How Does StepChange Make Money? What to Know Before You Call

StepChange is genuinely free for people who call. It is not free to run. The Foundation for Credit Counselling, which trades as StepChange Debt Charity, reported £58.4 million of total income in 2024, most of it paid by the same creditors its clients owe money to.

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 the largest debt charity is funded. It is not personal financial advice, regulated debt advice, or legal advice. For advice on your specific circumstances, use a qualified debt adviser or an FCA authorised organisation.

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" (StepChange regulatory information page).

The charity was founded in 1993 with the stated aim "that no one should have to pay for debt advice" (StepChange About Us). It is by far the largest debt charity in the UK by income. In 2024 the group reported £60.2 million of total income and £39.2 million from charitable activities (Annual Report 2024, p.42).

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).

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:

The 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" (StepChange, How We Are Funded).

In plain English: when a client on a StepChange Debt Management Plan pays £100 a month towards their debts, StepChange distributes that £100 to the creditors, and each creditor pays a percentage of what they received back to StepChange as a "Fair Share" contribution. The 2024 Annual Report confirms that the average Fair Share rate that year was 10.33%, and that "FSC remains the group's largest source of income" (Annual Report 2024, financial review section).

Where the money actually comes from

The clearest breakdown is on the Charity Commission entry for the Foundation for Credit Counselling, which shows the following income split for the financial year ending 31 December 2024:

A useful cross-reference: the StepChange 2024 Annual Report gives a total group income of £60.2 million (some group subsidiary income is not held inside the parent charity's Charity Commission return, hence the small difference). Either way, the picture is a well-funded organisation with two dominant sources of income, both ultimately linked to the credit sector.

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.

The IVA piece

The Fair Share Contribution is one revenue stream. StepChange also has a separate subsidiary, StepChange Voluntary Arrangements Ltd, which sets up and supervises Individual Voluntary Arrangements (IVAs). The fees for that subsidiary are set out on StepChange's own IVA costs page and are unambiguous:

• Nominee fee: "either the first five payments into the IVA or £2,000". This is the fee for putting the IVA proposal to creditors and is only paid if creditors approve.
• Supervisor fee: "15% of any further realisations". This covers the ongoing costs of running the IVA and starts after the nominee fee is paid.
• Both fees are deducted from monthly IVA payments, not paid up front.
• "These fees are not refunded if… the IVA fails".

These are the exact wordings from the StepChange IVA fees, costs and charges page. StepChange notes on the same page that "StepChange IVA fees follow the industry standard for IVAs", which is true. Any IVA in England, Wales or Northern Ireland is a fee-earning insolvency process for someone.

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.

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.)

StepChange is not a debt packager. It is a registered charity that provides advice directly and, if an IVA fits, arranges it via its own regulated subsidiary. The FCA's concern was specifically about commercial firms that had a strong financial incentive to steer people towards IVAs regardless of suitability. StepChange is authorised and regulated by the FCA and its IVA subsidiary is required to comply with the same consumer duty rules as any other authorised firm.

The reason the FCA case matters here is broader than any single organisation: it establishes on the regulator's own record that the funding structure behind debt advice can influence the solution offered. Recognising that is not an accusation. It is context for asking better questions.

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 stores nothing. 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

A Debt Relief Order (DRO) is free to apply for since 6 April 2024, and in the standard case the moratorium lasts 12 months. Bankruptcy costs £680 in England and Wales and, in the standard case, the person is discharged after 12 months. Neither of these is a clean 12-month exit. Both stay on the credit file for six years from the start date, and both can be extended. A DRO can be revoked by the Official Receiver if circumstances change, and a Debt Relief Restrictions Order can add 2 to 15 years of additional restrictions (GOV.UK, guidance for creditors in a DRO). Bankruptcy discharge can be suspended by the court, and a Bankruptcy Restrictions Order can add 2 to 15 years (GOV.UK, bankruptcy restrictions orders). These are formal insolvency solutions with long consequences. They are not automatically the right answer just because they carry no ongoing provider fee. If they are being suggested, ask exactly why they fit your circumstances rather than a token payment arrangement, a Debt Management Plan, or an informal arrangement with the creditor.

4 Slow down on IVAs

An IVA is a five- or six-year insolvency solution with real long-term consequences: credit-file damage, potential home equity release, potential bankruptcy on failure. 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, but for a lot of situations it buys time without the credit-file consequences of a DRO, IVA or bankruptcy. TRDG 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.

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