StepChange’s debt advice is free for people who call. It is not free to run. The group headed by the Foundation for Credit Counselling, which trades as StepChange Debt Charity, reported £64.5 million of total income in 2025. Fair Share Contributions from creditors remained its largest income source.
That is not a scandal by itself. It is how large-scale free-to-caller debt advice in the UK is funded. The point of this article is not to argue that StepChange should be avoided. It is to explain, using StepChange's own accounts and the Charity Commission register, where the money actually comes from, so that anyone considering their services can weigh a recommendation with full context.
This is general UK information about how StepChange is funded. It is not personal financial advice, regulated debt advice, or legal advice.
Quick answer
StepChange does not charge you for debt advice or for running its Debt Management Plan. But it can still receive money as a result of the payments you make.
Here is how it works: you pay StepChange, which passes your DMP payment to the creditors you owe. Creditors that take part in its Fair Share scheme then pay StepChange a percentage of the money they receive. Your full DMP payment goes towards your debts; the contribution comes from the creditor, not an extra fee charged to you.
These creditor contributions are StepChange’s largest source of income. Its accounts report an average Fair Share rate of 10.17% in 2025, compared with 10.33% in 2024. That is an average across the scheme, not a promise that every creditor pays that rate. Other income includes donations, grants and fees from its IVA operation.
StepChange also runs an IVA subsidiary, StepChange Voluntary Arrangements, which takes fees from your IVA payments for setting up and running the arrangement, along with costs paid to other organisations. This means not all the money you pay into the IVA goes towards reducing your debts. This is legal, disclosed, and standard for the sector. It is also worth understanding before deciding whether an IVA is the right solution for you.
StepChange in plain English
StepChange Debt Charity is the trading name of the Foundation for Credit Counselling, a registered charity in England and Wales (no.1016630) and Scotland (SC046263), and a limited company registered in England and Wales (no.2757055). It is "authorised and regulated by the Financial Conduct Authority".
The charity was founded in 1993 with the stated aim "that no one should have to pay for debt advice". In 2025 the group reported £64.5 million of total income, including £45.7 million from charitable activities.
The core services are free to anyone who calls: budget review, information about the debt options that might fit their situation, and setting up and running a Debt Management Plan (DMP). StepChange also runs a separate insolvency subsidiary, StepChange Voluntary Arrangements, which sets up and supervises Individual Voluntary Arrangements (IVAs).
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Explore the Members’ HubPrefer to watch or listen to this article? This video explains how StepChange is funded, how Fair Share contributions and IVA fees work, and the questions to ask before accepting a recommendation.
Why "free" needs unpacking
The word "free" in this context is accurate. It is also incomplete. When StepChange says the service is free, it means the caller is not charged. Someone still pays. StepChange's own About Us page is unusually direct about this:
Unlike lots of charities, we're not funded by donations from the public. Most of our funding comes from organisations that lend money or provide credit for their services, like banks, credit card providers, and energy companies.
StepChange Debt Charity, About Us pageThe mechanism most of that money comes through is called the Fair Share Contribution. StepChange defines it on its funding page as follows: "Fair share contribution (FSC) is a funding model that we introduced to the UK whereby creditors make a donation to our charity… With FSC creditors who receive a payment from one of their customers on a StepChange debt management plan pay a percentage-based contribution for our service, based on the payments they receive".
In plain English: if a client pays £100 a month into a StepChange Debt Management Plan, that £100 goes towards their debts. Participating creditors then pay StepChange a Fair Share contribution based on the repayments they receive. This is not an extra charge to the client, and not every creditor contributes. The 2025 accounts report an average Fair Share rate of 10.17%, compared with 10.33% in 2024, and identify Fair Share as the group’s largest income source.
