Bankers: Debt advice needs to be clearer

The debt advice system needs to be streamlined to make it easier for consumers to understand and should offer people help at an early stage, a report by senior bankers has warned.

People struggling with debts should have a clear range of options, while there should also be greater consistency in the way debt advice is provided and in how creditors deal with people who are in financial difficulties, according to the British Bankers' Association.

The group said people struggling to pay their debts faced a confusing range of options, including both informal and formal solutions, while some groups offered free advice and others charged for it.

It is calling for the existing range of solutions, which include informal plans under which people repay what they can each month, to bankruptcy as a last resort, to be made simpler to understand.

Paul Ross, BBA policy director and co-author of the report, said: "Our vision is to provide a clear and coherent process to help people facing debt difficulties, to intervene early where possible and to provide a simple debt resolution solution if those early attempts do not succeed.

"We want to unravel the red tape to bring about a more financially responsible solution for customers.

"Customers are faced with too many confusing options for resolving their debt, and may set out too early on expensive legal procedures when a more common sense approach would be better for everyone."