CSA responds to Treasury’s ‘debt threat’ letter changes

Chris Leslie, who recently took on the CSA chief executive role, said: “The wording of these ‘default letters’ has been prescribed in old legislation for decades – so we completely agree it’s about time the law was updated.

“An overhaul of the rules governing the precise sentences that creditors are forced to use in these formal letters was long overdue and it’s good news the Treasury have finally agreed to act.”

Leslie said the process of making an initial letter less intimidating of course “has to be a good thing“, and explained that it’s an issue the CSA and other trade bodies, as well as firms, have argued is overdue from as far back as 2014.

He added: “Communications with consumers in default do need to be clear and comprehensible, but they now need to be designed for the 21st century and sensitive to customer circumstances.

“When a relationship between a firm and a customer has broken down, it is reasonable that a firm should convey the gravity of the situation to the customer and what may happen if it remains unresolved. Creditors would welcome the flexibility to be able to convey similar information but in a more nuanced and relevant way.

“Some customers will have vulnerabilities or mental health issues while others will not. Some customers may simply be failing to engage. That is why any new legislation must be balanced and fair, giving the creditor the opportunity to tailor the language used so it is most appropriate.”

The CSA hopes the new policy will take into account the views and experience on all sides, including that of firms and industry bodies which have been trying to improve customer experience in spite of some of the anachronistic and unhelpful existing regulations.

The CSA and others wrote last year to say that if the rules and the regulator oblige the creditor to follow a particular path, it is unfair to criticise the industry for doing what it is told in law that it has to do.

Leslie added: “Even the most finely crafted letter may appear intimidating to a confused consumer and do little to aid their understanding.

“The technical, rigid nature of the Consumer Credit Act 1974 sometimes means there can be an understandable nervousness in writing documentation that is clear, simple and concise. I think we can all agree that a letter that is intended to explain a customer’s situation is of little use when all it achieves is to drive the consumer to seek further explanation, with all of the inherent worry that this brings.”