Where the money actually comes from
StepChange’s 2025 annual accounts give the following group income breakdown for the year ending 31 December 2025. These are the organisation’s income figures, not the total repayments it distributes to creditors for clients:
| Income source | 2025 group amount | What this actually is |
|---|---|---|
| Charitable activities | £45,723,000 | Income reported under “Debt advice and solutions”; this is not a separate figure for Fair Share alone. |
| Donations | £15,803,000 | Donations reported separately from income from charitable activities. |
| Other trading activities | £2,743,000 | Income from insolvency services and equity-release services, reported separately from charitable activities. |
| Investment income | £156,000 | Income classified in the accounts as investment income. |
| Other | £94,000 | Remaining income classified as “Other”. |
| Total group income | £64,519,000 | Combined group income, rather than the parent charity’s standalone income. |
Keep the group and parent charity figures separate. The same 2025 accounts report £64.519 million of group income and £62.416 million for the parent charity alone. This table uses the group figures throughout. Fair Share remains the largest individual funding source, but the accounts also include donations, grants and other income.
StepChange itself acknowledges the composition on its About Us page: "Most of our funding comes from organisations that lend money or provide credit for their services… Some make one-off donations to us, and others pay something called 'fair share'". This is unusually clear disclosure by charity-sector standards, and the accounts back the wording up.
Want to see your own numbers first?
Open the Budget Planner before you call anyone
A Debt Management Plan needs a monthly surplus to pay from. The Budget Planner shows you what surplus you actually have after essentials, so the number you take to any organisation is your own, not one they build for you.
Open the Budget PlannerThe IVA piece
Fair Share is one revenue stream. StepChange also provides Individual Voluntary Arrangements through its separate IVA subsidiary, trading as StepChange Voluntary Arrangements. Its published fees include:
- Setting-up fee, called the nominee fee: StepChange publishes this as either your first five IVA payments or £2,000. It pays for preparing and putting the proposal to creditors and is only payable if they approve it.
- Running fee, called the supervisor fee: StepChange publishes this as 15% of further money received into the IVA after the nominee fee. It pays for supervising the arrangement.
- Other costs, called disbursements: payments to other organisations for things such as registration, insurance and any necessary legal or property-related work.
- These fees and costs come out of the money paid into the IVA. They are not all payments towards clearing what you owe your creditors.
- StepChange says there are no upfront fees and no charges if creditors do not approve the IVA.
- Fees already paid are not refunded if the IVA fails.
The exact fees depend on the case. You must agree to the fees in the proposal, and creditors must approve them. Before signing, ask: “Of each payment I make, how much goes towards fees and costs, and how much reduces my debts?”
The important structural point is that "StepChange Voluntary Arrangements gift aids any profits from IVAs to the FCC", meaning any surplus flows back to the parent charity rather than to external shareholders. That is a legitimate charitable structure and it distinguishes StepChange from the commercial debt packagers the FCA subsequently regulated. It also does not remove the underlying reality that IVA fees are generated when clients enter IVAs.
An IVA usually means making payments for five or six years. Part of the money you pay covers fees and costs, rather than reducing your debts.
It normally stays on your credit file for six years from the day it starts. If it lasts longer than six years, the record normally stays until it ends.
If you own your home, check the exact terms before signing. For an IVA following the 2025 standard rules in England and Wales, you do not have to sell your family home or take out a bigger mortgage to put money from it into the IVA. Instead, the rules use a calculation of your share of the home’s value to decide whether you pay for five years or six. Older IVAs and agreements with individually negotiated terms may work differently.
If the IVA fails, the debts it was meant to deal with are not simply wiped out. Creditors can start chasing you again, and you could face bankruptcy. Bankruptcy is a possibility, not an automatic result.
Before agreeing to one, read our article on IVA pitfalls and safer debt solutions. GOV.UK also has a plain English summary on Individual Voluntary Arrangements.
What the FCA said about referral fees
Charity-sector debt advice looks different from the world the FCA sanctioned in 2023, but the wider context is useful. In June 2023, the FCA published policy statement PS23/5, its final rules banning debt packagers from receiving referral fees from debt solution providers. The ban applied in full from 2 October 2023.
