By Shanaz Musafer
Business reporter, BBC News
More and more people are seeking advice on handling debt
As a nation we owe about £233bn on credit cards, overdrafts and other loans, according to the Bank of England.
So it may come as no surprise that during the credit crunch, when people have been facing the prospect of losing their jobs or even their homes, that addressing one's personal debt level has become an increasing priority for many.
"Advice agencies have been swamped with a tidal wave of cases [in relation to debt] as a result of the credit crunch," Chris Pond, head of financial capability at the Financial Services Authority, told the BBC.
Some people face waits of several weeks to see a debt adviser, says the Citizens Advice Bureau (CAB).
"None of the agencies who give face-to-face debt advice have got the capacity to deal with the recession," says Sarah Divine, debt adviser at the CAB in East Staffordshire.
"Our waiting lists have got longer. At times clients are waiting up to eight weeks to be seen."
Extended opening hours
The CAB says it has seen a big increase in the number of people seeking advice about debt, in particular with problems regarding mortgage arrears and unemployment.
So what has the government been doing to address this increased demand for financial advice?
Citizens Advice has been giving out self-help leaflets
"The government has put a lot of money into new debt advisers - the Financial Inclusion Fund," says Stephen McKay, Professor of Social Research at the University of Birmingham, referring to the £45m the government handed out organisations, including the CAB, to pay for new debt advisers.
The CAB acknowledges this and also says branches have been able to extend their opening hours thanks to a grant received at the beginning of the year.
But they are still struggling to deal with the numbers coming through their doors.
"We have been referring people to other organisations," says Ms Divine.
They have also been producing self-help leaflets to provide advice to people without having to see an adviser.
Professor McKay points out one of the problems facing advice agencies.
"Most financial advice is on how to manage your existing finances, whereas most people fall into debt because there's a major change in their circumstances, such as losing their job," he says.
Ms Divine agrees. Many of the people she sees have been made redundant and never needed debt advice before.
"We are now getting people right at the start of the process, with no understanding, no experience of it before - people who aren't familiar with the benefits system," she says.
"When they find out that Job Seeker's Allowance is £64.30 a week, they're shocked."
Even after a client has been seen, the casework that follows now takes longer, she says.
'Busy, not swamped'
However, not all advice agencies say they are struggling to cope with the increased number of queries.
Many that offer advice over the phone or online say that they are meeting the demand.
In the first six months of the year the Consumer Credit Counselling Service (CCCS) answered just over 152,000 calls, compared with 106,000 in the first six months of 2008.
Chris Tapp from the CCCS's sister charity Credit Action says they have been "busy, but not swamped".
"This demonstrates two key things - both that there has been a notable spike in demand, but also that very large volumes of people are being helped successfully by the charitable advice sector.
"It's not true across the board to say the sector has not been able to cope.
"We took on more staff in 2007," as the credit crisis was starting. "As a whole I think the response of the sector has been commendable."
At a recent conference, Lord Turner, the chairman of the FSA, stressed the importance of financial advice and capability building.
"Consumers lack, and know that they lack, the financial capability to feel empowered," he said.
An FSA survey found that while 70% of people thought that staying up-to-date with their financial affairs was important, 42% admitted to monitoring their finances less than once a month.
This is something the FSA's financial capability scheme wants to address.
It aims to educate and inform consumers to take greater responsibility for their financial affairs.
Aiming to reach 10 million people by 2011, the FSA says it has already reached seven million.
But it has been criticised for being slow to react.
In March, Chris Pond, the FSA's director of financial capability, announced a change of priorities in his team's budget, which would see them target fewer schools and young people, and focus more on working with those facing unemployment.
This decision could have been made sooner, according to Credit Action's Chris Tapp, who does a lot of work with the FSA.
The FSA launched its Moneymadeclear service in April
"Everything they've been doing has been a little bit after the event," he says.
While Steve Webb, the Lib Dem work and pensions spokesman, adds: "Financial advice generally is grossly under-resourced.
"From a consumer end, prioritising families ahead of teenagers is probably the right thing to do at the moment. But why are they having to move resources around? Because they're not resourced properly in the first place."
Rolling out services
In their white paper on banking reform, the Conservatives have said that they would abolish the FSA and replace it with a consumer protection agency.
But the FSA's Chris Pond points out that whatever happens with the organisation, its consumer work will carry on, even if under a different body.
And it is making a push to make more financial advice available to the public, in addition to the workplace seminars and publications they already run.
Earlier this year, it launched the Moneymadeclear Pathfinder in the north west and north east of England, offering financial guidance over the phone, online and face-to-face. In April 2010, the programme will be rolled out nationally.
The service seeks to help people avoid getting into difficulties, and offers step-by-step guides on topics such as managing your money, losing your job and dealing with debt.
The FSA is determined that the service will make a real difference to consumers.
But Lord Turner admits that to improve the overall level of the nation's financial capability "will take a generation to achieve".