A report by the Low Commission has recommended that payday lenders are forced to pay a levy in order to fund debt advice. Costs may also increase for other firms regulated by the Financial Conduct Authority (FCA) if the Commission gets its way.

The Commission, chaired by Lord Colin Low, a cross-bench member of the House of Lords, notes that advice agencies are struggling to cope with the numbers of people contacting them with problems regarding debt, welfare, housing, legal issues and employment. Lord Low is also an experienced disability lawyer and vice-president of the Royal National Institute of Blind People. In compiling the report, he was assisted by nine other people with experience in the field of welfare provision.

The Commission believes that an implementation fund of £100 million per year for the next ten years is required, in order to introduce a nationwide strategy for advice and legal support. It recommends that £50 million of this is funded by central government, via the Ministry of Justice, the Cabinet Office and the Department for Work and Pensions; and that the remaining £50 million is obtained from other sources. These sources would include: the Big Lottery Fund, clinical commissioning groups, housing associations, levies on payday lenders and a 20% increase in the FCA’s levy on firms it regulates. The report mentions the payday lending levy as a separate item to the increase in the general FCA levy, but does not specify the size of contribution it believes lenders should make.

The report also recommends that: a new ministerial post in Government is created to oversee implementation of the new strategy, legal education is introduced into schools, local councils take a greater role in co-ordinating local advice services and greater use of technology is made by advice agencies. Over 100 recommendations are made in all, and the Commission says its intention is to influence policy-making of the major political parties as the 2015 general election approaches.

The Commission has discovered evidence of consumers waiting for up to five weeks to obtain appointments at their local Citizens Advice Bureau (CAB), and of other CAB offices being forced to make advisers redundant owing to budget cuts. Some MPs have reported that more and more people are coming to their advice surgeries with issues that should be handled by the CAB and other advice agencies.

Lord Low said: “Our report makes sobering reading and we are calling on political parties of all stripes to recognise the need to act before we reach crisis point.  All around the country we found advice agencies buckling under the strain, and ordinary people left with nowhere to turn.”