A new body offering free financial advice and help for those in debt will be introduced, after action taken by Tatton MP Esther McVey.

The newly appointed Work and Pensions Secretary has announced Money Advice Service, the Pensions Advisory Service and Pension Wise will merge to create a new Single Financial Guidance Body.

Within three months of the body being formed, government will set up a debt respite scheme which will look at ways of protecting people from debts, including protection against enforcement agencies, interest and charges on debt and repayment plans. 

Ms McVey said: “The Government are concerned about low levels of financial capability in the UK. We recognise that not enough people know how to manage their money effectively, which is why we are taking decisive action through the Bill. Debt is not rising. It has actually fallen over the past eight years, but it is still too high. 

“This new body will offer guidance and advice, so that people understand what loans they are taking out and, fundamentally, what paying them back will mean for them. This information, guidance and, in respect of debt, advice will be not only independent and impartial, but free at the point of use, making it accessible to all those who need it.”

In addition measures taken through the Commons by Ms McVey as part of the Financial and Claims Guidance Bill will mean a clamp down on Claims Management Companies (CMCs) who help people make compensation claims across various sectors including personal injury and financial products. The responsibility for CMCs will be taken over by the Financial Conduct Authority who can impose a cap on fees companies can charge. 

Cold calling over pensions will also be banned as part of the measures set out by Ms McVeyand she also said Government was looking at ways to regulate other areas of cold calling.

She said: “The Government have been clear that we will not stand for unlawful, persistent cold calling made by companies in the claims management sector. Cold calling is already illegal under certain circumstances. Under the privacy and electronic communication regulations, we have forced companies to display their numbers when they call, made it easier to take action against those involved in making the calls, and strengthened the powers of the Information Commissioner Office to impose fines. That being said, a number of companies continue to act disreputably, so it is only right that the Government continue to take steps to further regulate the sector. ​That is why the Government committed in the other place to introduce measures to tackle those issues. The Department for Digital, Culture, Media and Sport is currently working through the details of an amendment to prohibit CMCs from making live, unsolicited calls unless the receiver has given prior consent. That step, combined with the Government’s previous actions in this area, should act as a warning to those acting unlawfully that we will not rest until the problem has truly been eradicated.”