t there a real danger of advice organisations becoming embroiled in legal action for negligence?
It also begs the question of when, exactly, does such an approach mean the word “charity” becomes rather hollow? I’m well aware there are many “charitable” organisations that charge for services. But, it does leave a rather unpleasant taste in the mouth.
I msut admit, I’m not sure that I agree with your point entirely, because there already exists a legal liability insofar as needing to be accurate in any advice being given to an individual, hence the need for liability insurance for any advice agency worth its salt.
There are different business models to consider of course, such as charging housing associations on a gross basis to advise all of their tenants - effectively the tenants are being charged because I would imagine that the HA will pass on costs through service charges, but from the point of view of tenants, the advice remains free at the point of delivery..
understand that CitA are currently consulting with bureaux re charging ....
... plus adviceuk have published a discussion paper and online survey @
Another model is trading, but I’m not sure of the sustainability issues. For example, Guernsey CAB have at least one shop selling second hand goods. Age UK nationally I assume prop up their advice line with trading income (insurance, etc.), but that also raises potential conflicts of interest. However, charities like the RNLI and most things involving animals (esp donkeys) will always eclipse the needs of people with benefit problems by miles.
Any developing income model that lets the government off the hook will surely mean that even in more prosperous times there is no return to the old model, so it will mean a very big change indeed.
I couldn’t listen to Phil Jew – link didn’t work. However, the fact charging was on the conference’s agenda speaks volumes. I think charging is inevitable whether we like it or not.
I think the no win no fee model is viable though I agree that it might require a reasonably high percentage of arrears as the success fee (eg 40%-50%). However, I think that model would work better for smaller concerns, probably individual freelancers, rather than bigger orgs like Disability Alliance and CAB.
[ Edited: 11 Jul 2011 at 12:40 am by Tom H ]Isn’t the main problem going to be that if the CAB did say raise money that the funders would seek to reduce their funding by the same amount? I am sure our local authoirty wouldn’t look on the CAB as being dynamic for example if we had more funding but rather that we needed less from them on that basis and the net gain would be very little if not nil. It is a worry that this is even being considered.
I couldn’t listen to Phil Jew – link didn’t work. However, the fact charging was on the conference’s agenda speaks volumes. I think charging is inevitable whether we like it or not.
I think the no win no fee model is viable though I agree that it might require a reasonably high percentage of arrears as the success fee (eg 40%-50%). However, I think that model would work better for smaller concerns, probably individual freelancers, rather than bigger orgs like Disability Alliance and CAB.
Just checked the link and it works for me Tom - if you send me your email, I’ll send you the long link back if you like?
But, yes, we put charging on the agenda because it is something that has to be seriously considered in the face of such widespread cuts to grants, contracts and commissions.
No win, no fee is also subject to reform under the legal aid bill - I have to confess now knowing much about this area in the first place really and I would imagine it’s a risky business model for a charity to adopt, given the external factors that cannot be accurately predicted. I would also worry slightly that a NWNF approach based on arrears of benefit would give a huge incentive for advice agencies to try and string matters out to maximise their returns. Really tricky area to me.
How about (post hearing) the No Win No Fee customer offering to settle the debt @ £1 per month?
Thanks Paul but have arranged since to have it unblocked. Problem with firewall.
How about (post hearing) the No Win No Fee customer offering to settle the debt @ £1 per month?
Would that be RPI or CPI index-linked John? I’d hate to see my profits eaten by inflation.
I don’t know.
It’s still a £1.
It’s all my customer can afford, being reliant upon state benefits.
I don’t know.
It’s still a £1.
It’s all my customer can afford, being reliant upon state benefits.
Ah, well, of course, if she’s on benefits. Why didn’t you say?
Exactly.
Solicitors have the money ‘up front’ with which to deduct fee’s and disbursements from.
As things stand I could see a big problem over conflicts of interest.
Business and poverty do not go well together.
The ‘model’ that exists is for higher inerest charges, higher fuel charges, higher insurance (although by default than design) and there must be some other examples…..
