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Law360, London (June 9, 2020, 12:26 PM BST) -- HM Treasury announced plans on Tuesday to pump an additional £38 million ($48 million) of funding into debt advice services to help manage a flood of new cases of arrears resulting from the coronavirus pandemic.
Financial services companies will contribute £14.2 million to the support package through a one-off increase to the industry levy, the government said. The Financial Conduct Authority, the collection agent for the levies, said it will carry out a consultation on the details.
Allocation of the funds will be overseen by the Money and Pensions Service, the government's new guidance body on pensions. The cash will go to charities and other services offering financial guidance.
"We know that some people are struggling with their finances during this difficult time, which is why we want to make sure people can access the help and support they need to manage their debts and get their finances back on track," John Glen, Economic Secretary to the Treasury, said.
The joint funding package will help debt advice providers to continue with, and increase, their vital work," he added.
The support package will help debt advisors offer guidance to more people who are experiencing financial problems as a consequence of COVID-19. It will also help providers who have seen their income fall to continue working.
The government will provide £20.6 million, and the Money and Pensions Service will contribute £3 million from its existing budget.
"The impact the coronavirus pandemic will have on people's financial wellbeing is significant and will continue for some time," said Caroline Siarkiewicz, the Money and Pensions Service's chief executive. "We know there will be increased demand for free, expert debt advice services over the coming months, and this extra funding will help to ensure that more people can access help more quickly."
Glen said the extra funding comes on top of an "unprecedented package" put in place by the government to support individuals, businesses and the economy through the coronavirus outbreak.
The government recently announced an extension to payment breaks on mortgages of three months. The scheme was announced in March to help borrowers in financial difficulty because of the health crisis, and was due to expire at the end of June.
The mortgage holiday scheme is part of a £330 billion Treasury rescue package to help the country survive the economic fallout from the pandemic. The government has also set up funds for businesses at risk of collapse to give them access to state-backed and guaranteed loans.
--Editing by Ed Harris.
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