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New Rules Will Prevent Lenders from Sending ‘Thuggish’ Debt Letters


A campaign initiated by consumer champion Martin Lewis has led to the Treasury proposing new rules to prevent lenders from sending out ‘thuggish’ debt recovery letters.

The Treasury said that the letters need to be easier to understand, as well as less intimidating. The use of ‘legalistic language and block capitals’ will also be restricted, and customers will have to be told how they can get hold of debt advice free of charge.

At present, a law created in the 1970s dictates the text of default notices. Concerns were raised about the format of debt letters when banks were forced to send out letters during the pandemic as the mortgage holidays introduced were, in effect, a default.

Nationwide building society even went as far as to tell its mortgage holiday applicants that they could safely ignore the letters, but they had no choice but to send them as per the law.

The Money and Mental Health Policy Institute, founded by Lewis, warned that each year as many as 100,000 people struggling with debt consider taking their own lives. They say that a key contributing factor is debt letters.

“It’s no exaggeration to say that this change could save lives. We’re delighted the government has agreed to back this element of our campaign and change the default demand rules. 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,” said Lewis.

“And the timing is crucial, with millions of people facing debt and distress due to the pandemic, the sooner we end these out-of-date laws which force lenders to send intimidating letters the better.”

Letters will now have to use simple and less threatening language with technical terms having to be explained in plain English.

The changes will come into effect from December this year, with all lenders being required to make the transition within six months.

Economic secretary to the Treasury, John Glen, said: “Being behind on your credit repayments can be a really distressing experience which is made worse by a confusing and intimidating letter from your lender.

“As part of our effort to help to people struggling with their finances, it’s right that we look again at the legislation around these letters. 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.”

Harry Pererra
Harry Pererra

Harry turns on his experience in journalism and programming to write about the latest news in the world of tech and the environemtn. When he isn’t writing for usave he is working towards his Blue Belt in Brazilian Jiu Jitsu, and prefers dogs to cats.

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