The new U.K. Enterprise Bill introduced in the U.K. relaxes personal bankruptcy rules, which is troubling to some, as personal bankruptcy is already on the rise. Opinions differ as to how this will impact U.K. ABS, though most sources believe that negative implications to consumer-related deals will be felt over the long term. In the meantime, U.K. deals remain sufficiently safeguarded to weather immediate rises in defaults as a result of the law.
According to market reports, the new rules seek to reduce the cultural stigma associated with bankruptcy by reducing the bankruptcy period to a maximum of 12 months, compared with three years. The bill's intention is to create more incentive for entrepreneurship. "The law will certainly create a more debtor-friendly bankruptcy regime, bringing the U.K. more into line with other countries, such as the U.S.," said analysts at Deutsche Bank Securities.