The Government is committed to making sure that debt advice is accessible to all, including the most vulnerable. It is also committed to improving standards concerning debt management.
Following consideration of the responses received, the Government has proposed:
- the Money Advice Service should perform a central role in the coordination of debt advice, and should research and develop a delivery model for debt advice
- development of a protocol setting out what to expect from a Debt Management Plan;
- strengthening voluntary codes of forbearance where debtors need a breathing space to seek debt advice or recover from sudden income loss; and
- a consultation on how to facilitate access for bankrupts to a basic bank account
- a consultation on increasing the petition debt level for creditors. The level (currently £750) has not been increased since the Insolvency Act 1986 came into force and we believe that to be able to threaten someone with bankruptcy for such a small amount is disproportionate.
Business Minister Edward Davey said:
"While it is clear that stakeholders have strong concerns about some aspects of the personal insolvency framework, no strong case has been made for a radical shake-up.
"However, I am convinced that there is more that can be done to improve the delivery of debt advice to the most vulnerable and intend that Money Advice Service take up this work.
"I want to see creditors, debtors and particularly providers working together to improve standards in debt management, so that debtors are directed only to those operating the very best service, leaving no place for the rogue providers who are only in it to make money for themselves."
Following Business Minister, Edward Davey’s publication of the Government’s proposals to improve the delivery of debt advice to the most vulnerable, Kevin Still, Director of debt solutions provider, Atlantic Financial Management comments:
“Atlantic Financial Management is a member of the Debt Management Standards Association whose Code of Conduct is approved by the Office of Fair Trading.
"We strongly believe that the measures that the OFT are currently taking in strengthening the Debt Management Guidance and taking enforcement action against those providers that don’t comply can only be in the best interests of consumers, creditors and the reputable debt solution providers to which Mr. Davey makes reference.
“There is an absolute requirement for better collaboration and for agreed standards to be set out with regard to the provision of debt advice and the resultant debt solution, which includes the creditor obligations when dealing with a consumer or micro-business in financial hardship. The updated Lending Code and the OFT Debt Collection Guidance supports this. There should be more consistency in service delivery, irrespective of whether the resultant debt solution is formal or informal.
“As a debt solution provider, we currently sign-post the most vulnerable to the free sector, notably where they meet the criteria for a Debt Relief Order (DRO) or their personal unsecured debts are not the top priority because there are other more urgent factors that may need to be taken into account, for example, eviction from their home.
“We also feel strongly that there should be wider consideration given to how consumers can rebuild their credit profile and rating for the future, where re-mortgaging or downsizing may become a necessity. People who have sought professional debt advice and then stuck to a long-term debt solution like an IVA or a DMP have generally shown serious financial responsibility without resorting to further borrowing to make a fair contribution to their creditors.
"Future lending practices need to take account of this as the UK emerges from a protracted recession, where debt problems are likely to get worse for UK homeowners before they get better.”
