Charging for Advice - Member comments

These are the comments received so far from members about AdviceUK's open debate about charging for advice. We welcome your views. To contribute, complete our on-line survey.

Comment 1

‘I think it is an excellent discussion document covering all the main issues I think are relevant. 

Ethical point is important.  If asked 5-10 years ago our organisation would not contemplate charging clients. Our problem is that we have built 85% of our funding on legal aid, and the sudden disappearance of most of this does threaten viability. The question is can we sustain key overheads such as offices, reception etc which are critical to deliver front line services. If we can generate a fee paying service to pay for core overheads, then we are better placed to offer free advice on a marginally costed basis or increase use of volunteers. Faced with closure and offering no service or having part fee paying and retaining core provision during period of low public funding, the latter is clearly preferable. We retain some service for the poorest and choice of low cost (high quality service) for low/middle income.

Setting up a social enterprise subsidiary is not a light undertaking. We have done this and it means we have 2 Boards, 2 set of accounts etc. Also there are complex agreements and finance arrangements between both bodies – especially when it comes to sharing of resources such as staff/offices etc. In the end we decided it was easier to look at providing fee paying from the main charity, as only practical way to use current offices/staff/branding. SRA rules on separate entities means we would have problems maintaining distinct identities/confidentiality etc between 2 bodies. We await out come on our application for waiver on charging as in house solicitors. Agencies would need to weigh up carefully cost, complexity and risks involved setting up separate entity against benefits.

Finding a market that can and is willing to pay for service may not be straightforward. I struggle charging the very poorest clients, say for benefits advice – but may be a contingency fee approach is possible against obtaining back payments. Business planning here will be critical. There may be no market for services with skills that our advisers have. Entering new areas could be high risk, to ensure quality delivery of new area and clients are prepared to pay. It is interesting to see that IAS say that private client work is only 1% of turnover. Charging may not be an easy fix.

On tax I think it is important to note that charities can charge so long as primary purpose, if outside then tax is payable on “profit”.  It is not that it cannot be undertaken so long as not at odds with charitable objectives. So for example in our case we are allowed to give advice under our objectives but if this not for core client group, then tax may be payable. So lets say we advise middle class parents on school admissions appeals - that could be taxable but immigration advice to someone on benefits/very low income is not. Tax is only paid on profit, after overhead costs calculated on full cost recovery are factored in. This means the fee could be set, which allows overhead contribution but no profit, if tax is to be avoided. Tax, company and charity law advice will be critical.  

I think I have little to say to improve the briefing, beyond saying I am convinced AdviceUK will need to be flexible on charging but this needs to be in framework of good practice, so AdviceUK membership still stands for services that are mainly free to use and certainly free on point of contact, but services have flexibility to charge to maintain core free service. Good practice would highlight how risks of more commercial charging approach should not displace commitment to free services. I recognise however it may start us down a slippery slope we live to regret but see no other way than take this risk.’

Comment 2

‘We may have to all take a business view as to maintain a strong moral view could well be more detrimental to vulnerable people by removing our ethos of empowering people to make informed choices.’

Comment 3 

'On the ethical question, my guess is that the great majority of advisers will instinctively reject the idea, as most have a strong affiliation with the fundamental principles of advice: confidential, independent, impartial and free. However there will be other people (perhaps managers and treasurers) who are at least willing to consider the possibility of charging, if only as an option for the survival of their organisations.

 On a personal level, I think the introduction of routine, widespread means testing and charging would spell the end of the end of the independent advice sector as we know it. That would seriously risk losing the trust and good reputation that has been so hard-won over the years – both with the public and with public sector funders/private donors. From a public sector commissioning perspective, it could be seen as adding weight to the LSC’s commissioning argument: that as long as minimum standards are satisfied, it doesn’t matter who delivers advice, as long as it’s cheap enough. The connection between advice services and their local communities would hopefully still survive but the key determining issue could become ‘price’ rather than ‘value’.

However we are in exceptional times so the debate needs to happen. Looking at the question more pragmatically, I have a few thoughts and questions.

First, there’s the bureaucracy of means testing. The examples given in the paper are useful to ground the debate in real life experiences. The experience of running LSC contracts will also contribute but this does not seem to be explored in the discussion paper. In particular, I feel we could learn more about the admin and associated costs needed to implement means testing, charging and chasing/enforcing payments from clients. People who have managed an LSC contract could tell us about the admin task of doing the means testing element and LSC staff ‘escapees’ could report on the amount of work involved in pursuing unpaid legal aid bills.

