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2019 General Election: Beating problem debt

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We call on parties to help reduce problem debt and protect vulnerable households

In the first six months of 2019, over 330,000 people across the UK came to us for advice with their debt problems – that's a plea for help with money worries every 48 seconds.


A strong economy and a just society rely on the confidence and financial resilience of UK households. But confidence can’t spread to households having to borrow just to pay bills, worrying about spiralling debts or the bailiff’s knock on the door. 

We believe that the UK can and must be better than this.  


We're calling on the next government to:

  1. Commit to reducing the harm problem debt is causing now
  2. Work to prevent future debt problems by increasing the financial resilience of households most vulnerable to problem debt. 

1. Committing to reducing the harm problem debt is causing now

1.1 Introduce independent regulation for the bailiff sector


The problem

Enforcement by bailiffs (enforcement agents) is highly intrusive and heaps large extra costs onto those struggling with debt. Use of bailiffs is common, particularly among public sector creditors: research from the Money Advice Trust found local authorities alone had referred 2.6 million debts to bailiffs in 2018/19.

Unlike debt collectors who are tightly controlled by the Financial Conduct Authority, the bailiff industry operates free from effective oversight by an independent regulator, even though bailiff enforcement has a greater potential to cause harm to families in debt.

Our solution

We're calling on the next government to commit to designate a statutory independent regulator of bailiffs and bailiff firms to tackle both individual and systemic bad practice; and to establish a transparent and accessible complaints mechanism for people treated unfairly by enforcement agents that is free and clear to use, ensuring effective remedies for bad behaviour and proper redress.

This mirrors the oversight arrangements for debt collection long established in the financial services sector.

1.2 Implement a breathing space scheme and statutory debt repayment plans


Breathing space gives people protection from interest, fees, charges and enforcement action from creditors while they seek debt advice.

Statutory plans would extend this protection to people while they're repaying their debts in full. Importantly, this protection would cover the majority of someone's debts - including those owed to central and local government.

We're asking the next government to continue the commitment to implement these schemes; by introducing regulations for a breathing space scheme and legislation for statutory debt repayment plans as soon as possible in the new Parliament.

1.3 Create binding good practice standards for public sector debt collection and enforcement, and end imprisonment for council tax debt


The problem

The National Audit Office has highlighted the need for improvement in public sector debt collection.

The House of Commons Treasury Committee found that local authority debts are often pursued overzealously with routine recourse to bailiffs, and that central government can take an uncompromising approach to debt collection.

The Committee concluded that the public sector should be leading by example in their treatment of the most financially vulnerable; but the current approach risks driving them into further difficulty.

Our solution

We agree with the Treasury Select Committee that by bringing central government and local authority debt collection practices consistently into line with industry best practice, the Government has the power to make a significant difference to the burden of problem debt in a short space of time.

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2. Working to reduce future debt problems

2.1 Reduce the harm caused by distressed credit use

long term debt

The problem

While most people will benefit from using consumer credit at some point in their lives, credit products can be a cause of serious harm where they compound financial difficulty and trap people in a spiral of rising debt and hardship.

We know that the Financial Conduct Authority has made some good progress in addressing some longstanding problems in consumer credit markets; but a good deal of detriment remains through irresponsible lending, excessive charges and exploitative product design.

Our solution

We're calling on the next government to strengthen the hand of the Financial Conduct Authority with a clear mandate and responsibility to deliver a safe and fair credit market for consumers. This mandate should include:

  • Introducing a legal duty of care for financial services firms to ensure they do not profit from consumer vulnerabilities, behavioural biases and constrained choices
  • A stronger and clearer requirement on firms to deliver early identification and support for people showing signs of financial distress to prevent this developing into more harmful problem debt
  • Extending the principle that no one should pay interest and charges that are over 100% of the amount borrowed to all forms of consumer credit

2.2 Make the benefits safety net more responsive to crisis needs


The problem

The social security system is failing to provide an adequate safety net and support people to manage life events and transitions without experiencing poverty and destitution.

These issues stem from inadequate levels of support, particularly as housing and childcare costs have increased in recent years. Key design features of Universal Credit are also contributing to financial problems and debt.

Our solution

The next government should strengthen the social safety net to help people manage life events without experiencing poverty and destitution.

To strengthen the social safety net, the government should:

  • End the benefits freeze and bring support in line with living costs
  • End the two-child limit
  • End the five-week wait for Universal Credit
  • Ensure that deductions from social security payments to repay debt are affordable
  • Extend access to, and the flexibility of, Universal Credit budgeting advances
  • Re-invest in comprehensive crisis support in England to prevent hardship and destitution

2.3 Increase help with essential bills for the most financially vulnerable


The problem

We're seeing more people without the means to meet everyday expenses. 30% of our clients have a negative budget (meaning they do not have enough money coming in to cover essential expenditure) even after receiving budgeting advice from us.

Two in five clients are behind on one or more households bills like council tax, energy or rent.

These problems are far more pronounced among our clients with poor mental health and physical health conditions.

Our solution

We're calling on the next government to address the basic living costs crisis that pushes the most financially vulnerable households into problem debt. This includes:

  • A commitment to introduce energy social tariffs, to help people who cannot afford their gas and electricity bills
  • Reintroducing full council tax support for the most financially vulnerable households

2.4 Plan to improve the financial resilience of households and reduce vulnerability to debt


The problem

Since July 2017, just after the last general election, to June 2019 around 1.25 million people have contacted us for debt advice - 2.5% of the UK adult population.

The scale of ongoing demand for debt advice and the circumstances of people contacting us signals that problem debt is being driven by a set of underlying vulnerabilities to household financial resilience.

We will not be successful at preventing millions more households from experiencing harm and hardship from problem debt unless policy makers get firmly focused on the underlying causes.

Our solution

We're calling on the next government to develop a strategy over the life of the next parliament to develop effective policy responses to address the underlying causes of problem debt.

This won't be easy, but there is a way in by focusing on the groups of people most heavily over-represented among our clients.

We therefore urge the next government to set out a cross government action plan to improve the financial resilience of single parents, adults under 40, renters (particularly those in the private rented sector) and people with physical and mental health problems.