The Petition of Elspeth Rushbrook,
Declares that the petitioner believes that the current rules regarding banking and bankruptcy need urgently revising; that since the downturn, there is very strong negative public feeling towards financial institutions; that there is much anger at the bonuses and that public money has bailed out highly paid bankers of a crisis which we are suffering and paying for in many senses, while banks create debts for private customers as well as the country as a whole.
Further declares that banks extract huge fees from thousands of personal customers for going only a little over a limit, and these fees have no cap; fees of up to £100 per month are taken automatically and there are cases where these have made those in hardship have four figure fees while investigations go on; that this can lead to loss of banking facilities and demands for further money from banks; that the High Court test case was a very drawn out way of looking at this issue, which is clearly deeply unbalanced; that the High Court decision was entirely in the bank’s favour, and the furore around the unsuccessful case shows how strong popular feeling is about this matter; that banks make over £I billion each year through these fees, on top of their other profits.
Further declares that bankruptcy laws have been tightened without public consultation or even widespread knowledge; most websites on debt do NOT mention changes to bankruptcy laws, including the Government’s; in this time, debt has become very common; that debt is seen as bad but it is often the only way to improve circumstances, such as setting up business or paying for an education; that debt is also a result of materialism and consumerist society; that Government cuts, especially to legal aid and for medical treatment, make this worse.
Further declares that the petitioner believes that bankruptcy laws have been put in place by those who are well off; that the previous £50 free spending money a month was tight—but the current £10 for three years shows no understanding of modern life or poverty; that £10 per family member shows no understanding of single people and expects the burden and shame of bankruptcy to be spread across a whole household; and that for a person already under pressure, to not have any kind of relief asks for other problems, such as depression, as £10 a month means a single coffee a week, is not enough to buy a meal out, to allow you to leave your home town, to rent a DVD each week, for a television licence; that bankrupts may have to sell anything of value; that the law does not understand how things like DVD players, music and especially instruments, or computer games are vital; that whatever our financial circumstances, we all need a richer life, and after and during all the indignity and stress of debt, having pleasures and passions taken away is wrong and unfair; that being without a bank account is very hard in today’s society—it is necessary to have one in order to receive benefits; that anything extra the insolvent earns during those three years goes to the creditor, meaning that doing better financially gives bankrupts no relief and no benefit; that insolvents are even asked to pay to become insolvent, and are publically shamed by having their bankruptcy published.
Further declares that the petitioner believes that our whole ethos is built up on a contractual debt, blame and punishment that enters into every part of our existence; banks and law unfairly control much of our society; the recurrence of recessions and other problems suggest that our current systems are not the way, and invite us to urgently look again—not try to continue much as before.
Further declares that the petitioner believes that one should not have to pay to declare oneself bankrupt; that bankruptcy should last and have effect for only one year; that there should be no public publication and shaming; that the allowable personal budget should return to £50 per month, and to rise appropriately with inflation; that bankruptcy should not affect members of a household or family, only the persons directly filing for it; that creditors should not be able to take extra monies earned in this time; that there should be a system in place to allow bank accounts for bankrupts without further fees; that there should be no ban on public offices or other roles; that personal bankruptcy should not stop a self-employed business and vice versa; that this is the livelihood and will mean no money for the person filing as bankrupt; that creditors should not be able to force borrowers into bankruptcy, particularly when the creditors have created the debt, such as with banking fees or aggressive lending.
Further declares that the petitioner believes that student loans of all kinds should be covered by bankruptcy; that the 2004 ban should be repealed as should the March 2011 legislation.
Further declares that the petitioner believes that having to attend a court hearing in respect of bankruptcy should be stopped—this is extra stress and cost (to attend) and quite often humiliation.
Further declares that the petitioner believes that information from debt advice centres should also be looked at, as many of these encourage insolvency as an easy way of freedom, and do not present the facts properly.
Further declares that the petitioner believes that the law should protect genuine people from large preying creditors without encouraging non-payment from reckless borrowers.
Further declares that bailiffs should be stopped immediately; that it is unsupportable to be harassed in your home for goods not related to the creditor’s claims.
Further declares that banking fees should be abolished immediately; that such fees are not necessary, as they are only partly as a deterrent; that if one goes over one’s account’s limit, the account should simply not allow further withdrawals until further funds are put in; that banks should be banned immediately from following up fees with demands to further repay overdrafts; that where in the past, unreasonable fees have been charged and or hardship has been caused, these fees should be returned to customers.
Further declares that the blame, debt and contract system of our society needs to be revisited and debate begun and implemented about a fairer way forward.