How about the “no good, no fee” model that is popping up on the web…
A brave new big society with paid off WROs undercutting each other to offer advice. Of course, we’ll be well placed to maximise our Universal Credit payments.
How about the “no good, no fee” model that is popping up on the web…
A brave new big society with paid off WROs undercutting each other to offer advice. Of course, we’ll be well placed to maximise our Universal Credit payments.
It’s scary looking around that website.
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No one has mentioned premium rate phone lines yet! Too book a DLA appeal call 098….*calls cost loads of dosh per minute…
And, of course, there’s many a client who has been given the best possible advice and service but thought it was useless because they didn’t get the outcome they wanted and there are more than a few people who are delighted to have been successful at Tribunal where the case was won despite the advice given.
I happen to think this is a fair and proportionate method of charging, if done appropriately and with proper safeguards and up front information for the caller.
Would you charge for instance if someone went on to lose an appeal? “Fair and proportionate” sounds very good but what does it mean in practice?
At least no win no fee doesn’t charge those who lose. The problem with NWNF is that you have to charge the winners more to subsidise the work you did for the losers. So you’d certainly be charging more than John’s Poundland example.
If it helps keep the provision of expert advice available then I think it is important to look at it.
The main thing is trying to ensure that it does not come to that, hopefully by keeping welbens under legal aid. There are alternative funding streams it is all about identifying them. Local government need to be aware of the cost savings to them of proper benefits advice and charities are going to have to be set up or pushed to provide the funding as well/
If charging comes in then it is going to have to be at a very low level, the recovery of costs from chaotic clients will probably be prohibitively expensive so they will not get the advice they are currently entitled to. Cases will be cherry-picked so good cases, that involve lots of work, could fall by the wayside.
I think the polluter pays principle is a sterling idea that deserves much wider publicity.
The important, and simple point, is that any system, which is not genuinely voluntary, will find advisors having to say to people in exactly the same situation -“Pay and get help or don’t pay and don’t get it”.
Can someone explain to me why, unlike in previous recessions, LAs, in particular, are not putting more resources into advice when there is an unarguable business case for their finances?
...What does “fair and proportionate” mean to you, Tom?
I suppose until we live in a world where we all have an equal chance from birth then nothing will ever be truly fair.
I think all we can say is that NWNF is fairer for the losers [eg of claims/appeals] and that premium rate telephone advice fairer for the winners (because they’ll probably hand less of their winnings over to the adviser).
I know the website “say no to 0870” was set up after concerns were raised about how premium rate lines were operating in practice in some areas. I think one issue was the difficulty in estimating the cost of the call as it often depends on the type of phone and/or network the customer is calling from.
I also think potential customers will be more willing to use NWNF rather than premium rate advice simply because they’ll prefer the prospect of handing over more of their winnings than paying upfront without any guarantee of success. However, that is just my instinct and I haven’t any evidence to back that up.
If you ever do go freelance Tony, I wish you all the best and hope you’re a roaring success. At least there’ll be no concerns about the quality of your advice. Mind you if I were to go freelance too and found myself up against you, I suspect I’d be setting up “SayNoToTonyBow.com” quite quickly. Anyway, whether NWNF or premium rate I think we can both be consoled by this: neither is Belgian.
I suppose until we live in a world where we all have an equal chance from birth then nothing will ever be truly fair.
You’re in for a long wait then.
Drive, ambition and determination : Nature or Nurture?
Drive, ambition and determination : Nature or Nurture?
I have the answer to that John? If you’d kindly phone me on 0870….
Ahh….... but you’ll need an 0844 number to avoid regulation and collect revenue.
0870 and 0871 being regulated numbers.
Just to cloud the issue further. I use http://www.saynoto0870.co.uk to get geo numbers for use through my mobile as I get charged hideously for 08 numbers.
It wouldn’t be long before someone was ringing you for advice using the geo number rather than the non-geo number. Probably.
Therfore, limited income stream.