UK Government pre-empts itself on debt breathing space: Financial Guidance and Claims Bill amendments

The Government has introduced amendments to the Financial Guidance and Claims Bill currently before Parliament to facilitate the creation of a 'debt respite scheme'. This move pre-empts industry feedback on last month's HM Treasury Call for Evidence on a statutory breathing space scheme for problem debt (take a look at our previous blog post).  The amendments set out the framework for the next steps but firms are left with continuing uncertainty as to how such a scheme will work in practice and what its impact on creditors' infrastructure and financial performance could be.
What are the amendments?
Two new clauses inserted into the Bill at its third reading in the House of Lords this week:

  • Require the single financial guidance body (which will replace the Money Advice Service) to provide advice to the Government on specific points relating to the scheme within 12 months of the new guidance body's establishment in late 2018;
  • Empower the Government to make regulations to implement the scheme, once it has received the advice from the single financial guidance body;
  • Enable the scheme to extend to Wales and Northern Ireland.
What's next?
During the third reading debate on the Bill the Government referred to the current Call for Evidence, which closes on 16 January.  There was confirmation that a further consultation on a specific policy proposal would take place in the first half of 2018.
For the Government, Baroness Buscombe also confirmed that it 'will make regulations to set up the scheme as soon as is practicable—and certainly within 12 months of receiving the advice [from the single financial guidance body]'. The Baroness stated that this 'will enable the body to supplement, rather than duplicate, the policy work the Government will have done up to that point' as well as potentially speeding up the introduction of the scheme.
In light of this accelerated approach to the new scheme, financial services and consumer credit firms should make sure they submit their feedback to the Call for Evidence in good time before January's deadline.

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