Debt Arrangement Scheme - returning funds to the free advice sector: consultation
Opinion is sought on which of the options detailed in this consultation, for returning funds to the free advice sector, would work best and why.
Appendix A - Statistics
DAS approvals by public sector - by calendar year
| Year | Public sector approvals | Total value of monthly instalments | Average monthly instalment | Annual value if all payments made | 20% admin fee (CMA & PD) | Highest instalment amount | Lowest instalment amount |
|---|---|---|---|---|---|---|---|
| 2014 | 1741 | £344,274.00 | £197.00 | £4,100,000.00 | £820,000.00 | £1,400.00 | £5.90 |
| 2015 | 1204 | £260,237.00 | £216.00 | £3,100,000.00 | £620,000.00 | £2,489.00 | £6.33 |
| 2016 | 1162 | £273,027.00 | £234.00 | £3,200,000.00 | £640,000.00 | £1,840.00 | £4.95 |
| 2017 | 918 | £229,733.00 | £250.00 | £2,700,000.00 | £540,000.00 | £2,255.00 | £4.95 |
| 2018 | 753 | £186,331.00 | £247.00 | £2,200,000.00 | £440,000.00 | £2,290.00 | £6.88 |
Breakdown of funds generated by the current PD fees charged in Q2 2018/19:
| Q2 2018/19 | Total amount ingathered by PD | Fee to PD |
|---|---|---|
| All cases | 9,231,843 | 534,381 |
| Public sector | 3,672,550 | 202,017 |
The current live DAS caseload includes approximately 7,000 public sector DPPs. These cases generated approximately £200,000 in fees paid to the PDs in Q2 2018/19, which extrapolates to an estimated £800,000 for 2018/19.
The average PD fee per case is therefore £115 per year (£800,000 divided by the 7,000 caseload).
Comparable breakdown of the proposed 20% administration fee for the same period, detailing funds available to redistribute to the public sector:
| Q2 2018/19 | Total amount ingathered by PD | Proposed 20% admin fee (CMA & PD) |
|---|---|---|
| All cases | 9,231,843 | 1,846,369 |
| Public sector | 3,672,550 | 734,510 |
The Q2 2018/19 stats show that, with an established caseload of the 7,000 public sector cases at present, the proposed total administration fee of 20% would generate circa £2,938,040 per annum (the estimated figure for Q2, £734,510 multiplied by 4).
The average proposed admin fee per case is therefore £420 per year (£2,938,040 divided by the 7,000 caseload).
Assessing alongside current stats:
From 1 January 2018 until 1 December 2018 there were 753 public sector DPPs approved. With an estimated average admin fee of £420 per year, the total funds would be in the region of £316,000 per annum.
This is a top end estimate as cases are approved at various points in the year and will not have each been paying every month for the year.
There is also the matter of missed payments where each payment cannot be guaranteed by debtors.
This would suggest that in the first year, on the basis of no increase in numbers, around £100,000 would be available to distribute.
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