It is unacceptable that the Department has no plans to recover outstanding debt after lenders have pursued borrowers for up to 12 months. There is no minimum term that lenders are required to pursue borrowers for payments. Lenders are not expected to continue to pursue borrowers after 12 months. Lenders can claim on the government guarantee before the end of the 12-month period if they have conducted what they consider to be a “sufficient and robust level of recoveries” and have concluded that no further payment is likely. The Bank and the Department assert that lenders could pursue overdue payments for longer than 12 months if they chose to do so, and believe it would be in the borrower’s commercial interest to repay if they want to maintain their bank account with that lender. The Department was also not in a position to state what the shortest time period had been for a lender to claim their guarantee. We are concerned that this presents an overly optimistic view about lenders’ incentives to recover funds and how the Bank’s lender assurance programme would work towards recovering unpaid loans beyond this 12-month period. The Department has, however, agreed to consider alternative approaches to recovering loans. Recommendation: The Department should, as part of its Treasury Minute response, set out its strategy for collecting overdue payments after the lenders have completed their 12-month requirements. In addition, the Department should write to the Committee and provide further information on what the shortest time period has been for a lender to claim on their guarantee to date and how this compares to the average.