The British Bankers Association – the trade body for banks – has published proposals that it says would help people in financial difficulties, would streamline the process of debt management and deliver a better and fairer deal for customers.
The report, A New Model for Dealing with Personal Debt, says that a clearer range of options for people working to resolve their debt would avoid confusion and worry. It calls for greater consistency in the way debt advice is provided and in how creditors deal with customers in financial difficulties, in order to ensure fairer and more consistent results. It recommends changes in four key areas:
• creation of a single body to regulate debt advice, with a single debt management licence and sole responsibility for delivering a national over-indebtedness strategy
• simpler debt remedies, and increased emphasis on early intervention and resolution
• better use of customer information to identify people at risk of losing control of their debts, to offer early help
• helping customers to help themselves by improving financial education and providing a single, online debt advice portal
Paul Ross, BBA policy director and co-author of the report, said:
"Our vision is to provide a clear and coherent process to help people facing debt difficulties, to intervene early where possible and to provide a simple debt resolution solution if those early attempts do not succeed. We want to unravel the red tape to bring about a more financially responsible solution for customers.
"Customers are currently faced with too many confusing options for resolving their debt, and may set out too early on expensive legal procedures when a more common sense approach would be better for everyone."
These suggestions are good. But I have some much simpler ones:
• stop banks lending stupid amounts of money to people who can't afford to pay back the debt
• stop banks selling customers associated products they don't need or can't make use of
• where banks have lent too much money to individuals who are now struggling with repayments, stop them taking precipitous action to repossess homes, stop them bullying customers, and above all stop them selling on their defunct lending books to other even less scrupulous companies
I can predict that as soon as this piece is published I will have banks on the phone protesting that there are already rules in place to stop these practices. But I also know from the letters we receive from readers and discussions that we have with (charity-based) debt advisors that all of these things still go on.
Do you have any other suggestions that you would like to pass on to the BBA to improve the debt situation?
