EuroDebt Welcomes Common Financial Statement Initiative

May 2008

"This gives greater clarity for debtors and creditors which is crucial"
Kevin Still, Director, EuroDebt Financial Services

Leading debt management provider, EuroDebt Financial Services, is welcoming the launch of the revised Common Financial Statement announced by the Money Advice Trust. As the UK's leading fee-charging debt manager to conduct home visits, EuroDebt believes the Common Financial Statement will provide vital clarity for debtors and creditors in terms of the living expenses that are considered acceptable when an individual is going onto a debt management plan.

"Recent reports have highlighted that debt is now hitting people hard across all social groups" confirmed Kevin Still, Director, EuroDebt. "And this means that it's more vital than ever that there are some common benchmarks regarding living expenses for those wanting to recover debts and those trying to help indebted consumers. The revised Common Financial Statement will provide that benchmark and, as long as creditors apply some level of flexibility to take into account the recent unavoidable increases in household expenditure, then it should enable EuroDebt and others to be able to help more individuals."

The new and updated Common Financial Statement (CFS) and trigger figures will be formally launched on 16th June 2008 in a three-month trial. The Money Advice Trust (MAT) has led both a Steering Group and a Working Group to oversee both the strategy and detail of the proposals.

Key changes to the CFS will include:

• There will be four trigger headings - telephone, travel, housekeeping and other.
• A 'child multiplier' will be introduced so that expenditure can be matched to actual child numbers in a household (rather than an assumed average under the current system). And children will be split into two age bands (up to 14 years and over 14 years) with different expenditure allocations.
• The introduction of a specific car expenditure allowance under the travel trigger figure, rather than the current unitary travel figure that seeks to cover such expenditure whether or not a car is used.
• The trigger amounts have been updated in line with latest ONS data. As before, this is based on expenditure patterns for national households with the lowest 20% incomes and therefore remains relatively cautious.

"We are fully supportive of this initiative" continued Kevin Still. "TDX Group (The Debt Exchange) recently highlighted the need for the credit industry to take a more pragmatic view of debt management and this initiative will support that goal. They are forecasting a 100% increase in debt management plans actioned this year, undoubtedly due in part to the impact of the credit crunch. Anything that can be done to ensure that these plans can be sustained will, clearly, benefit the creditors as well as the borrowers"

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