Make the Debt Industry Fairer

Some positive news in the fight to make the debt industry fairer

by Sarah-Jayne Dunn, Manager of CAS Financial Health team.

This article was first published in The Herald on 29 June 2024.

It’s always nice to be able to report some good news here in this column, especially when it’s about a policy change that we in CAS have been pushing for.

So sit back and enjoy an example of how sometimes the unique CAB evidence that we often use this space to highlight can actually lead to positive change.  

Three years ago, we said that people with serious mental health difficulties should get a pause in debt recovery demands from their creditors.

The argument for this is based on decades of case evidence that we’ve seen in the advice sector. It is also, I think, common sense. For someone with mental health difficulties, dealing with debt is often the last thing on their mind. As a result, the person’s debt spirals out of control, their mental health gets even worse and their creditors’ chance of recovering the arrears gets even smaller. It’s the classic vicious cycle, and – speaking as an experienced debt adviser – it's tragic to see it play out in real life cases, year after year. 

Whereas – and again the evidence shows this - if you introduce a breathing space, pausing all re-payment demands and let people focus on their mental health recovery, then when a person does recover that person is more likely to actually re-pay their creditors. Win-win.

So, we and others have been proposing this to politicians for the last three years. A lot of meetings, reports, presentations etc. But last month Holyrood finally approved legislation which included such a pause, known as a ‘Mental Health Moratorium’. This is set to become operational in Scotland next year. An excellent step forward that will really change the lives of countless people.

It’s important to say that creditor organisations too have been involved in all this. There will be strict criteria for eligibility for the moratorium, and applications will need to be signed off by a mental health professional as well as a debt adviser.

Now, as a member of the working group that’s been advising the government on this, I must admit that I found the process of setting eligibility quite frustrating. I was keen to make sure the moratorium was open to as many people as possible, but compromises had to be made. 

At the moment I think the proposed bar is too high, but the good news is that the regulations that will set up the scheme will still be subject to extensive consultation where we, along with other organisations like SeeMe, the Scottish Association for Mental Health and Money Advice Scotland, can make the case for widening access to it. And you can be assured we will be doing just that.

Yes there is still work to be done on the detail, but the big picture is a significant win. And it goes to show the value of the sort of evidence-based advocacy that CAS does, presenting decision-makers with solutions for change based on our unique evidence base of real peoples’ lived experiences.

In this case we also found a political landscape – by which I mean all political parties and also the debt industry and financial institutions - that was willing to engage and genuinely open to change. The result? A positive outcome that will change lives for the better. More of the same please.