THE GOVERNMENT is seeking views from creditors and debt advisors as it plans to provide indebted individuals with a six-week ‘breathing space’ from their bills.
This period would give people time to seek financial advice on how to manage their debts and could also include legal protections that would shield individuals from further creditor action.
The Treasury issued a call for evidence on Tuesday to gain further insight about how such a scheme would work.
Read more: FCA chief outlines consumer credit concerns
“For many people in the UK problem debt seems impossible to escape,” said City minister Stephen Barclay.
“Its effects can be far-reaching, impacting all aspects of a person’s life and leaving them feeling helpless.
“That is why we are working to give people who are overwhelmed by debt more time to seek advice, find a workable solution, and help get their lives back on track.”
In its call for evidence, the Treasury said that regulation of the consumer credit industry was “fundamentally transformed” when oversight was transferred from the Office of Fair Trading to the Financial Conduct Authority (FCA) in 2014.
“Under FCA rules, lenders must…show forbearance – holding back on the collection of debt – if there is evidence that the client is in financial difficulty,” the Treasury said.
“The FCA has a broad enforcement toolkit to punish breaches of its rules – there is no limit on the fines it can levy and it can force firms to provide compensation to consumers if it discovers evidence of bad practice.”