ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

Breathing Space Scheme Regulations laid for England and Wales

  • LinkedIn (opens new window)
  • Twitter (opens new window)
Steven Wood By Steven Wood, Practice Support Specialist (Insolvency)

17 July 2020

  • Scheme provides individuals in problem debt the right to legal protections from creditor action while they receive debt advice.
  • Breathing space will last for a period of sixty days.
  • Separate access mechanism for individuals receiving treatment for a mental health crisis.

A look at the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (‘the Regulations’), which were laid in draft on 15 July 2020 with a view to implementing the government’s new statutory Breathing Space scheme in England and Wales.

When will the Regulations come into force and what is their extent?

The Regulations are currently laid in draft awaiting approval of Parliament. Aside from some minor exceptions, it is expected that the Regulations will come into force on 4 May 2021. They extend to England and Wales only in respect of individuals domiciled or ordinarily resident there.

Background and intention of the Regulations

The implementation of a breathing space scheme in England and Wales was a 2017 government manifesto commitment and was subject to a consultation which ran from October 2018 until January 2019.

Breathing space aims to give individuals in problem debt the right to legal protections from creditor action while they receive debt advice in order to enter an appropriate debt solution.

Breathing Space moratorium

Entry

Breathing space is a period of time during which an individual in problem debt is given respite from creditor action. This time is designed to give an individual the space to fully engage with debt advice and seek a sustainable solution to their debts.

An individual is excluded from accessing breathing space if that individual has entered a breathing space in the previous 12 months.

Debt Advice provider

To enter breathing space, an individual will first have to access advice from a debt advice provider, as defined in regulation 3 of the Regulations.

This means an FCA-regulated debt adviser, or an adviser from another organisation that qualifies for an exemption from FCA authorisation, such as a local authority.

The Regulations are drafted in such a way that the ‘insolvency exclusion’ under the Financial Services and Markets Act 2000 (FSMA), which removes debt counselling as a regulated activity when undertaken by an insolvency practitioner as an office holder or in reasonable contemplation of an appointment, will not apply.

Further, the permissions given under Part XX of FMSA (the DPB scheme) will not apply.

Insolvency Practitioners will consequently only be able to offer access to breathing space if they have appropriate FCA permissions to offer debt advice.

Debt advice provider assessment

The debt advice provider must assess whether

  • the individual has sufficient funds or income to discharge or liquidate their debt as it falls due,
  • it would benefit the individual to enter into a debt solution (such as bankruptcy, an IVA or a voluntary debt management plan),
  • the individual may be eligible to enter into a debt solution during a moratorium or as soon as reasonably practicable after the moratorium ends, and
  • the moratorium period is necessary in order for the debt advice provider to assess which debt solution would be appropriate for the individual, to advise the individual on which debt solution would be appropriate or for a debt solution to be put in place.

Creditor notification and rights

Once an individual enters (or exits) breathing space, creditors will be informed through an Insolvency Service-run central portal which will be populated with information supplied by the debt advice provider.

There will be a private register of individuals in the scheme and individual creditors will have access to a register of those individuals who owe them debts who are in breathing space and have been included in the portal. Creditors will not be able to access details of other individuals in breathing space through this register.

Creditors can request that the debt advice provider reviews the moratorium to determine whether it should continue or be cancelled on the grounds of unfair prejudice or material irregularity. If the moratorium is not cancelled the creditor has an onward right to apply to court for its cancellation.

Timescales and protections

The protections provided by breathing space will last for a period of sixty days.

The debt advice provider will have to complete a midway review to ensure the individual is continuing to comply with ongoing eligibility requirements. This is required to be undertaken no earlier than 25 days and no later than 35 days after the commencement of the moratorium,

Breathing space will stop the accrual of contractual and default interest, fees and charges, and enforcement action. Creditors will also be barred from the retrospective application of interest and charges should an individual leave breathing space without entering a debt solution. The bar on creditor recovery and enforcement will extend to any contact with the individual, by the creditor or their agent, relating to the repayment of debts covered by breathing space, except in a small number of specific circumstances.

Breathing Space will include almost all personal debts, with broadly the same set of exclusions as apply in bankruptcy and will cover the business debts of sole traders who have a turnover under the VAT threshold (currently set at £85,000).

However, if an individual falls into arrears on an ongoing liability whilst they are in breathing space, they will not be protected from enforcement action, or the charging of additional interest, fees and charges on these missed bill payments. Ongoing liabilities include items such as mortgage payments, rent, insurance premiums, taxes, water and sewerage charges and utility supplies.

Debt advice providers will have discretion to remove a person from breathing space if they do not pay their ongoing liabilities, but are not required to do so. The expectation is that an individual will only be removed if the person clearly has the means to pay their ongoing liabilities but has not.

Mental Health Crisis Moratorium

Individuals receiving treatment for a mental health crisis will benefit from an alternative access
mechanism to breathing space. For cases involving such individuals a debt advice provider will not be required to carry out the full initial assessment of the individual’s finances but instead would give access to breathing space on the basis of evidence that the individual was receiving mental health crisis care.

Approved Mental Health Professionals (AMHPs) will be the professional group able to produce an assessment that an individual is receiving mental health crisis care. AMHPs are social workers, nurses, occupational therapists or clinical psychologists who have specific training in mental health and mental capacity law, are experienced in supporting people in crisis and are usually based in community, crisis or home treatment teams and approved by local authorities.

An individual who enters breathing space via this route will have all the protections of the main scheme but with some differences in terms of application to recognise the sensitivity of the situation of someone who is experiencing a mental health crisis.

The protections for individuals who access breathing space in this way will not be fixed at 60 days but will continue for however long the individual’s crisis care lasts.

How do the Regulations compare with Scottish provisions?

A further article will follow looking at how the new measures to be introduced in England and Wales stack up against the moratorium available to assist individuals in problem debt in Scotland.


Subscribe to the ICAS Insolvency Technical Update

Coronavirus - Insolvency

By Steven Wood, Practice Support Specialist (Insolvency)

7 May 2021

Corporate Insolvency and Governance Act 2020

Find out more about the Corporate Insolvency and Governance Bill.

2022-11-mitigo 2022-11-mitigo
ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: