PARLIAMENTARY WRITTEN QUESTION
Debts: Young People (12 July 2017)

The government is committed to supporting all those affected by problem debt, and has a range of measures in place.

The Financial Conduct Authority (FCA) regulates the consumer credit market, and has introduced binding rules to strengthen consumer protection. They are based on the principle that money should only be lent to a consumer if they can afford to repay it; lenders must show forbearance if there is evidence of financial difficulty.

The FCA also capped the cost of payday loans. As part of a review of this price cap, the FCA will examine the high-cost credit market more broadly (such as rent-to-own), and consider whether further interventions are necessary to address the risk of consumer harm.

The Money Advice Service (MAS) coordinates the provision of free-to-client debt advice. Last financial year, MAS had a debt advice budget of £45m and funded 380,000 free-to-client debt advice sessions.

In the Queen’s Speech, the government announced the Financial Guidance and Claims Bill. This will legislate to restructure the financial guidance landscape and bring debt advice, money guidance, and pensions guidance together in a single body, and give consumers better access to the financial information they need. This Bill is currently going through Parliament.

This government's manifesto proposed a statutory breathing space that would give heavily indebted consumers a period of respite from enforcement action, and further interest and charges for a period of up to six weeks. Where appropriate, this would be followed by a statutory repayment plan to help them pay back their debts in a sustainable way. We will outline further information on how this policy could be implemented in due course.