Money Advice Trust > Media centre > News > Changes to debt collection letters welcome as calls for broader reform grow

Changes to debt collection letters welcome as calls for broader reform grow

The Money Advice Trust has welcomed today’s announcement of changes to the Consumer Credit Act that will make Default Notices less threatening and easier to understand.


The changes, which were announced by the Government today and take effect in December 2020, will update outdated 40-year old rules on the language and formatting used in warning letters sent from creditors. 

The changes will mean that:

  • Default notices will now use more accessible and less threatening language
  • Creditors will now be able to replace legal terms with more widely understood terms
  • Letters will no longer contain capitalized text
  • Letters will signpost to sources of free debt advice.
The news follows a campaign led by Money and Mental Health Policy Institute, with the support of the Money Advice Trust, other debt advice charities and financial firms, who have long been constrained by the previous rules.
 
The changes apply to consumer creditors including credit card, personal loan and hire purchase providers, but do not apply to other debts such as council tax, utility arrears, tax debts or benefit overpayments.
 
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:
 
“Using threatening and jargon-filled language when communicating with people struggling with debt is not only ineffective – it is actively harmful.  We are pleased that the Government has listened to the need to update these 40-year old provisions in the Consumer Credit Act, which for far too long have constrained financial services firms from following better practice.
 
“Todays’ welcome but small step needs to be followed by much stronger action on the way that other debts – and especially debts owed to government – are collected.    We need a new Government Debt Management Bill to bring fairness to debt collection across central and local government – as well as fundamental reform of the way that bailiffs are used to enforce debts.”
 
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