SDRP consultation opens on draft regulations

HM Treasury opened a consultation on draft regulations to introduce a new statutory debt solution known as the statutory debt repayment plan (SDRP)¹. The consultation ran from midday on 13 April 2022 to 11:59pm on 5 August 2022¹. It sought stakeholder views on the draft regulations needed to implement the SDRP, outstanding policy and operational questions, and a consultation stage draft impact assessment¹.

The SDRP is described as a new statutory debt solution focused on repayment of debt rather than debt relief, addressing a gap in the debt solution landscape¹. It would include a broad range of debts, including debts owed to the government and to creditors outside financial services, and would protect debtors from enforcement action, creditor contact, and interest, fees and charges on their debts while they repay them¹. The government consulted on aspects of the SDRP in 2018/19 and published a response in June 2019 setting out a basic blueprint for the scheme¹.

The Finance & Leasing Association (FLA), an independent trade body, summarised the proposals². It said the SDRP would be accessible only via professional, FCA regulated debt advice, or through a local authority, for individuals who live in England or Wales². Debtors would only be eligible if they had not been subject to another plan within the most recent 12 months, and would not be eligible if subject to a debt relief order, interim order, individual voluntary arrangement or undischarged bankruptcy². Debt advice providers would be able to propose plans lasting up to ten years, though the government would only expect plans of more than seven years in exceptional circumstances².

The FLA set out further proposed features²:

Priority debts for payment allocation would include rent or mortgage arrears on the primary residence, debt owed to central or local government, gas or electricity supply debt, hire-purchase debt, and internet service provider or mobile phone network debts². The FLA said the SDRP is based on the existing Debt Arrangement Scheme (DAS) offered in Scotland, which offered a statutory debt repayment solution known as a Debt Payment Plan². It also reported that the government originally expected regulations to be laid at the end of 2022 with the scheme launching in 2024, but now notes the implementation period between regulations being laid and the scheme starting will be at least 18 months².

Why it matters for households

The SDRP is aimed at people in England and Wales who owe money to multiple creditors and want to repay in full rather than seek debt relief¹. Under the proposals, those who qualify would make a single payment, with protections from enforcement action, creditor contact and interest, fees and charges while they repay¹. Access would be through FCA regulated debt advice or a local authority, not directly². Eligibility rules would exclude anyone who has been subject to another plan in the most recent 12 months, or who is subject to a debt relief order, interim order, individual voluntary arrangement or undischarged bankruptcy². The scheme would not be available in Scotland or Northern Ireland, where different arrangements apply². Because the consultation closed on 5 August 2022 and no regulations have been laid, no start date for the scheme has been reported¹.

What happens next

The consultation closed on 5 August 2022¹. The government received over 80 responses from a wide range of stakeholders, which raised significant challenges and concerns about both the design of the SDRP and the timing of its implementation¹. The government has since determined that it will not proceed to lay regulations implementing the SDRP this year, and will base further decisions on the outcomes of its review of the personal insolvency framework, led by the Insolvency Service¹. At this stage of the review, no decision on reform has been made¹. The FLA said it intended to work with members on its response and to discuss the consultation at its Regulatory Reform Working Group on Thursday 9 June 2022².