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 consultation updates, IVAs and poor practice, new published standards for the enforcement sector, and CPAG resources for advisers.
Buy-Now, Pay-Later consultation on draft legislation
Buy-Now, Pay-Later firms allow shoppers to split and defer the payment of purchases not exceeding a 12-month period. The products are currently unregulated, meaning that firms are not required to be regulated by the Financial Conduct Authority (FCA). They also do not need to comply with the requirements of the Consumer Credit Act 1974 (CCA).
HM Treasury has now published a consultation on proposals to regulate BNPL products, such as those offered by Klarna and Clearpay. The government states that it aims to ensure people using BNPL products receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise. It lays out five key principles for consumers:
access to simple, clear and understandable information
protection when things go wrong
lending should only happen if it is affordable
regulation should be proportionate to ensure continued choice and access
regulation must be introduced gently for consumer protection and certainty within the sector
The consultation will close on 29 November 2024 and HM Treasury aims to introduce legislation to be laid before Parliament in early 2025. Once implemented, HM Treasury proposes several outcomes including access to the Financial Ombudsman Service, affordability assessments, and applying some of the CCA such as section 75.
The Financial Conduct Authority (FCA) has welcomed the consultation and has long called for those products to be brought into the FCA’s remit since 2021 because of numerous risks it identified in the Woolard Review.
FCA welcomes BNPL consultation
Insolvency Service report into Individual Voluntary Arrangements
The Insolvency Service has published its report into concerns about Individual Voluntary Arrangements (IVAs) and poor practice by some firms in the IVA market. Their research randomly selected 310 IVAs which had been registered and terminated in the two years to September 2023. The research focussed on the reasons for the IVA termination and how the IVA providers first took on the debtors. In 185 of those IVAs, the research found areas of concern including:
the accuracy of income and expenditure
other debt solutions not being explained
the debtor not understanding the terms of their IVA proposal
The Insolvency Service will now focus on improving IVA outcomes with new standards and monitoring guidance.
Following the IVA report, the Insolvency Practitioners Association (IPA) has sent guidance to its members reminding them of the IPA's expectations in protecting debtor interests.
Insolvency Service report into IVAs
IPA guidance on member expectations
Enforcement Conduct Board complaints consultation launched
The Enforcement Conduct Board (ECB) has launched its complaints consultation outlining its proposals to review current complaints procedures to help make it easier for people to have their complaint resolved as early as possible. One of the proposals is for the ECB to run an independent ‘second stage’ complaints system.
The consultation closes on 7 November 2024, and their complaints handling approach will come into effect from January 2025.
ECB standards published
The ECB has launched its new ‘standards’ for the enforcement sector intending to ensure that all those who experience enforcement action are treated fairly. The standards set out how enforcement agents should conduct themselves and how firms should operate.
The key features of the new standards for the enforcement sector include:
having processes in place for firms to monitor their own compliance with ECB standards and act when they uncover issues
acting with integrity and respect during doorstep interactions. Unacceptable practices include placing a ‘foot in the door,’ misrepresentation of powers and threatening or intimidating behaviour
providing clear, accessible, and timely information to those facing enforcement action
a two-stage complaints process aimed at resolving complaints quickly
The ECB expects the enforcement sector to implement the new standards from 1 January 2025.
The ECB now aims to develop new standards on vulnerability and ability to pay, which will form part of version 2 of the standards later in 2025.
Alongside the new standards, the ECB has also published research into doorstep interactions with body worn video. The research found that enforcement standards are being breached in 6% of cases.
ECB research into doorstep interactions in civil enforcement
Debt advice strategy consultation responses published
The Money and Pensions Service (MaPS) has published responses to its consultation on proposals for the delivery of debt advice. The consultation ran from January 2024 to April 2024. The document also provides a summary on key themes and next steps MaPS will take.
MaPS debt advice strategy consultation responses
Free to access Debt Advice Handbooks from CPAG
The CPAG Debt Advice Handbook for England & Wales and CPAG Debt Advice Handbook Scotland are comprehensive guides for debt advisers, offering regularly updated information on debt solutions, welfare benefits, and legal procedures. They are designed to provide advisers with the tools and knowledge needed to deliver high-quality, practical debt advice to individuals and families across the UK.
What the handbooks cover:
dealing with creditors: guidance on negotiating with creditors and handling creditor communications
debt solutions: a detailed overview of options such as Debt Management Plans, IVAs, bankruptcy, and Scottish-specific solutions like Trust Deeds and the Debt Arrangement Scheme
welfare benefits: information on how benefits impact debt repayments and how to help clients maximise income
court procedures: advice on court actions, including repossessions, enforcement orders, and eviction prevention
Scotland-specific advice: exclusive content in the Scottish handbook addressing sequestration and other Scottish legal frameworks
CPAG Debt Advice Handbook for England and Wales
CPAG Debt Advice Handbook for Scotland
Case law
Find debt case law summaries by topic on Shelter Legal.
Council tax liability when a tenant moves out
Tenants with fixed term or contractual periodic tenancies are liable for council tax until the tenancy is formally ended or new occupiers move in.