In the report published today, A New Model for Dealing with Personal Debt, says that a clearer range of options for people working to resolve their debt would avoid confusion and worry.
The reportcalls for greater consistency in the way debt advice is provided and in how creditors deal with customers in financial difficulties, in order to ensure fairer and more consistent results. It recommends changes in four key areas:
- Creation of a single body to regulate debt advice, with a single debt management license and sole responsibility for delivering a national over-indebtedness strategy;
- Simpler debt remedies, and increased emphasis on early intervention and resolution;
- Better use of customer information to identify people at risk of losing control of their debts, to offer early help; and
- Helping customers to help themselves by improving financial education and providing a single, online debt advice portal.
Paul Ross, BBA policy director and co-author of the report, said:
"Our vision is to provide a clear and coherent process to help people facing debt difficulties, to intervene early where possible and to provide a simple debt resolution solution if those early attempts do not succeed. We want to unravel the red tape to bring about a more financially responsible solution for customers.
"Customers are currently faced with too many confusing options for resolving their debt, and may set out too early on expensive legal procedures when a more common sense approach would be better for everyone."
David Parker, senior executive in Accenture's Financial Services group and co-author of the report said:
"As the Government considers changes to consumer credit regulation, now is the right time to get real change under way and ensure that there are effective safety nets for consumers in financial distress. The changes we are proposing will have a fundamental impact on the way debt is managed through the rehabilitation of debtors and the prevention of new or repeated debt behaviour.
"However, agreement to implement a new debt management framework must be reached by all relevant stakeholders, including the government, regulatory and advice bodies, as well as lenders and borrowers."