Debt packagers are commercial firms that would recommend a debt solution to a person and then earn a referral fee for sending them into an IVA, a Protected Trust Deed in Scotland, or another paid insolvency solution. The FCA's own press release announcing the ban quoted the following facts:
- "The median referral fee to debt packagers for IVAs in 2019-2020 was £940, and £1,340 for Scottish PTDs."
- "IVA or PTD fees can cost consumers £3,650 or more over their lifetime whereas DROs cost £90 upfront in fees."
- The FCA cited a case where one consumer, who was homeless, was recommended an IVA costing £6,000 when they could have been debt free in one year via a Debt Relief Order for £90. (The £90 DRO application fee was later removed on 6 April 2024, so DROs are now free to apply for.)
The FCA banned referral fees for debt packagers because it found financial incentives could lead to unsuitable recommendations. That action concerned the debt-packager market, not a finding against StepChange.
StepChange’s own funding still deserves scrutiny. It receives creditor contributions linked to repayments through its Debt Management Plans. Its IVA business earns fees from clients’ payments and passes profits back to the charity. In other words, the organisation giving the recommendation can also receive income when someone takes up and pays into certain solutions.
In The Real Debt Guy’s view, this creates a potential conflict of interest worth examining: what brings income into an organisation is not necessarily the same as what best suits the person in debt. The question is how it keeps those financial interests from influencing its recommendations.
Ask: “What income would your organisation receive if I took this option? What alternatives have you compared, and why is this the best fit for me?”
The charity’s debt advice is regulated by the FCA. The insolvency practitioners in its IVA business are licensed by the Insolvency Practitioners Association. Those arrangements provide oversight; they do not mean readers should stop asking how the service earns money.
Six checks before you phone any debt organisation
The point of understanding funding models is not to talk anyone out of speaking to StepChange, Citizens Advice, or any other free-to-caller service. It is to walk in with the questions that reveal whether the solution being offered fits the situation. Six practical checks:
1 Know your surplus before you call
Every debt solution starts from one number: your monthly disposable income after essentials. Work it out yourself first, using a tool you control. Our Budget Planner is free and helps you work out your income, essential spending and what is left for debts. Bring that figure into any call so the recommendation is anchored to your reality, not to a form filled in during a phone conversation.
2 Ask what solutions can and cannot be offered
Some organisations can arrange Debt Management Plans, IVAs, and refer to bankruptcy or Debt Relief Orders. Others focus on a narrower set. Ask, up front: "Of all the debt solutions available to me, which ones can you personally set up, and which ones would you have to refer me to somewhere else?" The answer tells you which solutions are natural fits for that organisation's structure.
3 Understand what a DRO or bankruptcy actually involves
In England and Wales, a Debt Relief Order is free to apply for and normally lasts 12 months. Applying for bankruptcy costs £680, and discharge normally happens after 12 months. Both normally remain on your credit file for six years from the start.
The end of those 12 months does not necessarily end every consequence. A DRO can be extended in some circumstances or revoked if you no longer qualify or fail to follow the rules. Bankruptcy discharge can be delayed if you do not cooperate, and income payments can normally continue for three years. Separate DRO restrictions orders and bankruptcy restrictions orders can last between two and 15 years; that does not mean the normal DRO period or bankruptcy automatically lasts that long.
These are formal insolvency solutions, and cost alone does not decide whether either is right for you. Ask how the option fits your income, assets, debts and circumstances, and why it is more suitable than a token payment arrangement, a Debt Management Plan or an informal offer. The rules differ elsewhere in the UK.
