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Citizens Advice response to BIS Consumer credit and personal insolvency review

20 July 2011

Gillian Guy, Chief Executive at Citizens Advice said:

“While there is much to welcome in this response, it is also a missed opportunity to help people facing serious financial difficulty.

“In 2010 Citizens Advice highlighted how most banks are excluding undischarged bankrupts in a way that is unfair and causes unnecessary hardship. So we are pleased to see the Government intends to look at amending insolvency legislation to help undischarged bankrupts to get access to basic bank accounts.

“While the watching brief on bank charges that hurt the poorest and those in financial difficulties is welcome, the pace of change needs to be stepped up.

“We welcome research on the effect of caps on interest rates for consumers. But we also believe there is a pressing case for action to ensure high-cost credit markets treat people fairly. CABs are still seeing cases of bad lending and debt collection practices. So we support the push for industry to come up with voluntary approaches but where these are not properly committed to dealing with problems the Government should be prepared to regulate quickly, or give the regulator better powers to intervene.

“However we are disappointed that Government concludes that there is no need for changes to personal insolvency and debt remedies as markets for debt management plans and IVAs continue to cause problems for vulnerable consumers. Debt remedies are not well articulated and there is not enough ‘breathing space’ protection for people who suffer a sudden loss of income. The system needs to properly balance the needs of both debtors and creditors and to give adequate protection for people in financial difficulties who are trying to deal with their debts. We are a long way from this now and so debt continues to have devastating consequences for too many people.”

Responding to the change in role for the Money Advice Service, Gillian Guy said:

“We welcome the Government’s move to bring consistency to the debt advice sector and clarify the Money Advice Service’s role. We look forward to continuing our strong working relationship with the Money Advice Service and putting to good use the years of experience we have built up as the nation’s largest advice agency and more recently, with the highly successful Face-To-Face Debt Advice service (formerly the Financial Inclusion Fund).”

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.