On a different tack, are there any examples where an organisation gives free initial advice but then charges for more complex help – e.g. free general help, means tested/fee charged for casework? It would be like the solicitor ‘free 30 minute interview’. I would guess that this may be the way A4E have managed their CLAC contract in Hull but I don’t really know.

Secondly, there’s a question mark over the effectiveness of means testing for many advice centres. If your services are predominantly used by the poorest and most vulnerable people, then it would not actually help. It wouldn’t effectively ‘ration’ the service because, if most clients pass the means test, but that doesn’t bring with it any extra resources, then you’re just back where you started. So instead would something like the ‘sufficient benefit’ test help to decide who gets the advice and who doesn’t? Obviously that test wouldn’t have to be exactly the same as the LSC’s but how else would you decide who gets access to your scarce resources – whether that’s at the ‘front door’ or for more complex casework – if means testing is ineffective?

Thirdly, there might be a ‘funds replacement’ risk. If you did manage to generate income to supplement cuts in public funding, would that not risk inviting further cuts? A hard pressed Council commissioner could conclude that if you’ve been able to cope with a cut of 15%, why not try dealing with 30%? Once that public funding has been lost, it’s probably gone forever.

Fourthly, there’s a concern around regulation (or the lack of it) if charging was widely introduced without clarity about the future of quality standards and regulation. OISC/CCL licences aside, pretty much anyone can set up a fee charging advice service, with no legal-competence-specific requirements for external audit or quality standards. We know that many advice clients are the most vulnerable people around so it would be doubly concerning that there is no legal framework to protect them from poor quality advice and being fleeced the same time. I realise that’s the case already but I’m concerned about the inability to distinguish the independent advice sector if it also began widespread charging. And let’s be honest, what are the prospects of this govt being interested in setting up a new regulatory regime or ‘quango’ for independent, non-solicitor advice? I sincerely hope that the ASA’s new Quality Mark project is not another victim of the cuts.

Fifthly, there are perhaps different issues for different categories of law. For example, I can understand that in some categories (eg employment or immigration) there may be less of an immediate ethical issue and, indeed, more or a market. But as regards benefit, debt and housing/homelessness (which is what brings in the majority of clients for advice in our area), poverty is the basic reason why they need help. That is perhaps not necessarily the case for everyone seeking employment or immigration advice (though it is very often linked) so the IAS model may be more feasible in those categories.

Finally, on the idea of taking payments from third parties for clients, I don’t see the problem with that. The service remains free to the client and as far as I can tell, it’s no different in principle from a PCT or Mental Health Service funding an outreach session for users of particular venue – it’s just done individually.

So those are my initial reactions – what do you think?'

Comment 4

‘From our organisations’ point of view, because we deal with people in debt, one of the biggest issues would be becoming a clients’ creditor. We had quite a tussle with the council when we first started getting contracts to provide a service which contributed to care packages. We insisted that when people had to make a contribution we would not be responsible for collecting it. This meant the council paid us the full cost of the service and recovered the contribution from the client. Of course the person was still effectively being charged if they had to make a contribution. 

When we found we were getting requests for our money handling service from people who didn’t qualify for a paid for service and wanted to pay we decided to set up a social enterprise rather than trade through the charity to address issues such as being a clients creditor, VAT etc. We still try and adhere to the no charge for advice principle by giving a free first appointment to assess the persons need for a service, get an idea of the amount of involvement needed and therefore cost and give debt and benefit advice. Then the person starts paying for the money handling service but this will always have elements of advice in it and it would be impossible to separate it out. We are really struggling with how to set charges and separate out different bits of work. 

In addition, most of our work is paid for by contracts from the local authority so again we are charging for advice, just not the service user directly.  At the moment Supporting People is totally free to the service user, but there is one local authority which has found a way to charge, just like social services. 

it’s a huge dilemma.  If we are able to charge for advice then this is what funders will expect us to do and I imagine the consequence will be that it will be harder and harder to get grant funding. There is also the creditor problem. I think the vast majority of people who seek advice from the voluntary sector are people without much money. Is here any research on this? I also agree that there may be a 2 tier service – maybe not so much quality as waiting time. If someone can afford to pay they can jump the queue and not have to wait for a space on a contract or until capacity is available on a grant funded project.

