The monthly round-up of news, guidance, legislation, and case law from Shelter's Specialist Debt Advice Service.
News and legal updates
This month's legal round up includes new pension annuity guidance from the DRO Team, DRO application refunds, upcoming BNPL regulation, Consumer Credit Act reform consultation, Welsh Government consultations and more.
Debt relief orders - pensions and annuities
In a situation where a client has one or more pension funds whose total value exceeds the level of their debts, and they are of sufficient age to draw down on their pension, they might not pass the 'insolvency test'. This tests whether the client is ‘unable to pay their debts’. This means they might not be eligible for a DRO.
One way to use a pension fund is to use all or some of the fund to buy an annuity which provides a regular retirement income. This reduces the amount in the pension fund.
The DRO Team has provided guidance on the implications for clients in this position who take out an annuity before applying for a DRO, thus reducing the amount in their pension funds below the level of their debts:
Pensions and annuities
Where an individual has sufficient funds in this pension to meet the debts a DRO is currently not appropriate. (The guidance in Debt Relief Orders: Guidance for debt advisers - GOV.UK makes it clear that where a debtor can repay their debts in full from their pension/assets then they do not meet the eligibility criteria.)
However, the individual could be able to purchase an annuity with the lump sum and the annuity income would be considered income in terms of the eligibility criteria for a DRO.
In practical terms if the individual had converted their assets/a pension lump sum to an annuity prior to making an application, and met the eligibility criteria, a DRO would most likely be made.
However, there may be consequences for the debtor - the debt advisor should be advised that this would be a disposal of an asset prior to the application and the official receiver would consider whether any enforcement action should be taken since the transaction is clearly intended to put the monies beyond the reach of creditors. This might mean that
An application for a debt relief restrictions order is made
Consideration is given as to whether a criminal offence may have been committed, for example section 251Q Insolvency Act 1986 – Fraudulent disposal of property
Where the debt adviser is aware that assets that could have been used to pay the creditors have been used in such a manner, we ask that the debt adviser bring this to the official receiver’s attention at the application stage.
Debt relief order refunds available
As advisers will know, the £90 fee for a DRO was scrapped in April 2024. The Insolvency Service has written to 5,000 people that started a DRO application before April 2024 but did not submit it.
If your client believes they are owed a refund after making a payment but not submitting a DRO application, they should contact dro.preorder@insolvency.gov.uk.
Reasons for revoked and declined DROs
The Insolvency Service has published the number of revoked and declined DROs by reason for 2024/25. Assets exceeding the property limit was the main reason for revoked DROs. Individuals in an active IVA was the main reason for declined DROs.
Insolvency Service analysis of revoked and declined DROs
Consultation on reforms to the Consumer Credit Act
Following HM Treasury’s 2023 consultation on reforming the Consumer Credit Act 1974 (CCA), HM Treasury has published a further consultation detailing their proposed reforms to the CCA.
The current consultation has been split into two phases:
Phase 1: The first consultation seeks views on proposals in relation to information requirements, sanctions and criminal offences.
Phase 2: A further consultation will follow which will set out how the Government intends to reform the scope of regulation and rights and protections under the CCA.
Phase 1 proposes a repeal of all of the information provisions in the CCA and accompanying regulations and for these to be recast where required into FCA rules. This would include pre- and post-contract information, such as those provided under sections 77 and 78 CCA, as well as default notices and notices of sums in arrears under sections 86A – 86F and sections 87 - 89 CCA.
Phase 1 of the consultation closes on 21 July 2025.
This is a shift away from statutory regulation to a more principles, outcomes-based regime under the FCA. HM Treasury says that it will ensure that its approach to reform delivers robust consumer protection.
See Shelter’s response to the previous CCA consultation in our Debt Matters round up March 2023.
Consultation on Consumer Credit Act 1974 (CCA) Reform
HM Treasury response to Buy-Now, Pay-Later consultation
HM Treasury has published their response to last year’s consultation on regulating Buy-Now, Pay-Later (BNPL) products, along with draft legislation.
The consultation explained that the government was seeking to regulate BNPL products to ensure that shoppers receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise. See our Debt Matters round up October 2024 for details.
Under the proposed legislation, BNPL products will be known as “regulated deferred payment credit agreements”. BNPL providers will have to provide simple, clear, understandable and accessible information about these agreements. Rules governing this information will be drawn up by the Financial Conduct Authority (FCA).
BNPL providers will be expected to comply with the requirements of the FCA’s Consumer Duty, as well as the arrears and forbearance rules in the FCA’s Consumer Credit Sourcebook (CONC).
The legislation will not apply to instalment plans provided directly to customers by businesses, such as such as invoicing for building work, gym memberships, and travel season tickets.
HM Treasury has confirmed that the FCA will publish a consultation on their proposed rules for regulating BNPL shortly, with the legislation and rules coming into force in mid-2026.
Government response to BNPL consultation
Draft legislation: The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025
Welsh Government consultations
The Welsh Government has published a consultation proposing changes to the administration and enforcement of council tax in Wales. The law currently states that a household has 14 days to pay a missed instalment before a council can issue a court summons letter. The proposed changes for reminder and final notices will extend this timeframe and give households at least 63 days from a missed payment to a liability order application.
The consultation closes on 23 July 2025.
The Welsh Government is also proposing some changes to council tax discounts and exemptions. One of the key proposals is to introduce a council tax exemption for properties operating as a refuge for domestic abuse survivors.
This consultation closes on 15 August 2025.
Council discounts and exemptions consultation
Financial abuse code published by UK Finance
UK Finance has published a new version of its financial abuse code following the increased number of women impacted by economic abuse and the FCA’s Consumer Duty respectively. The updated guidance revolves around a seven-pillar framework for firms to implement. This includes producing internal guidance to offer appropriate support for victims of financial abuse.
UK Finance Financial Abuse Code
HMCTS centralised service centre rollout
Following a successful pilot, HM Courts & Tribunals Service will roll out centralised contact numbers to all regions between April and June 2025. Its service centres will be the first point of contact for calls instead of local magistrates’ courts but will continue to connect people to the appropriate court where necessary.
HMCTS centralised service centre rollout
Case law
Find debt case law summaries by topic on Shelter Legal.
Bluestone Mortgages v Stoute
The court ordered the cancellation of a mental health crisis moratorium on the grounds of material irregularity and unfair prejudice.
Bluestone Mortgages Ltd v Stoute and others [2024]
Spotlight
Recent articles and reference content.
Debt and insolvency solutions for council tax
Our new Shelter Legal page explains ways to deal with council tax debt including breathing space, debt relief orders, bankruptcy, and applying for discounts and reductions.
Read about debt and insolvency solutions for council tax on Shelter Legal.