The impact of the new DRO limits on existing debt solution customers

The new Debt Relief Order (DRO) rules came into effect in England and Wales on the 29^th June. They opened up access to the solution to a wider group of people: those with disposable incomes (DI) of up to £75 a month, debt levels of up to £30,000 and asset and car value up to £2,000 each.

The changes raise the question of how best to support existing debt solution customers – particularly those with an IVA or DMP – who could now, potentially, qualify for a DRO. In the main this will either be customers whose DI is under £75, or those with higher DIs where some of it is made up of certain benefits – which aren’t included in the calculation of DI for DROs. It could also include customers who were previously unable to access a DRO due to their debt level or an asset over the limit.

The first thing to say is that we are taking a pro-active approach: we’ve already identified a small number of customers that fall into one of these categories across all the debt solutions we provide.

DMP customers

We’ll be contacting customers who may now be eligible for a DRO to conduct a review with them and, as you’d expect, where a DRO is suitable we will make that recommendation. Whilst we’d expect the majority of customers to opt to change, in some cases the decision may not be as clear cut. For example, some people may not want to take an insolvency solution because it would impact their job.

IVA customers

We’ve also identified a small number of IVA customers that may be impacted by the new criteria. Again, we’ll work with our IVA customers to find the route that works best for them, rather than adopting a blanket ‘one size fits all’ approach.

In some cases where customers qualify for a DRO it may not be the best option for them: a variation to end the IVA on the basis of payments made to date might work better for some customers, for example.

Our DRO service

Our in-house DRO team – which has a 100% positive rating on Feefo – is able to complete applications within a week, provided that customers are able to provide us with the relevant information promptly. The newly extended criteria mean that we expect to see an increase in DRO recommendations from our advisers.  As a result, we are expanding our DRO team to ensure that we can sustain our service standards.