The Government has published a summary of the responses received to its ‘call for evidence on the proposed ‘debt breathing space’ laws.

The proposals were contained in the 2017 Conservative manifesto and would give anyone who finds themselves in serious problem debt the right to legal protections from their creditors for up to six weeks. The intention is that, during this six-week period, they could receive debt advice and enter into a sustainable debt solution.

The summary notes that under Financial Conduct Authority (FCA) rules firms should only lend money where there is a reasonable expectation that the borrower can afford the required repayments. It also notes that the FCA has a high-level principle requiring firms to treat their customers fairly.

Some of the responses to the call for evidence include:

  • Many people felt that it should be necessary for an individual to seek debt advice before being granted breathing space, while others questioned if this was appropriate for certain customers, such as those with mental health issues. Most felt it would be necessary for the individual to continue to engage with their debt adviser during the breathing space period
  • Some respondents felt it was important that there were defined characteristics to determine eligibility for a breathing space, so as to reduce the potential for abuse of the scheme
  • Most thought there should be restrictions on whether individuals could enter into a breathing space more than once over a short time span
  • Most believed that a breathing space period should be terminated early if an appropriate solution was identified
  • Opinion was divided over which debts could be included in the scheme, or whether interest and charges should be frozen during the six-month period
  • Most respondents believed that the fact someone had entered a breathing space should be registered on their credit file

The Government now intends to table the regulations enabling the breathing space scheme during the course of 2019. Prior to that, it will issue a policy proposal for consultation later this summer.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article