Enhanced regulation needed despite a drop in insolvencies

– TDX Group comments

Following the release of the Q3 2018 Insolvency Service statistics today, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company,  calls for enhanced regulation to improve debt advice services:

“Despite figures released by the Insolvency Service today, showing a fall in personal insolvencies from a six year high in Q2 2018, increased regulatory oversight of debt advice and personal insolvency is still required.

“Continued economic uncertainty and stalling growth, driven largely by Brexit, unprecedented levels of unsecured debt, and the increasing reliance of low-income workers on earnings from the ‘gig economy’ have the potential to create a perfect storm for personal insolvencies.

“Exacerbating the issue is the forceful marketing approach used by some insolvency providers  to target people in financial difficulty, and the limited resources available in the debt advice sector, for example when it comes to charitable funding. In this environment, it’s vital that people are able to access high quality debt advice.  

“We don’t believe the fall in Individual Voluntary Arrangement (IVAs) is attributable to a drop in consumer demand but may just be a short-term effect, specifically driven by market activities and regulatory intervention. The Insolvency Service recently raised significant concerns around both the provision and regulation of IVAs and in October, the Financial Conduct Authority issued a ‘Dear CEO’ letter to firms involved in debt packaging.

“Yesterday’s Budget provided grounds for optimism, with the government announcing plans for collaboration with debt charities to design a no-interest loan scheme for those who can’t access affordable credit,  and a consultation to extend breathing space for people in debt to 60 days. It’s encouraging to so see clear and meaningful action but more is needed to ensure people can resolve complex, problem debt in a way that’s fair for them and their creditors.

“If people are struggling with their debt payments we urge them to speak to their creditors as early as possible, as there are options available to help manage repayments more effectively.”