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Man Reading Debt Collection Letter
February 16 2021

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

Michael Lloyd Industry News, News, Top 3 Bounce Back Loan Scheme, Covid-19 emergency loan schemes, debt collection agency

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.

Read more: Repaid covid support should be used to help small struggling firms

Read more: Banks begin freezing accounts suspected of bounce back loan fraud

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.

Read more: Tax firm calls for CBILS repayments to be paused

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