StepChange Debt Charity Review

StepChange is one of the UK’s most well-known debt charities, and it is often one of the first places creditors recommend contacting if you are struggling with debt. Since 1993, StepChange states it has helped more than five million people with debt problems, and its website attracts millions of visitors each year seeking debt help.

Anyone can call StepChange and speak to an adviser free of charge. You'll be connected to someone who will listen to your situation and discuss what they believe is the best course of action for you. They are authorised to give advice, and they won't charge you directly for any of the services you use. However, and this is the important part, despite being a charity, StepChange does still make money from the services it provides. Quite a lot of it, in fact.

In 2023, StepChange's total group income was £54.7 million. Understanding the sources of that income is essential before you decide to use their services.​

Concerns grew after repeatedly hearing that people were being encouraged to enter an Individual Voluntary Arrangement (IVA) after speaking to StepChange — even when it didn't seem necessary. The alarm bells sounded. Was this motivated by money? After examining StepChange's website and published accounts more closely, the picture became clearer.

When you first visit the StepChange website, there is no clear or prominent route to information about how the charity is funded. However, tucked away in the 'Partner with us' section — an unlikely place to visit if you're looking for help with your debt — there is a breakdown of how StepChange is funded. You can also read this section directly on the StepChange website.

There are two significant revenue streams worth understanding:

1. Fair Share Contribution
2. Other Income

Let's go through each one.

1. The Fair Share Contribution — StepChange's Main Income Source

The Fair Share Contribution (FSC) is a funding model whereby creditors — the banks, lenders, and credit card companies you owe money to — make a donation to StepChange. When a creditor receives a payment from a customer on a StepChange Debt Management Plan (DMP), they pay a percentage-based contribution to StepChange for its services.​

This is one of StepChange’s key sources of funding. According to its 2019 annual report, clients repaid almost £436 million of debt with StepChange’s support, while the charity reported over £48 million in income from its charitable activities — a significant proportion of which is understood to come from the Fair Share Contribution model, where creditors contribute funding based on repayments received.

More recently, in 2024, StepChange secured £18.7 million in direct donations for advice provision from partner organisations — a 55% increase on 2023.

Here's the question worth considering: if StepChange receives a percentage-based contribution from creditors based on the payments its clients make, does that mean the more money they recover on behalf of creditors, the more income they generate? It certainly raises questions about whether this model truly aligns with the description of a "voluntary donation."

StepChange itself acknowledges on Reddit's UK Personal Finance community that

"Fair share contribution (FSC) is a funding model that we introduced to the UK whereby creditors make a donation to our charity"

Though critics have long noted this arrangement is far from a standard charitable donation. There is an agreement between creditors and StepChange that effectively compels that payment.​

2. Other Income Sources — IVAs and Additional Funding

StepChange states it receives “other income” from various sources. These include StepChange Voluntary Arrangements (which earn IVA fees agreed with creditors, which are deducted from client payments), donations from utility companies, statutory fair share payments for administering Scottish Debt Payment Programmes, and interest on cash balances.

It’s important to understand what those IVA fees really mean in practice. When a client enters an IVA with StepChange, a Nominee fee is charged — either the first five payments into the IVA or £2,000 — followed by a Supervisor fee of 15% of any further realisations. These fees are deducted from your monthly IVA payments and are not refunded if the IVA fails. StepChange Voluntary Arrangements gift aids any profits from IVAs back to the Foundation for Credit Counselling (FCC), the registered charity. Remember the name of this charity — you’ll see why later.

StepChange also has an equity release and mortgage subsidiary — StepChange Financial Solutions — though this is no longer listed as an active income source on their current funding page.

StepChange makes the following claim on their website:

Interestingly, StepChange's own About Us page now states: 'Most of our funding comes from organisations that lend money or provide credit' — directly contradicting the 'voluntary donations' claim made elsewhere on the same website.

It's important to clarify: while StepChange offers free debt advice and helps many people in the UK, the details of the Fair Share Contribution model are equally crucial. This model isn't simply about voluntary donations. Instead, it involves a structured, percentage-based financial agreement between StepChange and its creditor contributors, which ties StepChange's income directly to the payments made by its clients.

The ‘free advice’ is part of the promotion for their services. While the term "sale" might seem odd when referring to a charity, here is how it actually functions.

If you sign up for StepChange's services and make payments to creditors through a StepChange Debt Management Plan, you are indirectly paying StepChange. They receive a percentage of the money you pay to your creditors.

Here's a simple analogy to make it crystal clear.

If you're interested in a car, a salesperson will offer you a free test drive at no cost. After the test drive, they will try to persuade you to buy the car. You then decide to purchase and write a cheque to the dealership. The dealership processes the payment and subsequently pays the salesperson a commission from that sale. Ultimately, you have indirectly paid the salesperson via the dealership.

StepChange operates on a similar model. The “free” advice is the test drive. The creditors are the dealership. StepChange’s income is the commission, mainly from Fair Share Contributions, where creditors pay the charity a percentage of the repayments they receive through its plans. What is less clear – and what StepChange does not make prominent on their website – is that this means they are financially incentivised by the volume and value of payments that flow through their plans, and that they have funding agreements with many of the same creditors to whom you owe money.

This is the part that raised the most concern. There is a well-documented broader issue within the UK debt advice sector, where clients are inappropriately encouraged to pursue IVAs — the option that generates the highest fees for debt firms.​

The FCA has identified serious concerns with IVA advice in a significant number of files it reviewed, noting that IVAs are the only debt solution in England, Wales, and Northern Ireland that generates large fees for the firms that set them up. The FCA has been clear that this financial incentive can distort the advice provided, making some firms more inclined to recommend an IVA even when it is not in the client's best interests.​

Unlike commercial debt packagers who have been subject to regulatory action, StepChange presents its IVA subsidiary as operating "on a charitable basis" — with profits gift-aided back to the charity. However, this is not a donation to a separate independent organisation. StepChange Debt Charity is the trading name of the Foundation for Credit Counselling (FCC), the parent charity. The IVA subsidiary (StepChange Voluntary Arrangements) and the equity release subsidiary (StepChange Financial Solutions) are both wholly owned by the same group. So, when IVA fees or equity release commissions are "gift-aided back to the charity," the money is simply moving from one part of the StepChange group to another. In 2024 alone, the charity received £678,650 via gift aid donations from its own subsidiaries. This is common charity-subsidiary tax structuring — but it does not eliminate the conflict of interest. The organisation advising you about your debt options is the same one profiting from the products it recommends. This creates a structural conflict of interest, regardless of the charitable status of the parent entity.

People have expressed concerns about being advised to enter an IVA or consider equity release when their situations could have been managed without such drastic steps. The Real Debt Guy has spoken to many individuals over the years, where this seems to have been the case. The question any reader should ask before accepting advice from StepChange — or any other debt organisation — is this: what is the most profitable outcome for the organisation giving advice, and how does that compare to what is genuinely best for you?

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.