Regulations aimed at reining in banks and financial institutions are choking off the voluntary and not-for-profit sector’s ability to offer free advice on debt to desperate people, according to Peter Thompson QC.
Legal aid was available for debt and benefits advice until the cuts imposed by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 took effect. This left the voluntary and not-for-profit sector to take up the slack.
However, new Financial Conduct Authority regulations are acting as a barrier to advice centres’ ability to advise on credit agreements such as bank loans and credit card debts, says Thompson, writing in NLJ this week.
Consequently, Thompson says, ordinary people who have been “unlucky” with delays or mistakes in their benefits and subsequently been chased by creditors now often have nowhere to turn except to the banks and money-lenders “who got them into debt in the first place”.
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