Government must clamp down on aggressive debt collectors during cost of living crisis 

Last week’s budget brought some measures to help the many people struggling with rising costs. In particular, the Chancellor announced that the energy price guarantee will remain in place until June. That was a welcome win for campaigners – including Money Saving Expert Martin Lewis – and will offer a relief for families feeling anxious about whether their finances would stretch to afford the rise. 

But as the cost of living crisis rages on, energy bill hikes were just one of the extra costs due to hit households this Spring. At the end of the month, millions of people could be facing council tax increases of up to 5% as local authorities seek to balance their books. Combined with the price hikes announced for mobile and broadband customers – and the loss of the government’s £400 energy bill support scheme – come April families already struggling could potentially be hundreds of pounds worse off. 

It’s apt then that this week is Debt Awareness Week. Run by debt advice charity StepChange, the focus of the week is ensuring that everyone who needs it can access debt advice and support with their finances during the cost of living crisis. 

That’s an important aim. But beyond support services, it’s also vital that we don’t lose sight of what the government can do to help people who have falling behind on bills — and for whom the strain of the cost of living crisis is only rising.

Recent research by the Money and Mental Health Policy Institute (on whose advisory board I sit) revealed that between March and December last year, a staggering 1 in 6 UK adults experienced suicidal feelings as a result of the cost of living crisis.

Suicide is always complex. Normally there are a range of factors that lead to someone considering taking their own life. But one key finding in the Money and Mental Health research is that the way people are bombarded with letters and calls about their debt is causing grave distress — and in some cases is even contributing to people becoming suicidal.

The charity has heard stories of people receiving as many as seven contacts in as many hours from just one creditor. Bearing in mind that people are often behind on more than just one bill, that can very quickly build up to looking and feeling like harassment, leaving people feeling hopeless and unable to cope. 

The reason why creditors can get away with bombarding people in this way is because in the UK, there are no firm legal rules on how often creditors can contact people about overdue bills. That is in contrast to the US, where such limits are in place. 

It’s welcome then that the government is consulting on changing the Consumer Credit Act, decades-old legislation which regulates what creditors must do when they lend money and when they collect it. The government has stated its aim in reforming the act is to “create a regulatory regime that…maintains high levels of consumer protection”. 

That should include a focus on setting stronger rules around the content and frequency of communications around missed payments, to make them less threatening and to protect the mental health of customers. 

Yet changing the Consumer Credit Act will undoubtedly be a long and drawn out process, and urgent action is needed now to better protect people experiencing distress due to the cost of living crisis. 

As a first step, the government should charge regulators now with putting a legal limit on how often creditors and other debt collectors can contact people. That will be vital in reducing unnecessary distress and giving people the space they need to access advice and support. 

Government action on aggressive debt collection is vital to minimising the psychological toll of problem debt — and could save lives as the cost of living crisis continues and beyond. 

It’s time to crack down on debt threats once and for all, and make sure that when people fall behind they are met with help — not harassment. 

Dr Lisa Cameron is MP for 
 East Kilbride, Strathaven & Lesmahagow