Creating a breathing space for the vulnerable

The Vulnerability Registration Service (VRS) is a private-sector initiative independent of any other database provider or credit-reference agency, with a sole purpose to protect consumers who are experiencing vulnerable circumstances, part of which is problem debt.

In simple terms we are vulnerable when, due to our personal circumstances, we are especially susceptible to detriment – particularly when an organisation is not acting with appropriate levels of care. Organisations that we deal with in our day-to-day lives, such as local authorities, utilities and banks have developed detailed strategies for consumers when identified as experiencing vulnerability, but the question is: how do they identify that consumer? The VRS seeks to provide that service by providing a shared register drawn from the above organisations, as well as Debt Advice and the individual, who may self-register.

In recognising problem debt as an issue and in light of the success of the Scottish Debt Arrangement Scheme, the 2017 manifesto committed the government to implement a breathing-space scheme, with the right safeguards to prevent abuse, so that someone in serious problem debt may apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks.

The VRS was asked by HM Treasury to submit evidence on how such a scheme could be implemented. Our submission centred on how this data could be made available on a real-time, online basis that could interface with the organisations mentioned above at the point of sale through to any back-office functions.

We proposed that once the consumer has entered the breathing-space period, the administrator of the scheme reports directly to the VRS, allowing business operators to access that data. We further proposed that as a proportion of consumers entering breathing space will inevitably have longer-term, more complex issues, they could be placed on VRS, with the consumer’s consent, to further safeguard their interests.

We are currently awaiting the outcome of this Call for Evidence in terms of next steps, but whatever recommendations are made, this scheme is much needed and should be implemented as soon as possible.