Business, Innovation & SkillsWritten evidence submitted by the Department for Business, Innovation and Skills

Further to the Committee’s recent announcement of their inquiry into debt management, please find enclosed the Government’s final response to its Review of Consumer Credit and Personal Insolvency. Our final response and our interim response published in July, which I also enclose, form the Government’s formal written evidence to the Committee’s investigation.

The Government is committed to curbing unsustainable lending and strengthening consumer protections, particularly for the most vulnerable. We launched the Consumer Credit and Personal Insolvency Review last year to gather evidence on how to deliver these commitments. The Government’s vision is twofold. First, we want all consumers to be empowered to make better choices for themselves. Consumers should be free to borrow if that is what they decide is in their best interest, but in line with the Coalition principles of freedom, fairness and responsibility, we want to provide consumers with the tools they need to make informed decisions. Second, we want to ensure there is a safe and fair regulatory framework for both credit and personal insolvency.

Our July response announced the Government’s proposals on the Personal Insolvency aspects of the Review. The measures announced in this publication will begin to address the two main concerns identified by the Review, recognising the importance of free and independent debt advice; and concerns regarding the debt management industry.

The Government’s final response contains the full response on the Consumer Credit parts of the Review, including our proposals on the three Coalition Commitments and actions to improve consumer protections in the high cost credit market.

I am confident that the package of measures announced in the two documents, alongside other significant developments in the consumer credit market and personal insolvency framework, including new consumer protections introduced as part of the Consumer Credit Directive and our proposals to reform bankruptcy applications, will deliver real benefits for consumers that can be achieved while minimising the regulatory burdens on business.

I understand that the Committee have had the opportunity to have an informal briefing from the Officials in my Department on these issues and I hope that you and Members of the Committee found this helpful. I am grateful to the Committee for allowing the Government an extension to submit this evidence.

I am copying this letter to the Financial Secretary to the Treasury.

Edward Davey MP
Minister for Employment Relations, Consumer and Postal Affairs

21 November 2011