Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 — House of Lords, 2020-10-06
Topic: Domestic Commerce
Theodore Agnew (Conservative, Centre-right): My Lords, I thank noble Lords for their thoughtful contributions, and I am grateful for the chance to respond to the points that have been raised I think we can all agree that current events make the case for this scheme to be introduced as soon as possible. I understand the point made by some noble Lords about the need to try to bring it in sooner. However, we have worked extensively with the sector and we feel that it is unlikely that we will be able to bring it in much sooner, probably due more to the need to train advisers than to issues related to the lending sector. The noble Lord, Lord Blunkett, and the right reverend Prelate the Bishop of Rochester are concerned about that. However, we want the scheme to work well, so we want to get it launched properly The noble Lord, Lord Tunnicliffe, my noble friend Lord Kirkhope and the noble Baroness, Lady Janke, asked about the SDRP. Many of the challenges apply in relation to the statutory debt repayment plan, which is complex; the Government want to ensure that the strong protections promised can be achieved. The financial services Bill will shortly be debated in Parliament. It contains a clause to give the Government the full range of powers they need to implement the SDRP and ensure that the protections that it offers mirror those in the breathing space regulations. Secondary regulations will then need to be prepared, appropriately consulted on and made. I cannot commit today to a specific date for introducing the SDRP, but I assure noble Lords that the Government are aware of the desire to see the second part of the debt respite scheme up and running as soon as possible We have also heard concerns that creditors will struggle to be ready, given the challenges of operating in the pandemic. The Government understand those concerns, but the scheme is, and remains, a priority in the current circumstances. The date of May feels like a reasonable compromise to achieve its introduction and have it working properly Noble Lords asked specific questions about how the scheme will work. The noble Lord, Lord Tunnicliffe, asked how the Government will prevent stigma in the scheme. I am aware that stigma can cause people to delay seeking advice. I am assured that this is being considered in the scheme design, including in the approach to credit referencing, which I set out for noble Lords in my opening speech. The Government’s intention is that the scheme’s strong protections should incentivise more people to see the value of taking advice earlier The noble Lord, Lord Blunkett, asked about unscrupulous advisers. I assure him that the FCA requires the provision of sound, impartial debt advice that is in the best interests of consumers. Debt advice providers cannot charge a fee in connection with the moratorium. Fee-charging debt advice firms must also signpost clients to sources of free debt advice. They must be transparent about the fees and charges payable by their clients and must ensure that those fees and charges do not undermine their clients’ ability to make significant repayments to creditors. The FCA’s most recent thematic review of the sector, published in March 2019, found significant improvements in the standard of advice given. The FCA takes supervisory and, if necessary, enforcement action where it finds that harm is caused by firms providing inappropriate debt advice The right reverend Prelate the Bishop of Rochester asked about the inclusion of universal credit debts. Universal credit overpayments will be included in the breathing space scheme from day one. Universal credit advances and third-party deductions will be included in the breathing space scheme on a phased basis as early as possible after the policy starts. These two additional aspects require significant IT changes, which need to align with the requirements of the wider UC programme. The Government recognise the importance of including all universal credit debts in the scheme as soon as possible The noble Lord, Lord Kirkhope, asked about approved mental health professionals. They are qualified and experienced, approved by local authorities, and have specific expertise and training in mental health and mental capacity law. They are experienced in supporting people in crisis and usually based in community crisis or home treatment teams. The Government will provide guidance on the scheme and are working with MaPS to smooth the process for AMHPs to reach debt advice providers The noble Lord, Lord Kirkhope, and the noble Baroness, Lady Janke, asked whether debt advice providers would be able to navigate the definition of excluded debts in the regulations. This point will be covered in the guidance. The Money and Pensions Service is working in partnership with the Money Advice Trust to develop and deliver an online training module, which will inform and support debt advisors with the introduction of the scheme in May 2021. The intention is for the training to be accessible to all debt advisors across the sector. MaPS is also working to provide debt advice providers with access to support on technical questions It is a complex scheme, necessarily so, given the wide range of public and private debts included. I explained in my speech that the Government will publish scheme guidance by the end of the year to offer further explanation where possible. The noble Lord, Lord Kirkhope, asked for whom this guidance will be provided. I can confirm that it will be prepared for debt advice providers, creditors, AMHPs, and GOV.UK will include a high-level overview of the scheme The Government are fully committed to closely monitoring the impact of the breathing space scheme, and developing and monitoring an evaluation strategy to facilitate an effective post-implementation review. As in all such matters, financial services firms will need to take their own legal advice on their approach. In addition to the government scheme guidance, I understand that the FCA will publish a consultation on guidance for firms shortly The right reverend Prelate the Bishop of Rochester asked about training. Government support for debt advice has already seen an extra £37.8 million support package made available to debt advice providers this year. The Government are working closely with MaPS on training for debt advice providers to help ensure that they will be ready to offer the scheme. The noble Baroness, Lady Janke, asked about demand for the scheme. Moratorium can be accessed only via professional debt advice, so the take-up rate of the scheme is constrained by the available supply of that debt advice. Covid-19 poses many uncertainties, and we will continue to monitor the evolving situation. The noble Lord, Lord Tunnicliffe, was also concerned about the impact of Covid-19 and the downturn of the economy. The Government recognise that people are struggling with their finances during this very difficult time and have put an unprecedented package of support in place to try to help people during the pandemic. We will keep this area under close consideration I believe that the breathing space scheme will encourage people to engage with professional debt advice and create the necessary space for them to make better decisions based on that advice. Importantly, it will protect people receiving mental health crisis treatment until they are more able to engage in this way. I hope we can agree that these regulations are a positive step forward in an area that has long been important to many in this Chamber, with the potential to change lives. I beg to move.