Key Facts

• The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) Regulations are proposed for amendment.
• Proposed start date change: '4th May 2021' to '31st January 2021'.
• Proposed duration extension of Breathing Space Moratorium from 60 days to 12 months.
• Half of the UK adult population went into 2020 with existing debt.
• Almost 5 million citizens owed more than £10,000 in unsecured personal debt.
• 40% of those polled said their debt was due to normal living expenses.
• Bank of England data shows £15.6 billion of household debt has been repaid since March.
• Credit card debt fell by 13% in the last year.
• Conservative estimates predict unemployment could rise to between 3 million and 4 million.
• New clause 11 addresses concerns about what happens when people seek help for their financial difficulties.
• The current timeline for dealing with new claims in the welfare system is 60 days.
• Debt advice providers support amendments that would make the breathing space process more flexible.
• The amendments aim to give discretion to debt advice providers to better address individual circumstances.
• Chris Woolard is conducting a review into high-cost credit models.
• The Government committed to a six-week moratorium breathing space period in their 2017 manifesto, later extended to 60 days through consultation.
• £37.8 million was allocated to the debt advice sector in May.
• The Government's regulations on the debt respite scheme were approved in October and by the Welsh Senedd in November.
• New clause 11 proposes commencing the breathing space scheme on January 31, 2021 instead of May 4, 2021.
• It also aims to extend a breathing space moratorium from 60 days to 12 months.
• The amendment follows a similar vein to amendment 34.
• 80 different debt advisers support the amendment.
• There will be a big increase in the number of people needing debt advice due to financial difficulties caused by unemployment and limited credit options.
• In Stella Creasy's constituency, 42% of constituents have become dependent on Government support in the last seven months.
• StepChange worries that a personal debt crisis is emerging because of covid, affecting 1.2 million people.
• Amendment 35 would restrict the Government's ability to require debt advisers to complete reviews in future regulations concerning breathing space or SDRP.
• Breathing space regulations were approved by the House in October, requiring a review after day 25 and before day 35 of the moratorium.
• The SDRP will be reviewed annually or when requested by a debtor.
• Amendment requires an assessment of the debtor’s resources before any debt repayment plan.
• The amendment suggests setting thresholds based on households in the second quintile of income distribution.
• Current cost to file for bankruptcy is £680, which can be prohibitive for many individuals.
• Thresholds were set in 2009 and do not account for inflation or current financial contexts.
• Monthly surplus income threshold for debt relief orders is less than £50 after expenses.
• The Treasury must prepare a report on the impact of COVID-19 on the Debt Respite Scheme by February 28, 2021.
• The report should include statements on changes to household debt levels caused by the pandemic and resilience against future financial shocks.
• Proposals for incorporating a no-interest loan scheme into the Debt Respite Scheme are considered.
• Clause 32 builds on existing legislation.
• A breathing space scheme commences on 4 May 2021.
• The SDRP provides a revised, long-term agreement between debtor and creditors with protection from most enforcement actions.
• Amendments will allow for regulations compelling creditors to accept repayment terms and provide funding through a charging mechanism.
• Alison Thewliss is speaking about new clauses 25 and 12.
• The clauses aim to review the impact of the debt respite scheme during the pandemic.
• She provides examples involving constituents struggling with rent, business grants, and government support during Covid-19.
• The debt respite scheme has been widely consulted.
• New clauses call for a review of the scheme after a year or so of operation.
• New clause 12(2) specifically references the covid impact on household finances.
• The Government will publish a report by February 2021 on the impact of COVID-19 on household debt and financial resilience.
• A feasibility study has been published earlier this year exploring the viability of a no-interest loan scheme.
• Regulations establishing the breathing space scheme start on May 4, 2021.
• The breathing space regulations contain provisions for evaluation after five years from commencement.
• Amendment 36 aims to protect customers' bonuses when transferring funds from matured accounts.
• The Help to Save scheme has over 222,000 people with £85 million deposited since its launch in 2017.
• Over 47,200 account holders have benefited from their first bonus payment as of September 2020.
• The Treasury must prepare an annual report on the Help to Save scheme for each financial year.
• The first report would be published by October 31, 2021, covering the 2020-21 financial year.
• Annual reports are required until 2027.
• The Help to Save scheme provides a 50% bonus to eligible individuals who save over four years.
• As of July 2020, more than 222,000 accounts have been opened, with 47,200 savers benefiting from their first bonus.
• The number of households receiving universal credit rose from 1.8 million in May 2019 to almost 4.6 million by October 2020 due to the impact of covid-19.
• Only 4.6% of eligible individuals had opened accounts by July 2019, out of a total of 2.8 million potential participants.
• One in five mortgages are issued with the help of the bank of mum and dad.
• In April to June this year, 28% of household income on average was saved by families.
• Property is a significant divider in society causing growing inequality.
• Amendment 31 would be made to clause 34, page 40, line 33.
• The amendment requires the FCA to ensure that consumers retain a full understanding of investment product risks despite new information requirements on ESG standards.
• Amendments 30 and 31 are proposed.
• The amendments aim to ensure consumers have accurate information before making investment decisions.
• The Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) is referenced.
• Amendment 30 seeks to require environmental, social and governance standards for PRIIPs products.
• Clause 34 makes changes to the PRIIPs regime to avoid unintended consequences for consumers.
• The FCA consultation on amending PRIIPs regulatory technical standards is expected next year.
• PRIIPs regulation aims to protect consumers by requiring standardised disclosure documents known as KIDs.
• The clause allows the FCA to clarify the scope of PRIIPs regulation through its rules.
• UCITS fund exemptions are extended from December 2021 for up to five years.
• Clause 35 amends UK EMIR to ensure clearing services on fair, reasonable, non-discriminatory and transparent terms.
• Amendments aim to increase transparency in derivatives markets and improve data quality collected by trade repositories.
• The Financial Collateral Arrangements (No.2) Regulations 2003 were introduced by the Treasury in 2003.
• Clause 36 has retrospective effect, confirming legal effectiveness since 2003.
• The clause removes risk of legal doubt and potential financial instability.