Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the finding contained in the Bank of England's Money and Credit June 2017 Statistical Release that one in six of the 2.2 million people with personal debt are in financial distress; and what action they are taking to reduce consumer debt.

The government monitors the Bank of England’s statistical releases, including Money and Credit, and is committed to supporting all those affected by problem debt.

We have a range of measures in place to help achieve that. The Financial Conduct Authority (FCA) regulates the consumer credit market, and has introduced binding rules to strengthen consumer protection. They are based on the principle that money should only be lent to a consumer if they can afford to repay it; lenders must show forbearance if there is evidence of financial difficulty.

The FCA also capped the cost of payday loans. As part of a review of this price cap, the FCA will examine the high-cost credit market more broadly and consider whether further interventions are necessary to address the risk of consumer harm.

The Money Advice Service (MAS), which was set up by the government, coordinates the provision of free-to-client debt advice. In 2016/17, MAS spent just under £49 million on its debt advice work, directing around 90% of this to fund frontline services. This led to more than 440,000 free-to-client debt advice sessions being delivered face-to-face, over the phone and online across the UK.

In the Queen’s Speech, the government announced the Financial Guidance and Claims Bill. This will legislate to restructure the financial guidance landscape and bring debt advice, money guidance, and pensions guidance together in a single body, and give consumers better access to the financial information they need. This Bill is currently going through Parliament.