allpay continues to explore jam jar accounts ahead of Universal Credit

allpay is continuing to explore the possibility of offering budgeting accounts to social tenants under Universal Credit in a bid to help landlords safeguard their rental income.

Last September  the Department for Work and Pensions (DWP) urged financial providers to come forward to develop new financial products for Universal Credit and planned to name one or more providers to offer new budgeting or jam jar-style accounts in April. These would allow claimants to split their monthly benefit into separate pots for spending, saving and bill payments etc.

The idea is that the accounts would be available to those exposed to debt or who feel unable to manage monthly payments.

allpay was one of a number of financial providers that attended the DWP’s procurement day and had been expecting the DWP tender in November. However, following a revised timetable for the procurement, allpay is not expecting to be updated on the DWP’s position until January. The department has also warned suppliers not to expect a tender in either January or February.

Nick Peplow, allpay’s business development director, said: “Once we receive the update and tender from the DWP, we will have a clearer idea of our position on offering jam jar accounts. We are continuing to discuss the possibility with a range of partners and would look to update clients in April as to our position."

The company has seen an increase in enquiries and housing associations signing up to its direct debit service ahead of Universal Credit, which could see claimants receive their benefit on different days of the month.

Peplow adds: “We have been able to help housing associations with this concern as our direct debit service will collect payments on every date of the month, allowing landlords to align rent payment dates with Universal Credit award dates, limiting their exposure to arrears."

allpay is the bill payment provider for each of the housing associations involved in the Government’s demonstration projects which are trialling the direct payment of housing benefit to tenants ahead of Universal Credit.

A range of allpay’s services are being used in the projects including its direct debit service and swipecards – allowing tenants to pay their rent at local PayPoint outlets and Post Office branches or online or over the phone.
Peplow said: “It has been somewhat of a learning curve to understand tenants’ preferred method of payment.

“For example, a proportion of those with bank accounts still prefer to pay in cash – using allpay’s traditional swipe cards to pay with cash at Paypoint and Post Office outlets – or to set up a weekly or fortnightly direct debit or standing order.

“What we can glean from the emerging information is that to safeguard rental income, it’s important for landlords to offer a range of payment options that suit the preferences and circumstances of each tenant.”

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allpay's Nick Peplow at a Universal Credit seminar in Manchester