“Shouty” capital letters and confusing jargon will be cut from debt-chasing letters to protect vulnerable people’s mental health after a finance charity convinced the government to change the law.
The Money and Mental Health Policy Institute (MMHPI), set up by Money Saving Expert’s Martin Lewis, has been lobbying ministers for two years to change the wording on letters. The charity warned that the letters are a contributing factor to the 100,000 people in problem debt who attempt to take their own life in England each year.
The government announced that they would be changing the rules in the Consumer Credit Act (1974) to stop letters sent by debt collectors from piling on the mental strain.
The move has been hailed by Lewis, MMHPI founder and chair, who said: “It’s no exaggeration to say that this change could save lives.
“The last thing people struggling with debt need is a bunch of thuggish letters dropping through the letterbox, in language they can’t understand, written in shouty capitals alongside threats of court action.”
Changes to the rules around distressing #DebtThreat letters will make a huge difference to the millions of people facing problem debt – and could even save lives. Find out more about today’s campaign win in our blog: https://t.co/HHhq5pZBRN pic.twitter.com/BvIfKCDVOQ
— Money and Mental Health (@mmhpi) October 7, 2020
The economic fallout from the Covid-19 pandemic has made rising debt a reality for hard-hit Brits who have seen their incomes slashed and jobs lost during the crisis. The Big Issue’s Ride Out Recession Alliance has been battling to protect jobs and prevent homelessness during these uncertain times to help people facing the financial and mental health challenges of the pandemic.
Despite the uncertainty, debt collections resumed in late August with bailiffs given the go-ahead to visit properties – as long as they promised not to shout.
But debt letters sent under the outdated Consumer Credit Act contain, by law, large blocks of threatening and confusing language, written in capital letters. They also have to include advice – which is now outdated – recommending that people in problem debt consult their solicitor or local trading standards board, instead of signposting to more appropriate support such as free debt advice.
MMHPI says this can have a catastrophic impact on people with debt problems and launched the Stop The Debt Threats campaign.
Under changes announced on Wednesday, letters will now use more accessible and less threatening language, replace complex or jargon terms with plain English and no longer contain “angry-looking” upper case letters as well as signposting free debt advice.
Great to see that the government has agreed to change the rules on the most distressing debt collection letters – this will make a big difference to people struggling with debt. Proud to have supported @mmhpi's Stop the #DebtThreats campaign: https://t.co/BOo2MqHon2.
— Norman Lamb (@normanlamb) October 7, 2020
Martin Lewis said: “The timing is crucial, with millions of people facing debt and distress due to the pandemic, the sooner we end these out-of-date laws which force lenders to send intimidating letters the better.
“Today’s changes will make the most distressing debt letters much less intimidating, and crucially will also easily and calmly point people in serious debt to get the free, non-profit, debt advice they need.”
Economic secretary to the Treasury John Glen added: “These new rules will help to take the fear out of finance by ensuring that letters are easier to understand, less threatening, and empower people to take control of their finances.”