1. Comparing the Common Financial Statement and Standard Financial Statement
Graeme Perry, AiB Head of Operational Policy and Compliance

2. Analysis completed by AiB’s Statistician – Samuel Dickinson
Things you need to know
Analysis
Final thoughts
Today’s talk

3. Analysis of 1,511 cases from the CFS
No consideration of evidence to justify any trigger breach
Savings contingency provision applied
Assumption of no behavioural change
Focus here on Housekeeping category
The following analysis is based on 1,511 real debtor income and expenditure details held in the Common Financial Tool (CFT), providing a high-level assessment of the impact of the trigger figures and new expenditure categories under the Standard Financial Statement (SFS)
All completed cases held in Common Financial Tool (CFT) were used. Debtor details are held in the CFT for 60 days under the Data Protection Act.
The following analysis applies the CFS and SFS trigger figure to the debtor household characteristics and financial details, and compares the resulting contribution.
In order to improve the comparison of both approaches, only the respective trigger figures have been used to establish the maximum expenditure under each category. Specific circumstances of the debtor were not taken into account i.e. provision of evidence to justify any trigger breach.
The debtor contribution is calculated by deducting the applicable statutory contingency provision (savings) from the available surplus. The potential monthly contingency provision is 10 per cent of surplus income up to a maximum of £20.
Comparison with SFS assumes no behavioural change from debtor or money advisor.
Things you need to know

4. Things you need to know: CFS vs SFS
The diagram presented in the Money Advice Service's SFS Spending Guidelines methodology has been used to reposition the expenditure subcategories of the CFS in the appropriate SFS expenditure categories.
Things you need to know: CFS vs SFS

5. Things you need to know: CFS vs SFS
CFS: Housekeeping
Assumed SFS category
Food and milk
Housekeeping
Cleaning and toiletries
Personal
Newspapers and magazines
Communication and Leisure
Cigarettes, tobacco & sweets
Alcohol
Laundry and dry cleaning
Clothing and footwear
Nappies and baby items
Pet food
Other housekeeping
The diagram presented in the Money Advice Service's SFS Spending Guidelines methodology has been used to reposition the expenditure subcategories of the CFS in the appropriate SFS expenditure categories.
Unclear where school uniform is in CFS – likely to be included in clothing and footwear under CFS therefore personal under SFS comparison but in fixed costs in SFS
Things you need to know: CFS vs SFS

6. Things you need to know: CFS vs SFS
CFS: Other expenditure
Assumed SFS category
Health (dentist, glasses, prescriptions etc)
Fixed Costs
Repairs / house maint.
Housekeeping
Hairdressing / haircuts
Personal
Cable, Satellite and Internet
Communication and Leisure
TV, video and other appliance rental
School meals and meals at work
Pocket money and school trips
Fixed Costs (no split made for pocket money, which is in communications & leisure)
Lottery and pools etc
Removed from CFS and SFS
Hobbies / leisure / sport
Gifts (Christmas, birthdays, charity etc)
Vet bills and pet insurance
Other (e.g. postage)
Other (e.g. holidays)
The diagram presented in the Money Advice Service's SFS Spending Guidelines methodology has been used to reposition the expenditure subcategories of the CFS in the appropriate SFS expenditure categories.
Things you need to know: CFS vs SFS

7. Things you need to know: CFS and SFS comparison
Monthly claim
Maximum trigger value
Flag if exceed trigger
Adjust for trigger
Surplus income adjusted for contribution
Surplus income adjusted for contribution
Compare CFS and SFS
Surplus income = final fixed + flexible expenditure (after adjustment for trigger) minus income - should this be ‘income minus
final fixed + flexible expenditure (after adjustment for trigger)’
Things you need to know: CFS and SFS comparison

8. Analysis: majority no trigger breaches
Under the CFS and SFS, the majority of cases do not see a trigger breach in any of the spending categories (71% under the CFS, 59% under the SFS). Under the SFS, 31% of cases see one trigger breach compared with 21% under the CFS.
Analysis: majority no trigger breaches

