Govt seeks views on new 'breathing space' scheme to help individuals in debt
The government is seeking views as it develops a way to provide individuals in debt with up to six weeks free from further interest, charges and enforcement action.
This period would give those affected time to take action by seeking financial advice about how to manage and relieve their debt burden, the government said.
The Economic Secretary to the Treasury Stephen Barclay said: "For many people in the UK problem debt seems impossible to escape. 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."
The new scheme could include legal protections that would shield individuals from further creditor action once a plan to repay their debts is in place.
Old Mutual Wealth responsible business director Jane Goodland commented: “Whilst breathing space for those struggling with problem debt is welcome, we cannot avoid tackling the fundamental issue of a massive gap in UK financial capability.
“The new ‘breathing space’ scheme is yet another example of symptomatic treatment of consumer financial problems. In recent years we have seen numerous interventions designed to tackle the consequences of financial difficulty, from the FCA stepping-in to cap payday lending costs to a ban on pension cold-calling.
“These measures are admirable and will help protect vulnerable consumers. Nonetheless, they are a sticking-plaster to the symptoms of a lack of knowledge and capability when it comes to managing our financial lives. Last week’s FCA survey of consumer financial wellbeing highlighted yawning gaps in our financial knowledge, and these need to be addressed in order to empower people to enhance their own financial health.
“In order to tackle the root cause of financial struggle, more needs to be done to improve financial capability across the board, starting with an effective programme of financial education integrated into the primary school curriculum.”
