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, despite being a charity, StepChange does receive significant funding from the services it provides, as its published accounts show.

StepChange reports tens of millions of pounds in annual income from a range of sources. Understanding where that funding comes from is essential before you decide to use their services.

Concerns grew after hearing from some individuals who felt they had been encouraged to consider an Individual Voluntary Arrangement (IVA) after seeking advice, even when alternative options may have been available. 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 under which creditors choose to contribute funding based on repayments received.​

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' — which sits uneasily alongside 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 funding arrangement, where creditors contribute based on the repayments they receive through StepChange plans.

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

In simple terms, creditors pay StepChange a percentage of the repayments that flow through its plans. Understanding how this funding model works is important, as it provides context for how StepChange can offer free advice.

What is less clear – and what StepChange does not make prominent on their website – is that this means part of their funding is linked to the repayments made 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 concerns with IVA advice in a number of cases it reviewed, noting that IVAs are one of the few debt solutions that can generate significant fees for the firms that arrange them. This creates a financial incentive within the sector, which is why the FCA has raised concerns about the quality of IVA advice in parts of the sector.

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 also the one that can profit from some of the products it recommends. Some may view this as creating a potential conflict of interest, regardless of the parent entity's charitable status.

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.