The government has today launched a call for evidence
seeking stakeholders’ views and evidence on the personal
insolvency framework and whether it serves the needs of debtors
and creditors in the 21st century.
The last fundamental review of personal insolvency was carried
out 40 years ago. The government is seeking views and evidence on
the overall purpose of the framework, how it currently supports
those in financial difficulty and how it is funded.
Business Minister said:
Any vibrant economy relies on people spending money, and for
many, using credit is an important part of that. However, in
situations where people are unable to repay borrowed money, it’s
vital that we have a system that is fair to both them and their
creditors.
Our current personal insolvency framework has been in place for
many years and so it is only right that we examine whether it
works as effectively as it should in today’s world.
The government would welcome responses from people who have
experienced debt, creditors and their representatives, trade
bodies, debt advisers and charities, insolvency practitioners,
recognised professional bodies, academics, and any other
interested parties. Responses will help to inform our
understanding and identify whether reforms are needed.
Peter Tutton, Head of Policy, Research and Public Affairs at
StepChange Debt Charity, said:
We know from our clients that personal insolvency remains poorly
understood, a source of potential fear and perceived stigma, and
in many cases expensive to access at the outset and risky if
circumstances change. We look forward to using the evidence from
our client experience to help inform the review. We would see
success as delivering an agreed pathway, supported by Government,
towards a personal insolvency framework that works with debt
advice to deliver sustainable, affordable and fair debt relief
for those who need it, under a well-regulated and effective
supervisory regime.
Eric Leenders, UK Finance Managing Director, Personal Finance,
said:
As part of a highly-regulated sector our members work closely
with their customers, and with debt charities, to provide
tailored support to those facing into financial difficulty. This
support always aims to help customers without the need for
insolvency solutions. However, where such solutions are used,
they should be accessible, understandable and fair for both
borrowers and lenders. As such we welcome this review and will be
happy to contribute to the call for evidence.
Notes to editors
The personal insolvency review will cover the framework within
England and Wales only. Personal insolvency is an entirely
devolved function within Scotland and Northern Ireland. Responses
for the call for evidence must be received by 24 October 2022.
The call for evidence has been drawn up with the assistance of
four academics known for their expertise in the area of personal
insolvency:
- Professor David Milman (Lancaster University)
- Dr Joseph Spooner (London School of Economics)
- Dr John Tribe (University of Liverpool)
- Dr Katharina Möser (University of Birmingham).
Statutory Debt Repayment Plans (SDRPs) are currently in
development by HM Treasury and are not in scope for this personal
insolvency review. Neither is the Breathing Space scheme as it is
not an insolvency procedure. In addition, County Court
Administration Orders and Debt Management Plans (DMPs) are not
within the personal insolvency legislative framework and are not
considered as part of this review.
Policy on insolvency law is partly devolved to Scotland and fully
devolved to Northern Ireland.