Relating to the appendix article by Richard Jenner about raising expectations – I would question this view as people should expect and get the same standard whether they pay or not.’

Comment 5

I have raised this topic on more than one occasion at National Conferences these past few years. The argument for charging is now becoming more apparent as agencies are starting to feel the pressure of cuts and commissioning models. When you deliver services in seriously disadvantaged communities you know how important these services are to the community they serve. No one expects that clients should ever pay for these services. It would be wrong to do so and most would pass a means tested system anyway, so little need to start introducing such mechanisms, though it could well happen when Councils want to justify their grant funding.

In [commentator’s city] there are many area’s which receive no advice services, some of these areas have large disadvantaged communities and others pockets of serious disadvantage. [The city’s advice network] believes next year, we shall be expected to provide services for these communities with no additional funding. The CAB and Law Centre are expecting to make changes in their service delivery due government changes to legal aid.  With a new commissioning model being devised by the council, potential cuts in core funding, difficult choices are going to have to be made.  

There are many people in [commentator’s city] who would be entitled to DLA for example, who presently may not be in receipt of this benefit.  This is not a means tested benefit and not confined to areas of disadvantage or income.  This is an example of where a charge for a service could apply; recently a caseworker did two DLA’s privately, since the applicants were not covered by any of the existing advice services, the applications were successful and both offered her £50 for her trouble. The additional income they receive from this benefit and what they thought was a reasonable amount to offer in remuneration, examples where a charged service could generate a profit, after paying for the caseworker’s time. My agency does a large number of new DLA and renewal applications each month, this is a service that we may well be forced to cease when a commissioning model is introduced. It is mooted that the Pension Service could take on all DLA’s as referrals, thus freeing up valuable caseworker time, but our concern is, will our clients get the same level of service!

Employment tribunals are likely no longer to be covered by Legal Aid contracts, opening options for a charged service, perhaps on a no win no fee basis. Debt is too heavy administratively to be viable, but a recent example of an accountancy firm offering a small business a bankruptcy for £750.00 examples how this is something that may be considered. 

I have always envisaged a charged service to increase the opportunity of advice provision in selected fields to widen the opportunity for advice outside of disadvantaged to communities where there is presently none provided.  People paying for advice would expect a different level of service, evening and weekend openings, home visits, and a more personal service. It would have to be offered through a Community Interest Company (CIC) or Industrial and Provident model. It would be separate to existing services and the profit generated would be reinvested in improving our free services. It does not have to be top heavy with staff, premises and admin, space could be rented in an existing centre’s or a home working operation could be established, and existing advisors and volunteers could provide addition part-time hours, to earn an additional income should they wish. It would not affect existing service provision but enhance it, and at the same time meet the needs of a wider base of local citizens, who presently cannot access alternative provision. It would be the responsibility too of the CIC to meet a Quality Mark Standard, and if these services were set up by existing agencies or staff then I am sure this provision would be automatic. In some respects it would be better if we as agencies got there first to ensure this is the case, rather than waiting for some other company to see an opportunity in the market place and provide an unregulated service. Also why AdviceUK ought to establish perhaps an Associate Membership for these CIC’s to ensure standards and credibility which can reassure clients and agencies alike.

Once a CIC is established it can trade in any way it deems fit, to meet the obligation of its purpose, in this case supporting existing advice provision, free at source. With expertise in advice centres not only based around the provision of advice, there is scope to generate income in a variety of ways.  Perhaps as consultancy to the voluntary sector, training provision, admin for external small businesses, PAYE services, HR provision. As a CIC is not distributing profits to its directors, or only 5% capped (or less) to it’s share holders the bulk of the profits can be distributed effectively to the cause it supports. If successful in a business venture it cannot be bought out as it is asset locked. CIC’s  should be able to provide services at a much reduced cost than can existing companies, leaving them unable to compete, so have the ability to take on contracts and tenders that were previously the domain of much larger companies. The scope for a broad range of mixed services is open to CIC’s and this is what really is needed to be considered by our sector. We could partner across larger boundaries thus reducing business costs and run greater home working and outreach programmes.

If we are charging for advice and this would breach the Law Centre constitution for example, then they could own a share in an external CIC without it conflicting with the aims of their Articles of Association. What is beyond doubt is that to survive this next few years and maintain or expand our existing services we need to do more in the way of generating unrestricted incomes, CIC’s are perhaps the way forward. 

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