SDRP proposals place “unrealistic burdens on debt advisers”

Teaming up with Debt Justice to submit a joint response to the government’s proposals, they said it also places unrealistic burdens on debt advisers to police payment behaviour and limit access to credit. 

Put forward by the government, SDRP is intended to serve debtors not suited to existing statutory debt solutions, such as bankruptcy or debt relief orders, and from whom non-statutory solutions such as debt management plans offer insufficiently broad protections. The government also hopes it will provide debtors with a more robust and effective route out of problem debt. 

Responding to a government consultation on the policy, which closed last Friday (5 August), CfRC and Debt Justice said it’s supportive of the protections from creditor fees, charges and enforcement action it could provide. However, it added the proposals would considerably increase the profits of debt collection agencies and lack any write-off. 

This, combined with assessments of disposable being based on the standard financial statement’s “trigger figures’’ - based on the actual spending of the lowest income quintile - risks trapping debtors in poverty for lengthy periods. 

Phil McGilvray - managing director of data and technology company TDX Group, an Equifax company, meanwhile said he was pleased to see the government move forward with plans to help hundreds of thousands of consumers who will fall into problem debt in the coming months. 

He added: “Inflation continues to squeeze personal finances, and with rising interest rates now pushing up the cost of servicing debt, and a recession threatening job prospects, this sort of structured support can’t come soon enough. 

“The government estimates that over 100,000 consumers a year will take out one of these new plans to resolve problem debts, and creditors will need to be swift to impose any changes. 

“If all goes to plan, we can expect to see an extra £1.8bn in debt recouped for creditors, but more importantly it will mean consumers have a vital safety net at an increasingly desperate time.”