Dave Heathcote, Insolvency Director at TDX Group, the UK’s leading provider of data, technology and advisory solutions to the debt industry, welcomes today’s (4 May) introduction of the Debt Respite Scheme (Breathing Space), but sees an increasingly complex debt landscape ahead needing further support and new solutions:
“Today’s long-awaiting introduction of the Debt Respite Scheme1 is a welcome and extremely timely move in the ongoing fight against debt. Providing a lifeline for indebted consumers via a temporary pause from most creditor enforcement action, Breathing Space offers a 60-day window for people to engage with formal debt advice, and consider repayment options best suited to their needs.
“Breathing Space is an important step in how society manages problem debt, however, its impact will be limited in cushioning against the potential wall of debt many will face down the line. Against the backdrop of increasingly positive news on the UK’s vaccination roll out and a potential return to normality, a more sombre and fuller picture of the pandemic’s financial impact will emerge as government support schemes and forbearance winds down.
“In the darkest days of the winter lockdowns, research2 showed concerning growth in the number of people facing financial difficulties, with almost half (47%) worrying about money every day and 24% feeling incapable of managing their finances. Lockdown lifted the lid on this underlying financial divide, but government support, as necessary as it was, masked the reality for those on lower incomes or facing unemployment. Now, as the tide goes out on financial support, the force of the wave of debt building since the pandemic began may be felt.
“Both people and businesses will need greater support, new solutions and innovative thinking to navigate future problem debt. The pandemic’s impact should accelerate improvements in how financial difficulty is supported, and the government’s mental health recovery plan3 already highlights the crucial role the debt management industry has to play. In the meantime, it’s vital for those in financial difficulty to fully capitalise on Breathing Space, and for creditors to use it as an intervention trigger to craft a sustainable, long-term customer journey out of debt.”
1. Gov.uk: Debt Respite Scheme
2. Research carried out by Portland Communications as an online survey conducted 9 - 10 December 2020. Total sample: 1,009 adults
3. Gov.uk: COVID-19 mental health and wellbeing recovery action plan
ABOUT TDX GROUP:
TDX Group, an Equifax company, provides businesses with technology, data and advisory services to improve debt liquidation and the fair treatment of consumers in financial arrears. TDX Group work at the centre of the industry with specialist debt businesses and with creditors across financial services, retail, energy, water, telco and media sectors, plus local and central government; providing solutions which support them in managing collections, recoveries, debt sale and insolvency. To find out more about TDX Group please visit: www.tdxgroup.com. TDX Group is authorised and regulated by the Financial Conduct Authority.