The SDRP proposal comes as a continuation of the Breathing Space Scheme which was launched in May 2021.

We are committed to working with the government and the debt advice sector to support customers in financial difficulty who require more time to pay their debts.

We are also supportive of the government’s proposal to extend legal protection to cover all debts, such as household bills and rent. This builds on the support that lenders already provide through, for example, Debt Management Plans (DMPs) and tailored forbearance. This ensures that borrowers never pay more than they can afford. Parts of these existing protections could be added to the SDRP to improve support for customers in financial difficulty.

Cost of living pressures are changing customers’ finances, which means flexibility is more important than ever, as their affordability will be greatly impacted. As currently designed, the SDRP is too complex. The rigid structure of the plan may mean that customers find it too difficult to keep up with payments. There are also significant operational and legal risks that may arise for creditors and the debt advice sector as part of the implementation requirements.

To improve the design of SDRP, we think that:

• all secured loan arrears should be excluded from a plan or only included with the agreement of the lender
• the regulations should not have any legal effect on a Consumer Credit Act (CCA) credit agreement
• a credible implementation timeline that allows systems to be fully tested before a go-live date is needed.

To ensure that the policy objectives are met, we are calling for reflection from key stakeholders. UK Finance and its members are committed to working with HMT and stakeholders to design a solution that enables good consumer outcomes through debt recovery.