Victory in battle against 'thuggish' debt letters

Warning letters sent to those falling seriously behind on debts are to be toned down to make them less "thuggish", under government plans.

Long-standing laws require warnings about potential court action to be written in bold or in block capitals.

A campaign by the Money and Mental Health Policy Institute claimed the letters were counter-productive and worsened mental health problems.

Now the Treasury has vowed they should be "less threatening".

However, the changes may not be fully implemented until mid-2021.

'Complex and intimidating'

Under the rules of the Consumer Credit Act from 1974, warnings in these letters should be written in capitals or in bold.

For example, the letter states: "IF YOU DO NOT TAKE THE ACTION REQUIRED BY THIS NOTICE BEFORE THE DATE SHOWN THEN THE FURTHER ACTION SET OUT BELOW MAY BE TAKEN AGAINST YOU."

The institute said that this "complex and intimidating" language risked adding further distress to those already facing mental health difficulties.

According to estimates produced by the institute, about 100,000 people in problem debt in England attempted suicide last year.

'You bury your head'

Rachel Edwards said the letters made things worse

Rachel Edwards is among those who have received debt letters after bouts of depression led to financial problems.

"You get these letters and they make you bury your head even further - and that makes both your mental health and your debt problems worse," Mrs Edwards, from Bridgend, told BBC News in June.

"You know what they are, you open them to look at what you owe, then put them on the side and leave them there."

She said the proposed changes announced by the Treasury were vitally important.

"It will make a big difference, especially for people like me who have mental health problems as well as debt," she said.

The Treasury said the new rules should make the letters less threatening by restricting the amount of information that must be made prominent, and required lenders to use bold or underlined text rather than capital letters.

Lenders would also be able to replace legal terms with more everyday language, and letters would clearly signpost people to the best sources of free debt advice.

'This could save lives'

Economic secretary to the Treasury John Glen said: "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."

Martin Lewis, who founded the Money and Mental Health Policy Institute, said: "It is no exaggeration to say that this change could save lives.

"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. 

"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."

Legislation should see the new rules in place in December, but lenders would then have six months to implement the changes.

UK Finance, which represents lenders, said the letters - which are required to be sent - would now be "more appropriate and supportive".