Plans for a Covid-19 debt collection agency to be scrapped

Plans for a formal collection agency for Covid-19 loans will reportedly be scrapped.

According to The Times, the plans have all but been dropped, leaving the recovery of the debt down to the lenders, while discussions about a looser agreement regarding common standards in debt recovery resume.

Last year, UK Finance started a feasibility study on the creation of a vehicle that would oversee debt collection on behalf of lenders taking part in the bounce back loan scheme, to ease the pressure on banks.

According to The Times, one of the reasons for abandoning the plans for a collection agency is that interest repayments are due to start in May for the bounce back loan scheme, so it would be complicated to set up a new agency in the short space of time.

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It had been hoped a single agency could have made sure there was consistent treatment of borrowers.

The National Audit Office has predicted that £31bn of loans taken out under the Covid-19 support schemes will have to be written off.

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