The impending Debt Respite Scheme - Breathing Space Regulations
The Regulations:
What is Breathing Space?
The Debt Respite Scheme SI 2020/1311, aka ‘breathing space’, comes into force in England and Wales on 4th May 2021.
It gives individuals with problem debt the right to a statutory respite period, enabling them to work with a debt advisor to find an appropriate long-term debt solution. This is a welcome development, particularly given the rising numbers of people being negatively impacted financially by the fallout of the Covid-19 pandemic.
Understanding the Debt Respite Scheme
There are two types of breathing space:
a standard breathing space; and
a mental health crisis breathing space.
In the main they are the same, but have a few distinct differences with greater protections for the debtor under a mental health crisis breathing space.
There are some areas within the regulations which are already causing debate amongst Creditors on interpretation for operational purposes, but that’s not uncommon with new legislation.
Given the eligibility criteria and requirements placed on debt advisors to ensure it is the correct option before approval, it is unlikely to be used as a quick sticking plaster for each and every debtor that presents for assistance. It remains to be seen though what the impact will be in terms of numbers of cases and how it will impact on revenue streams, so monitoring and reviewing will be important.
Post breathing space actions will need careful consideration, especially where there is no resultant debt relief plan, or a breathing space is cancelled. Would it be appropriate to just carry on as before given that financial vulnerability has been established?
Preparation is Key
As with any new piece of legislation, here at Dukes’, we have been digesting the regulations and guidance provided to determine how we ensure compliance, not just for us as a company, but for our Clients too.
Our action plan has covered ten main areas:
Internal and external communications;
Roles and responsibilities;
System requirements;
Cross checks;
Monitoring and reviewing;
Appeals and challenges;
Reporting
Training
Signposting
Post breathing space actions.
How We’re Preparing
We started our communications strategy as far back as last October, with monthly bulletins in both our internal and Client monthly newsletters, breaking the regulations down into bite-size chunks.
Recognising the administrative burden preparation for these regulations would place on most of our Clients, at one of their busiest periods, our free training programme is now up and running. We offer lots of different sessions over different dates to minimise the impact on our Client’s day to day operations, and now have over 400 people signed up.
The training is available, for free, to all Local Authorities across England and Wales, to find out more, or to sign up now click here.
