Question to the HM Treasury:

To ask Her Majesty’s Government what measures they are taking to reduce levels of insolvency among UK borrowers.

The government is committed to supporting individuals in problem debt and has a range of measures in place to support consumers.

The Money Advice Service (MAS) coordinates the provision of free-to-client debt advice. Last financial year, MAS had a budget of £75m and funded 380,000 free-to-client debt advice sessions. In October 2016 the government announced plans to restructure the financial guidance landscape and bring debt advice, money guidance, and pensions guidance together in a single body to give consumers better access to the financial information they need.

The Financial Conduct Authority (FCA) took over responsibility for regulating the consumer credit market in April 2014, and introduced binding rules which strengthen consumer protection. These rules are based on the principle that money should only be lent to a consumer if they can afford to repay it. Lenders must also show forbearance if there is evidence of financial difficulty.

The FCA also introduced a cap on the cost of payday loans, which came into force in January 2015. As part of the review of this price cap, the FCA will examine the high-cost credit market more broadly (such as rent-to-own), and consider whether further interventions are necessary to address the risk of consumer harm.