PMQs: Johnson says UK 'must be vigilant' for pension scams
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A debt respite scheme was launched in early May to help those struggling with certain debts. This Breathing Space scheme gives people in problem debt the right to certain legal protections from their creditors and where it is utilised, a debtor will be able to effectively pause their debt repayments for up to 60 days.
As the scheme was launched, it became clear that state benefit claimants would be able to benefit from the support.
Under normal circumstances, fuel and water suppliers and landlords may have asked DWP to deduct money from someone's benefit payments to repay a debt that's owed to them.
However, under the new Breathing Space scheme where a debtor seeks help, the insolvency service will notify the creditors involved who will then need to stop all action to recover the debt and stop any interest or other charges on it.
Specifically, these deductions will need to be halted from the following benefits:
- Income-based jobseeker's allowance
- Income-related employment and support allowance
- Income support
- Pension credit
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The Breathing Space scheme also provides help for a number of other debts which include credit cards, personal loans, overdrafts and mortgage arrears.
While this new scheme will likely provide welcome relief to many families still struggling with coronavirus, it has provided an unfortunate opportunity for scammers.
The Breathing Space scheme can only be initiated through certain debt advice providers authorised by the Financial Conduct Authority (FCA) and on this, Cifas, the fraud prevention organisation, has urged affected families to check the FCA register to make sure whom they're dealing with is legitimate.
This warning was issued as it recently emerged that a WhatsApp scam with messages purporting to be from The Money Advice Service was asking recipients to send bank statements, payslips, ID and letters from creditors.
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Cifas warned any details or documents provided in such scams will be used to impersonate the victim to set up new credit facilities or take over existing accounts.
Should a person believe they've fallen for a scam, they should report the case to Action Fraud, or to Police Scotland if they are a Scottish resident.
Amber Burridge, the Head of Fraud Intelligence for Cifas, commented on this.
She said: "'Scammers are quick to take advantage of any new situation where they believe they can trick an individual out of their details or money.
© EXPRESSPension credit
"When it comes to providing debt advice, the FCA's Financial Services Register provides a single source of businesses and advisers that are authorised to offer financial advice to those who need assistance.
"With many individuals in these circumstances potentially feeling vulnerable, it is important they take extra steps to ensure they are dealing with legitimate sources of assistance and can trust those who are helping them."
These problems may impact many people over the coming months as a recent survey found as many as 2.25 million people aged between 45 to 54 said their borrowing increased during the pandemic.
One in five of those with current debt increased over the past 12 months or so as they borrowed more to pay off existing debts.
Additionally, many are paying back costly interest on credit cards and mortgage repayments.
This research was commissioned by Aviva and Alistair McQueen, the head of savings and retirement at the insurer, who commented on the findings: "Those in mid-life represent the least happy and most anxious age group in the UK.
"They are balancing their own needs with younger and older family members and we know that when people feel their debt is out of control it causes huge anxiety."
Of the 2,010 people surveyed, 78 percent admitted to being worried about their debt levels, with a quarter not actually knowing how much they owed in total.
Debt concerns were responded to by John Gllen, the Economic Minister of the Treasury, who urged those who are struggling to look into the Breathing Space scheme where they can: "Problem debt can be terrifying. As a Government, we have taken significant steps to help. Today, [May 6] we're going further.
"Struggling borrowers can request a 60-day 'Breathing Space', to try to get their finances back on track.
"During the period, they will have legal protection from creditors, with most interest and penalty charges frozen, and enforcement action halted.
Anyone being treated for a mental health crisis will get protection for a further 30 days. I want there to be light at the end of the tunnel for those who feel trapped by debt."