News story

New measures to protect consumers from debt claims

Justice Minister Sir Oliver Heald announces a consultation and information campaign to help protect consumers.

The government has today (23 December 2016) announced a crackdown on unresolved debts which can damage people’s credit ratings without them knowing. The action comes after concerns were raised that companies were issuing claims to consumers using incorrect addresses.

Ministers say that is unacceptable and will consult on ways to protect people from having their credit ratings affected despite being unaware of the claims made against them. They will also examine to what extent unscrupulous debt agencies have contributed to the problem.

The consultation will consider how the current system can be improved and reinforced to ensure that companies take all reasonable steps before they are able to apply to a court for a claim.

The consultation will look at ways to:

  • better protect consumers who are sent mail to inaccurate addresses
  • verify addresses again before a claim is sent
  • protect people’s credit scores from being damaged if they resolve outstanding debts quickly
  • consider how modern communication could notify people of outstanding debts
  • assess the role of parking companies and examine how drivers are informed of fines

Announcing the measures, Justice Minister Sir Oliver Heald said:

It cannot be right that people who are unaware of debts can see their lives and finances ruined by county court judgments.

In the digital age, we must ensure companies pursuing unpaid debts make every reasonable effort to contact individuals, rather than simply relying on a letter to an old address.

Companies will always be allowed appropriate means of redress when they are owed money and people should always take reasonable steps to protect themselves.

“This consultation will make sure the right balance is struck in allowing companies to pursue debts, but while guaranteeing the appropriate level of protection to those who unwittingly owe money.

Round table events with consumer groups and advice organisations to gauge early views will take place in the new year before the consultation goes live.

The Ministry of Justice will also launch a new public advice campaign early in the new year to help protect people unaware of their debts and remind them of the importance of informing companies of a change of address.

It will provide simple, clear guidance for consumers on how to communicate accurate address information, find out about outstanding claims and how to challenge erroneous claims.

And the Department for Communities and Local Government will be taking further steps in due course to tackle poor practice by private parking companies.