The petitioner therefore requests that the House of Commons urges the Government to urgently review these rules and the ethos behind them.
And the Petitioner remains, etc.—[Presented, 11 August 2011; Official Report, Vol. 531, c. 13P .]
[P000955]
Observations from the Secretary of State for Business, Innovation and Skills:
Thank you for your wide-ranging petition regarding the current rules for banking and bankruptcy. The coalition Government take these issues very seriously, which is why we are committed in the Coalition Agreement to curb unsustainable lending and strengthen consumer protections, particularly for the most vulnerable. In particular, the five new rights for credit card customers mean they will have greater influence over their cards and it will be easier for them to compare and move to a better deal; the Consumer Credit Directive gives consumers an absolute right to withdraw from any credit agreement within 14 days; and the Office of Fair Trading’s (OFT’s) Irresponsible Lending Guidance provides greater clarity on what constitutes irresponsible lending.
We issued a Call for Evidence on “Managing Borrowing and dealing with debt” in October 2010, covering consumer credit and personal insolvency issues. We published a summary of responses in July 2011. The evidence shows that there have been significant developments in the market in recent years. As part of the OFT’s work on personal current accounts, banks have committed to introduce measures to improve the transparency of unarranged overdraft charges and, through the Lending Code, they have agreed to act sympathetically, positively and proactively if they have reason to believe that one of their customers is in financial difficulty. Many banks have also revised their charging structures. However, there are still serious concerns about how charges affect consumers, particularly where charges may not be clear or transparent. The Government are working with current account providers to determine the most appropriate course of action to deliver further improvements to consumers. We will regulate to address consumer detriment if suitable alternatives cannot be agreed. Ministers will report back later in the year to announce the Government position on these and other credit aspects of the Review.
The Government recognise that legitimate creditors are entitled to recover what they are owed and that enforcement action may be necessary if a debtor fails to pay or negotiate a reasonable repayment plan. Bailiffs and enforcement officers are authorised to remove and sell a person's possessions in order to pay money to a person or organisation. Detailed guidance on their responsibilities, how they work and how to make a complaint about them is available. Debtors should not be able to avoid their financial responsibilities by ignoring the debt or failing to pay, which is why the Government believe that it is essential for a consumer facing financial difficulties to be able to seek early advice as to possible courses of action. The Government have asked the Money Advice Service to review how debt advice could be more effectively delivered in the future, building on the expertise of specialist providers, with a view to putting in place a new delivery model in 2013, which will ensure that a holistic approach is taken so that people have the support to understand and evaluate their options for debt remedy.
Bankruptcy is one way for a person to deal with debts they cannot pay. The bankruptcy proceedings free them from overwhelming debts so they can make a fresh start, and make sure their assets are shared out fairly among creditors. It is Government policy that the costs of administering bankruptcy cases should be self-funding rather than a cost to the taxpayer. Consequently, the fee regime must be set to recover costs and this is achieved both by charging a deposit on those petitioning for bankruptcy and by realising appropriate assets (including a person’s net income) before any return may be made to creditors. When dealing with bankruptcy cases, it is reasonable in balancing bankrupt and creditor interests that any income above that needed to meet the reasonable domestic needs of the bankrupt and his/her family should be made available to cover the costs of administering the bankruptcy and make returns to creditors. A contribution would never be sought which did not allow reasonable domestic needs to be met. Student loans are not included as bankruptcy debts because they are made on non-commercial terms, including low interest rates and repayment being contingent on later income. In addition, student loans are paid out of and subsidised by public funds.
It is clear that people see benefits in removing the court from the bankruptcy process where it is unnecessary for a court to take a decision. We are currently exploring options to streamline the route into bankruptcy, with appropriate safeguards, and ensure that the court’s focus is on dispute resolution.
Debt relief orders offer a low cost route to debt relief where the person has low assets and liabilities. Changes were introduced in April 2011 to widen access to the debt relief order regime by ensuring that a person's future pension right is not counted as an asset, which could keep a person trapped in debt when they have nothing to offer their creditors.
We are aware of the concern that there should be greater access for bankrupts to basic bank accounts and we plan shortly to seek views on how to improve that access.
The petitioner may be interested to note that further advice for those concerned about specific charges imposed by a bank is available from the Money Advice Service (http://yourmoney.moneyadviceservice.org.uk/products/loans/tvpes/bank overdraft.html) and the Financial Ombudsman Service (FOS) (http://www.financial- ombudsman.org.uk/faq/bank-charges.html). In relation to bailiffs. Leaflet EX345 (About Bailiffs and Enforcement Officers) is available from the Court Form Finder on the Justice website at: www.justice.gov.uk.