On 15 December 2022, HM Treasury published its response to its earlier consultation seeking views on the implementation of a Statutory Debt Repayment Plan (SDRP).

On 13 May 2022, the government published a consultation seeking views on the implementation of a SDRP. The SDRP would be a new statutory debt solution. Debt advisers would devise a plan for repayment of a person’s debt over a period of up to ten years, with similar legal protections from creditor action as in the government’s existing breathing space scheme.

The response document now published states that the consultation received the following responses:

  • The majority of respondents agreed that the current SDRP proposal would require significant changes to improve on existing debt solutions.
  • Many debt advice stakeholders suggested that the government’s draft impact assessment overstated likely case numbers, as a lack of flexibility would restrict scenarios where they would recommend SDRP. A majority felt that managing and making difficult decisions on SDRPs would disrupt supportive relationships with their clients.
  • Creditors were concerned about the impact of SDRP on their businesses, and the weight of other new consumer protection regulation that would be implemented in the same period.
  • Many respondents questioned whether SDRP is the right intervention to prioritise now.
  • Some respondents suggested that while increases in the cost of living may bring people with higher incomes into debt advice and increase demand for SDRP in the medium to long term, in the short term, the number of people able to repay their debts in full over ten years is likely to fall.
  • Fewer SDRPs would reduce the benefits of the policy and may mean that the funding of the scheme would not operate as anticipated.
  • A number of respondents from both debt and advice providers and credit organisations suggested that there should be instead a 24-month implementation period.
  • Some debt advice stakeholders recommended that government defer the SDRP until cost-of-living pressures have subsided and the outcome of the government’s Personal Insolvency Review is known.

The government recognises the significant challenges and concerns raised by respondents, relating to both the design of the SDRP and the timing of its implementation. Henceforth, the government has reflected on this feedback and determined that it will not proceed to lay regulations implementing the SDRP this year. Instead, the government will base further decisions on the future of the SDRP on the outcomes of the government’s review of the personal insolvency framework.