4 Slow down on IVAs
An IVA is a formal insolvency arrangement with long-term consequences, including fees, credit-file damage and possible bankruptcy if it fails. Check the proposed payment term and how your home is treated. A 2025 protocol IVA does not require equity release from your family home, but older or individually negotiated terms may differ. If an IVA is proposed, ask: "Compared with a token payment arrangement, an informal repayment offer, a DMP, a DRO, or bankruptcy, why is an IVA the best option for me specifically?" A good answer will reference your income, your assets, your creditors and your goals, not the general benefits of IVAs.
5 Ask about token payments and informal arrangements
Before agreeing to any formal insolvency solution, ask whether a token payment arrangement or an informal repayment offer might fit. A token payment is typically £1 per month per debt while you deal with a period of low or no disposable income. It is not a formal insolvency product. It does not have set-up fees, ongoing provider fees, or a fixed multi-year commitment. It does not remove the debt, and creditors are not obliged to accept it. It may give you breathing room while your finances stabilise, but paying less than the agreed amount can still lead to arrears or defaults on your credit file. It does not create a formal insolvency entry in the way a DRO, IVA or bankruptcy does. Those are different consequences, not an absence of consequences. The Real Debt Guy has a full guide to token payments that explains where they help and where they do not.
6 Get a second view before you commit
No debt solution has to be agreed on the first call. If the proposal feels heavy, pause. Read the paperwork. Get a second view from a source whose income does not depend on which solution you choose.
FAQs
Is StepChange really free for people who call?
Yes for debt advice and its Debt Management Plan, but that does not mean StepChange receives no money from the arrangement. Your DMP payment goes towards your debts, and participating creditors then pay StepChange a percentage of what they receive.
An IVA is different. Fees for setting it up and running it, along with other costs, come out of the money you pay into it. So not every pound you pay into an IVA reduces what you owe your creditors.
What is the Fair Share Contribution and how does it work?
You pay StepChange through your Debt Management Plan, and it passes the money to your creditors. Creditors taking part in Fair Share then pay StepChange a percentage of the repayments they receive. Your DMP payment is credited towards your debts; Fair Share is paid by the creditor, not added as a fee for you.
StepChange reported an average Fair Share rate of 10.17% in 2025, compared with 10.33% in 2024. It was the group’s largest income source. Not every creditor contributes, and the average is not a fixed rate for every payment.
How much income does StepChange receive in a year?
The 2025 accounts report total group income of £64.519 million, including £45.723 million from charitable activities and £15.803 million from donations. The parent charity’s standalone income was £62.416 million. These are income figures, not the total client repayments handled and passed to creditors.
What are the IVA fees StepChange charges?
The setting-up fee, called the nominee fee, is published as either your first five IVA payments or £2,000. The running fee, called the supervisor fee, is 15% of further money received into the IVA after the nominee fee. There are also costs paid to other organisations, known as disbursements.
These amounts come out of money paid into the IVA, so not all your payments reduce your debts. The exact fees depend on the case and must be agreed by you and approved by creditors. There are no upfront fees, and fees already paid are not refunded if the IVA fails.
Is StepChange the same as a debt packager?
No. Debt packagers are commercial firms that were paid referral fees for sending people to insolvency solutions such as IVAs and Protected Trust Deeds. The FCA banned that referral fee model from 2 October 2023 under policy statement PS23/5. StepChange is a registered charity, is authorised and regulated by the FCA, and its IVA subsidiary gift-aids profits to the parent charity, the Foundation for Credit Counselling.
Should I still speak to StepChange?
Speaking to StepChange is one option among several free-to-caller debt information sources in the UK. What matters is that you understand how the service is funded so you can weigh the recommendation you receive. Understanding the Fair Share model and IVA fees does not disqualify StepChange from being useful, but it helps you ask better questions before accepting any single solution.
Who owns StepChange as a legal entity?
StepChange Debt Charity is the trading name of the Foundation for Credit Counselling, a registered charity in England and Wales (no.1016630) and Scotland (SC046263). It is a limited company registered in England and Wales (no.2757055) and is authorised and regulated by the Financial Conduct Authority.
