Credit, Collections & Insolvency News
The Credit industry has responded to the Queen’s speech. Here is an overview of the some of the main talking points:
Citizens Advice Chief Executive Gillian Guy said “The right guidance can be an essential part of a secure financial future. We help people with 1.7 million money queries a year and know that people’s finances are often complex, with people keeping on top of day-to-day finances while planning for their futures, and some also managing debts.
“The creation of a single body is a welcome opportunity to bring guidance on money, debt and pensions together, giving people more holistic advice that cuts across all areas of their finances. “The new body should also consider the best way to deliver the advice and guidance people need. Giving people the option of how they get support – whether online, on the phone or face to face – and offering it at key moments in their lives will help people to access the guidance they need to plan for their futures.”
Charles Counsell Chief Executive Officer at the Money Advice Service (MAS) said “We welcome the Government’s announcement of the creation of the new Single Financial Guidance Body. This will give a more joined-up offering to customers across debt advice, pensions advice and broader money guidance.
“We need to make sure people are able to access high-quality help with money issues and help prevent people getting into financial difficulties in the first place. “Critically, the new body will also carry on the important work underway through the Financial Capability Strategy to improve people’s ability to manage their money effectively.
“At MAS we look forward to working with Government and colleagues at The Pensions Advisory Service and Pension Wise on the formation of the new body. This is an exciting day for all those who care passionately that people should be given help to understand and deal with financial issues. Most importantly it is excellent news for the millions who will get real, practical, free and impartial help.”
Mike O’Connor, Chief Executive of StepChange Debt Charity, said: “Household debt is high by historical standards and consumer borrowing continues to head towards levels not seen since the economic crisis. Millions of households are resorting to credit as the only way to keep up with essential household bills. And millions more face the risk of falling into serious financial hardship in the future. Any further squeeze on household finances could have serious consequences. Dealing with problem debt needs to become a priority for the new Government.
“There is cross-party support for the introduction of a ‘Breathing Space’ scheme that would give individuals and families better protections and a safer way to get back onto a firmer financial footing. While we are disappointed that these proposals were not referenced in the Queen’s Speech, we remain hopeful that such a scheme will be implemented as soon as possible to help prevent those who need it the most from falling further into a downward spiral of increasing debt. We will continue to work with the Government to make the scheme a reality.”
Citizens Advice Chief Executive Gillian Guy said “The contents of this Queen’s Speech will go some way toward tackling some of the biggest challenges facing our clients and consumers. Too many people are being denied their rights at work and others are struggling with rental fees and high energy bills, so it’s good to see that this will be a focus for the parliament and government over the next two years.
“With the single financial guidance body there is a real opportunity to make sure people are getting the independent and impartial guidance they need to plan and manage their finances. It’s also important that, as the Queen’s Speech sets out legislation that will lead to the UK’s exit of the EU, the government provides information and advice to people about the impact of Brexit on them and their family, and protects workers’ and consumers’ rights.”
R3 welcomes the inclusion in the Queen’s Speech of plans to push ahead with consumer reforms for the creation of a ‘Single Financial Guidance Body’. Adrian Hyde says: “A new single advice body would be welcome, and the provision of debt advice should remain a government priority. Any new body should look also look at how people in debt sort out their situation and at the stigma associated with debt and insolvency. We look forward to working with any new body to break down barriers that stop indebted individuals from getting the advice they need and dealing with their debts in an appropriate manner.”
The government’s commitment to reform of mental health services is also welcome. R3’s recent research has found that personal finance issues have a significant impact on people’s mental health, while those in mental distress may find it far harder to deal with their finances, allowing debts to spiral out of control.
It looks like the door could still be open to introduce a ‘Breathing Space’ from creditors for indebted individuals. Since 2015, R3 has called on the government to give financially indebted individuals a 28-day break from creditor action – ‘Breathing Space’ – to use as a final opportunity to receive professional advice.
Adrian Hyde says: “It’s vitally important that indebted individuals end up in a debt solution appropriate to their situation. This doesn’t always happen, and the difficulty of being able to get professional, independent advice in a relatively unpressured environment is a factor.
“A short ‘Breathing Space’ would give people in debt the chance to seek advice and deal with their debts effectively. Both the Conservatives and Labour parties featured ‘Breathing Space’ in their manifestos, which will make it easier for the government to pass any Bill containing this proposal.”
He adds: “The length of the ‘Breathing Space’ matters: too long and it’s not fair on creditors and it may discourage lending. The government should make sure it listens to creditor voices when it consults on the proposals.”
Citizens Advice Chief Executive Gillian Guy said “Energy firms have been taking advantage of loyal customers for too long, so the government is right to consider ways to help cut energy costs for more people. Gas and electricity are essential for people to heat and light their homes – but it is often the worst off pensioners and families who have to pay more on their supplier’s standard variable tariff.
“Switching energy supplier can save people hundreds of pounds off their annual energy bill, so it is important that more people are helped to do so – but action needs to be taken to help those who simply aren’t switching year on year. One of the ways that an energy cap could be introduced is to extend the prepayment cap to all those eligible for the Warm Home Discount – which would help an additional 2.6 million of the poorest households. This would still allow for healthy competition between suppliers on prices.”
Citizens Advice Chief Executive Gillian Guy said “The government’s ban on letting agency fees could help 4.5 million households save hundreds of pounds each year. Citizens Advice has long called for a ban on letting agent fees with people paying an average of £400 to letting agents for standard administration, such as carrying out references and credit checks. It’s important that this ban covers all fees. Seventy-four per cent of private renters with children have experienced problems with the quality of their home, including broken heating and no hot water. So we’d also like the government to look at improving the quality of housing in the private rented sector, by introducing maximum timescales for landlords and letting agents to carry out repairs. ”
Citizens Advice Chief Executive Gillian Guy said “It’s good that the government will introduce greater protections for borrowers who take out a logbook loan to protect them from having their car taken away if they don’t meet repayments. Laws covering logbook loans are currently patchy and outdated, and borrowers face high interest rates and aggressive debt collection tactics. People who buy a second-hand car without knowing it has a logbook loan attached can have their vehicle seized or be made to to pay off the debt themselves – so better protections for these consumers are also welcome.”