In a major campaign success for the Money and Mental Health Policy Institute, the government has today agreed to change decades-old laws which force lenders to send intimidating letters to people with problem debt.
Money and Mental Health’s research shows that 100,000 people in problem debt attempt to take their own life in England each year — and intimidating debt letters are a key contributing factor. The charity’s Stop the Debt Threats campaign has been calling on the government to urgently address this issue, by updating rules in the Consumer Credit Act that dictate the content of debt letters.
The government has now announced important changes to default notices including:
- Letters will now use more accessible and less threatening language
- Complex or jargon terms will be explained in plain English
- Letters will no longer contain angry-looking in upper case letters
- Firms will be mandated to include signposting to sources of free debt advice.
In the coming year, Money and Mental Health will continue to push the government for further reforms to the Consumer Credit Act, to put an end to all types of distressing debt letters.
Martin Lewis, Founder and Chair of the Money and Mental Health Policy Institute charity, said:
“It’s no exaggeration to say that this change could save lives. Over 100,000 in England attempt to take their lives each year due to debts, and four times that consider it. So we’re delighted the government has agreed to back this element of our campaign and change the default demand rules. The last thing people struggling with debt need is a bunch of thuggish letters dropping through the letterbox, in language they can’t understand, written in shouty capitals alongside threats of court action.
“And the timing is crucial, with millions of people facing debt and distress due to the pandemic, the sooner we end these out-of-date laws which force lenders to send intimidating letters the better. Today’s changes will make the most distressing debt letters much less intimidating, and crucially will also easily and calmly point people in serious debt to get the free, non-profit, debt advice they need.”
John Glen, Economic Secretary to the Treasury, said:
“Being behind on your credit repayments can be a really distressing experience which is made worse by a confusing and intimidating letter from your lender. As part of our effort to help people struggling with their finances, it’s right that we look again at the legislation around these letters.
“These new rules will help to take the fear out of finance by ensuring that letters are easier to understand, less threatening, and empower people to take control of their finances. Some vital work has been done by charities, the industry and MMHPI and I am grateful for their support in tackling this important issue.”