9. Analysis: housekeeping and personal categories stand out
More cases are breaching the trigger figures under the SFS, mainly due to an increase in cases breaching the housekeeping and personal category. Here we see 350 cases under the SFS breached the housekeeping category compared with 174 under the CFS. For the personal category under the SFS, 346 cases breached the trigger figure
Fewer breaches are seen in Communication and Leisure under the SFS compared with Phone under the CFS.
Focus here on the housekeeping category but analysis could be extended to personal category as well
Analysis: housekeeping and personal categories stand out

10. Analysis: majority no trigger breach under housekeeping
Looking solely at the Housekeeping spending category, the majority of cases (75%) did not breach the trigger figure under CFS or SFS.
208 cases (14%) had a housekeeping trigger breach under the SFS but not under the CFS.
142 cases (9%) had a housekeeping trigger breach under the CFS and SFS.
350 cases (23%) had a housekeeping trigger breach under the SFS compared with 174 cases (12%) under the CFS.
32 cases (2%) had a housekeeping trigger breach under the CFS but not under the SFS.
Of the 208 cases that had a housekeeping trigger breach under the SFS but not the CFS, the majority (161) only had the one trigger breach (i.e. housekeeping). The remaining 47 cases had two or three trigger breaches.
Analysis: majority no trigger breach under housekeeping

11. Analysis: what happens to contributions?
We can look at final contributions for the 350 cases that had a Housekeeping trigger breach under the SFS.
350 cases (23%) had a housekeeping trigger breach under the SFS compared with 174 cases (12%) under the CFS.
Analysis: what happens to contributions?

12. Analysis: what happens to contributions?
Making contribution under CFS, lower contribution under SFS
No contribution under CFS or SFS
350 cases that had a housekeeping trigger breach under the SFS
Nearly a quarter of cases (24%) that breached the housekeeping trigger figure under the SFS, would make no contribution (i.e. no surplus) under the CFS or SFS.
11% of cases switched from making no contribution under the CFS to being in a position to make a contribution under the SFS.
Nearly half of cases (47%) were previously in a position to make contributions under the CFS and would make higher contributions under the SFS.
18% of cases would see lower contributions under the SFS than under the CFS
No contribution under CFS, making contribution under SFS
Making contribution under CFS, higher contribution under SFS
Analysis: what happens to contributions?

13. Analysis: what happens to contributions?
205 cases (14% of all cases) would switch from making no contribution to making a contribution or switch from making a contribution to making a higher contribution.
Of the 205 cases with a higher contribution under the SFS, 134 cases would see higher contributions of £50 or less. 184 cases would see higher contributions of £100 or less. 20 cases would see an increase in contributions of over a £100 under the SFS.
Analysis: what happens to contributions?

14. Analysis: household profile
Is the household profile of these 205 cases different from all 1,511 cases profiled?
On the previous slide we saw that of the 350 cases that breached the housekeeping trigger under the SFS, 205 cases would be making higher contributions under the SFS (including those that previously made no contributions under the CFS).
We can look at the household profile of these 205 cases compared with the overall profile of the 1,511 cases included in the analysis. Is the household profile of these 205 cases different from the all cases profile? This chart shows that the household profiles are similar and no particular household is effected.
Analysis: household profile

15. 350 cases had a Housekeeping trigger breach under the SFS.
Under the CFS and SFS, the majority of cases do not see a trigger breach in any of the spending categories.
350 cases had a Housekeeping trigger breach under the SFS.
Effect on overall final contributions mixed.
No particular household profile is affected by the SFS household trigger.
Under the CFS and SFS, the majority of cases do not see a trigger breach in any of the spending categories (71% under the CFS, 59% under the SFS).
Under the SFS, 31% of cases see one trigger breach compared with 21% under the CFS with the increase coming from increased SFS housekeeping and personal trigger breaches.
Of these, 208 cases had a housekeeping trigger breach under the SFS but not under the CFS. 142 cases had a housekeeping trigger breach under the CFS and SFS.
Of the cases that breached housekeeping trigger under the SFS, 24% would continue to not make a contribution; 47% making a contribution under the CFS would see higher contributions under the SFS.
Final thoughts

16. No consideration of behavioural change by the debtor or money advisor.
No scope in this analysis to consider whether a trigger breach could be evidenced.
Final impact, therefore, of switch to the SFS, would be less than shown here assuming where trigger breaches occur evidence can be provided to justify the breach.
Different sample of cases.
Final thoughts