Policy in Practice is a social policy software and analytics company working with councils, government, housing providers and community organisations to help them analyse the impact of policy, identify and engage the people impacted, and track the effectiveness of interventions

In the United Kingdom a staggering £19 billion in benefits and welfare¹ support goes unclaimed each year. This is financial support that people are entitled to but, for various reasons, are not accessing. The main factor contributing to this widespread issue is a lack of awareness about eligibility for these benefits. As a result, at least five million people miss out on much needed financial support that could significantly improve their quality of life. This blog delves into the reasons behind the unclaimed benefits, exploring the growing challenges faced by people in meeting their financial obligations, and proposing how creditors can play a pivotal role in bridging this gap.

Reasons for unclaimed benefits

The single most significant reason for the vast pool of unclaimed benefits and support is the lack of awareness among eligible people. Many are simply unaware that they qualify for financial assistance, and consequently, they don't take the necessary steps to investigate their eligibility. The complex nature of the benefit system and the multitude of available schemes often contribute to confusion, making it challenging for people to navigate and understand what they are entitled to.

Finding the information can be a daunting task

For those who are aware of the benefits system and wish to explore their eligibility, another challenge arises – where to find accurate and accessible information. The process of checking eligibility can be daunting, requiring people to navigate various government websites, fill out complex forms and understand intricate eligibility criteria. This complexity acts as a barrier, preventing many from taking the necessary steps to claim the support they are eligible for.

More people face rising financial struggles

Simultaneously, the number of people in arrears across financial services, utilities, telecommunications and local government is rapidly increasing². The soaring cost of living is pushing many to the brink, making it increasingly difficult for them to meet their financial obligations. As a consequence, creditors across various sectors are actively seeking ways to support their customers. The recent introduction of the Consumer Duty regulation is a testament to the industry's commitment to providing enhanced protection for individuals.

The overlap between those needing help and not claiming support

What is striking is the significant overlap between those struggling to make ends meet and those who are missing out on unclaimed benefits. It is crucial to recognise that now, more than ever, is the opportune time for creditors and especially mortgage lenders to step up and help their customers to access the financial support they desperately need. This is an incredible win-win. 

Supporting customers to access benefits and support they are entitled to has far reaching positive impacts on families whilst also supporting financial resilience, improving overall loss rates.

Three ways that mortgage lenders can make a difference

1.    Provide a benefits calculator

Mortgage lenders can take the lead in breaking down the complexity surrounding benefit eligibility by offering a benefits calculator. These tools serve as a centralised platform where people can easily understand their eligibility for various benefits and support. By simplifying the process, their customers are empowered to take control of their financial wellbeing.

2.    Engage users in the assessment discussion

Actively involving customers in discussions around benefit assessments can demystify the process. By fostering open communication, mortgage lenders can help to create an environment where customers feel supported and encouraged to explore the available avenues for financial assistance.

3.    Adopt a data driven proactive approach to identifying vulnerability

To truly revolutionise the landscape, mortgage lenders can shift from a reactive to a proactive approach. By leveraging data analytics, they can identify which of their customers are likely to be eligible for benefits. Proactive identification allows for targeted outreach, ensuring that those who need assistance are reached effectively.

The game changing opportunity

The potential to transform the current mortgage arrears landscape is immense. 

Creditors, with their direct access to a vast customer base, are well positioned to become catalysts for change. Collaborating with organisations like Policy in Practice, which has earned the trust of around 80 local authorities, can facilitate the seamless integration of proactive benefit awareness and assessment journeys into existing mortgage user journeys.     

Policy in Practice, a trusted player featured on GOV.UK, boasts an award winning benefits calculator used by approximately three million users annually. Their proactive identification approach has proven effective in driving uptake and supporting customers, putting over £720 million of benefits and support into people’s pockets in one year alone. By tapping into this expertise, creditors can enhance their ability to support customers when they need it most.

Close the unclaimed benefits gap and proactively support customers

The staggering value of unclaimed benefits represents a significant loss for people who need this help as well as a sizable missed opportunity for mortgage providers to foster stronger relationships with their customers. The convergence of financial difficulties and unclaimed benefits offers a unique chance to step into a role of active support. By providing tools, engaging users in discussions and adopting a proactive approach, lenders can play a pivotal role in closing the gap between unclaimed benefits and those who need them the most. 

Now is the time for the mortgage providers to play a proactive role in reshaping the landscape of benefit awareness and accessibility to drive better outcomes for the industry and the people they serve.

1. Missing out: £19 billion of support goes unclaimed each year : Policy in Practice Report. 
2. Statistics Yearbook Personal debt in the UK January – December 2023: Stepchange debt charity
 

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The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.