The Breathing Space Regulations – or to give them their full name, the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Regulations) – have now been published together with the guidance for creditors. The FCA’s feedback from its consultation on changes to its Handbook is due to be published shortly.
The Regulations come into force on 4 May 2021 and give eligible people in problem debt - who receive professional debt advice -access to a 60 day period in which most enforcement action and contact from creditors is paused and most interest and charges on debts are frozen. For individuals receiving mental health crisis treatment, the Regulations establish an alternate route to access the protections of a moratorium for the duration of the person’s mental health crisis treatment, plus 30 days.
We have set out below six key questions for secured lenders to consider in implementing the Regulations.
The definition of “qualifying debt” is the starting point (and the Regulations extend to buy-to-let as well as regulated mortgages), but other aspects of the application criteria of the Regulations (for example, based on the location of the debt/ordinary residence of the eligible person) can be more complex.
When you receive a notification, as well as searching your records for details of the debt you’ve been notified about, you must also search for any additional debts owed to you by the debtor.
In particular, the impact on any suspended possession order payments, where the customer’s payment includes a sum towards arrears.
For example, will you continue to progress existing possession proceedings through to obtaining a possession order for customers in breathing space or will you take a more restrictive approach than the Regulations permit?
For example, will your approach to customer contact be the same where the “qualifying debt” is a regulated mortgage contract or an unregulated buy-to-let loan?
For example, once qualifying debts have been identified, how will you record this on the relevant accounts, who do you need to notify, how will you make the changes to the accounts to ensure that the customer does not pay the fees, charges and interest that are frozen?
Our specialist mortgage sector team (comprising specialists in mortgage law and regulation, mortgage enforcement and lender sales) can support you with implementation of the Regulations. Our specialist team has followed development of the Regulations since inception and is well placed to support your implementation programme.
How will the office of the future work?Read more
Flexible working: the impact on our towns and cities webinarRead more
How will the office of the future work? WebinarRead more
European Commission adopts revamped SCCsRead more
Evolving citiesRead more
Dismissal and re-engagement: refusing Covid changesRead more
Dismissal for health and safety 'friction' automatically unfairRead more
Council wins appeal on sale of former school site landowner's heirs...Read more
TLT forms new partnership to support employee ownership growthRead more
Councils - don't lose the right to charge CILRead more
Employment Law Focus: TechnologyRead more
Personal data transfers to US-hosted CRM tools could be unlawful Post...Read more
The pandemic has forced the majority of the workforce into a world of remote working. As a result, our cities are evolving.Read more
Issues that will impact the sector over the coming months - from future proofing social housing developments to managing offices post pandemic, green finance, and creating connected communities.Read more
Watch our video series for information on the legal issues that are affecting the real estate sector. Each...Read more
Helping you navigate your business through the risks and opportunities that Brexit will bring.Read more
The way people shop is constantly evolving, from the growth of online and the changing use of stores...Read more
The widespread disruption and closure of businesses caused by the Covid-19 pandemic and the subsequent national and local lockdowns has brought into sharp focus the question of available insurance cover for losses under...Read more
The pandemic has had a deep and long-lasting effect on the leisure, food & drink sector, forcing operators to embrace new ways of attracting and servicing customers.Read more
There's a growing demand for retailers to do more to attract the Purple Pound – the collective spending power of disabled shoppers, estimated to be worth around £274bn. We look at the opportunities, the legal issues and...Read more
Green finance is gaining speed, driven by global climate change pressures and the recognition of the vital role which sustainability plays in a resilient financial services sector.Read more