The SFS spending guidelines are likely to rise again!

What is the Standard Financial Statement (SFS)?

The Standard Financial Statement (SFS) is a landmark development for debt advice in the UK. It was introduced in 2017 by The Money and Pensions Service, to help build financial wellbeing in the UK. The SFS provides a universal income and expenditure statement for anyone to use, along with any debts they own. Many debt advisors and financial technology companies use the SFS for the most accurate and universal guidelines.

When the SFS is used, spending guidelines are products to ensure that people can afford essentials and debt payments every month. This allows the debt advice sector and creditors to work together to achieve the most affordable and fair outcome for people struggling with their finances.

Why does MAPS update the SFS spending guidelines?

The spending guidelines are usually updated annually based on the previous year’s spending, however, due to the sharp rise in the cost of living, we are expecting the SFS spending guidelines to be updated again in June.

The aim of the SFS is to build an accurate household budget in order to assess whether an individual can afford to repay their debts and how much disposable income they have each month.

With the rise in the cost of living and inflation reaching a new high of 9%, the amount of outgoings a household has is dramatically increasing. Therefore, the SFS must adapt the guidelines accordingly.

June 2022 SFS spending guidelines

The SFS guidelines were last updated in April 2022. As previously mentioned, they usually update every year. However, with the drastic rise in inflation, the guidelines are likely to be updated again, only a few weeks after the last update.

The new figures are not expected to be released until the 30^th of May 2022, and organisations will have the month of June to implement them (that’s only a four-week window!).

How can you incorporate SFS guidelines into your collection process?

Although SFS guidelines are common practice in the creditor industry, it can often be challenging to update the SFS guidelines after every update. With an expected inflation rise in October 2022, it is important to be prepared for even further updates.

Here at IE Hub, we allow customers to complete their I&E online, in their own time. We reduce operational costs on the collections team end, whilst also automatically updating our system with all SFS guideline updates. Therefore, by utilising IE Hub, creditors do not need to worry about updating their system to accommodate any SFS changes.

Currently, 8.5 million people in the UK are behind on at least one priority bill. So many customers will be falling into this category if inflation continues to rise. It is crucial that creditors act now to protect their customers and ensure their collections team is well prepared.