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Debts: Advisory Services

Volume 501: debated on Tuesday 1 December 2009

To ask the Secretary of State for Justice (1) what discussions officials of his Department have had with the Prime Minister’s Office on the regulation of debt management schemes; (302658)

(2) what meetings his Department held with outside organisations prior to the publication of the consultation on the introduction of a statutory debt management scheme;

(3) for what reason the consultation on the introduction of a statutory debt management scheme was not published in July 2009;

(4) what discussions Ministers in his Department had with interested parties prior to the publication of the consultation on the introduction of a statutory debt management scheme;

(5) what representations his Department has received to its consultation on debt management schemes to date;

(6) what his policy is on the generation of profits from debt management schemes operating under the provisions of the Tribunals, Courts and Enforcement Act 2007; and if he will make a statement;

(7) when he expects to publish his Department’s response to its consultation on debt management schemes.

The current economic downturn is causing real hardship for many hardworking consumers and the Government are determined to do all we can to help those in financial difficulties, while balancing this against creditors’ rights to recover their debts wherever possible, both now and in the future.

Following concerns about the operation of this sector, the consultation paper “Debt Management Schemes—delivering effective and balanced solutions for debtors and creditors” was published on 18 September 2009. It looks at the current operation of the debt management market, seeking views on whether any changes are needed in this area and, if so, what those changes should be.

The consultation paper sets out three broad options. First, to continue with the measures currently under way to raise awareness about current schemes and enforce existing rules with operators. Second, to improve current schemes without regulation, possibly through the introduction of a protocol. Or third, to implement the Lord Chancellor’s powers to approve debt management schemes contained in Chapter 4 of Part 5 of the Tribunals, Courts and Enforcement Act (TCEA) 2007.

During the development of the paper, officials held a number of bi-lateral meetings with stakeholders from the credit, advice and debt management plan operator sectors. These were supplemented by a series of seminars to wider audiences at various locations across the country and the creation a key stakeholder group consisting of representatives from all sectors that has met several times.

The Government had originally intended to publish the consultation paper before the summer recess. However, publication was delayed to allow the paper to reflect early comments on the Consumer White Paper published on 2 July 2009, which detailed wider Government action to support consumers.

This consultation has been developed jointly by the Ministry of Justice, the Department for Business, Innovation and Skills and the Insolvency Service. As is normal, such consultations involve discussions with and input from a wide range of departments, including the Cabinet Office.

The consultation paper makes it clear that the Government have no set view on which, if any, of the options proposed should be taken forward. However, we have made it clear that only reasonable costs should be recoverable by providers and are seeking views on the level at which these should be set should there be a consensus to move forward with either the introduction some form of protocol or the implementation of the powers in Part 5 of the Tribunals, Courts and Enforcement Act 2007.

It is expected that the results of the consultation will be available in the new year, at which time the Government would announce what action we plan to take in this area.

The consultation paper can be accessed via the Ministry of Justice website at: