As this week’s Bank of England figures show, credit card balances continuing to surge, the Trust’s policy manager Meg van Rooyen reviews the Financial Conduct Authority’s new proposals on persistent debt and early intervention.
The latest lending figures from the Bank of England, out this week, show credit card balances are continuing to grow by half a billion pounds each month. With consumer credit across the board surging by 10 per cent a year, here at the Trust we continue to be concerned that many households are leaving themselves exposed to financial difficulty if their circumstances change.
Persistent credit card debt is a key feature of the UK’s household debt problem, with the FCA finding 1.6 million people repeatedly paying only the minimum payments on their credit cards.
In April 2017, the Financial Conduct Authority (FCA) made a series of proposals to address the issue of persistent credit card debt, as part of its overall package of remedies from its credit card market study.
The Trust’s director of external affairs Jane Tully takes a look at the Financial Guidance and Claims Bill as it starts its journey through parliament.
After a rather lengthy process involving no less than three consultations, the government has finally settled on a plan for the future delivery of money, debt and pensions advice. Earlier this month the Financial Guidance and Claims Bill finally entered parliament, starting in the House of Lords, a clear sign that the Government expect the bill to pass without too much controversy.
What does the Bill cover?
The Bill provides the legislative framework for the technocratic sounding ‘single financial guidance body’ – a new Non-Departmental Public Body which, assuming the legislation is enacted, will be in place by mid-2018. This replaces the Money Advice Service, The Pension Advisory Service (TPAS) and PensionWise, and will centralise the government’s pensions, debt and money guidance offer for consumers.
The Trust’s Insight and Innovation Grants Officer Timon Scheven blogs about our launch of the ‘Nudging Tools for Money Advisers’ toolkit, developed by Behaviour Change.
It was fantastic to see so many people from across the advice sector, government and creditors at the launch this morning – the lively discussion highlighted the interest in how we can use behavioural science to better engage and support people with unmanageable debt.
Joanna Elson, our chief executive, really set the scene for me when she talked about how the advice sector has impressive expertise and empathy in working with people in debt, but is still on a journey to understanding how to best give advice (and raise awareness of advice) so that it ‘lands’ as intended with the people we support. Essentially giving (and signposting to) good advice in a way that consistently enables people to take action or change their behaviour for the better. This idea is at the heart of our Innovation Grants programme; trying new innovative ideas to make debt and money advice work better.
The Trust’s Policy Manager Meg van Rooyen looks at the new Goods Mortgage Bill included in the Queen’s Speech.
In an eventful few weeks at Westminster – to say the least – a new piece of legislation appeared in the Queen’s Speech designed to tackle a long-running cause for concern in the advice sector.
Why reform logbook loans?
Bills of sale are commonly used to secure a “logbook loan” on goods you already own, usually your car. This is a form of high-cost lending that has been a source of considerable problems and caused substantial consumer detriment. Based on legislation that dates back to the 19th century, bills of sale are an archaic lending vehicle with obscure and complex rules that has no place in a modern society. The lending products offered using bills of sale are both oppressive and enforced unfairly and the advice sector has repeatedly raised concerns about logbook loans. It seemed particularly unfair that people who have innocently bought a second hand car with no knowledge of an existing logbook loan attached to the car, can still lose the vehicle.
Yesterday saw the launch of Vulnerability: a guide for lending; an important new report aiming to help firms better identify and support customers with mental capacity limitations during credit applications. The report is produced by the University of Bristol’s Personal Finance Research Centre and funded by the Finance & Leasing Association and UK Cards Association. It is supported by the Trust and key trade bodies for financial services – FLA, BBA, CML, CSA, BSA, UK Cards Association.
Mental capacity limitations can result in customers having significant problems with understanding, remembering, and evaluating information about credit products they are applying for, as well as communicating a decision about this.
Where not identified, these can result in detriment including borrowing, lending and contracts that results in ‘later downstream’ financial difficulty and problem debt. We see the implications of this every day at National Debtline, and are keen to work closely with financial services and other sectors such as telecoms (e.g. when signing customers up for mobile phone and other telecoms contracts) and motor finance (e.g. when entering car leasing agreements) to improve early identification and prevent the build-up of debt.
The Trust’s director of external affairs Jane Tully blogs about the Trust’s Living Wage Friendly Funder announcement.
Through our work at National Debtline, we recognise the role that fair pay plays in enabling people to balance their finances and manage their debts. The Living Wage scheme has played a significant role in addressing low pay across the UK and is backed up by calculations that reflect the real cost of living – which is all the more important at a time of economic uncertainty and rising inflation.
We are therefore pleased to announce that we have become a Living Wage Friendly Funder, accredited by the Living Wage Foundation – building on the previous accreditation we gained in 2015 as a Living Wage Employer.
This week the Trust launched a revamped version of our National Debtline website, here Rosie Thompson, Head of Digital Advice Services, explains some of the changes.
Since the National Debtline website was launched in 2014, we’ve come a long way and so has technology. In the first quarter of 2017 the site received 58% more visits from mobiles compared to last year, showing that people are comfortable accessing debt information and advice on the move. Stats from Ipsos Tech Tracker in the last quarter of 2016 also showed that smartphone ownership in the UK is now at 74%, with the top three activities being; emails (69%), social media (54%) and browsing websites (48%).
We have created a mobile ‘burger’ menu and search for mobile devices, as well as further optimising the site for mobile. This means for the first time mobile visitors can navigate around the site and experience lots of our pages adjusting automatically to their screen size.
Sharing the learning from our 2016/17 Innovation Grants Projects – the Trust’s Insight and Innovation Grants Officer Timon Scheven blogs about our Innovation Grants programme and the four projects we have supported over 2016/17.
One of the less known, but hugely valuable, areas of the Trust’s work is its Innovation Grants Programme. Since 2010, the Trust has funded 29 local projects across the UK that aim to test out innovative approaches to money and debt advice.
Having visited all four projects from the 2016/17 programme, as they come to a close, I am delighted to share some of the learning that has emerged.
In addition to the benefits that projects have brought directly to the individuals and communities they work with, the debt advice sector can benefit more broadly from understanding the learning from their work. It is with this in mind that I am delighted to share some of the findings.
Figures that came out earlier this week from the Registry Trust show a sharp increase in County Court Judgments (CCJs) against companies in England and Wales in the first quarter of the year, rising to over 29,000 – a 36% increase compared to the first quarter of 2016. While their average value fell by 24% to £2,712, overall the total value of business CCJs rose by 4% to £81m.
A CCJ is often taken by a creditor when a business falls behinds on payments owed to them and an arrangement to repay what is owed can’t be worked out.
At Business Debtline, we are concerned over this spike, which bucks previous trends that showed a decline in CCJs. This year we’ve seen an increased demand for our services, with calls to our helpline up as businesses feel a squeeze. In an uncertain business environment, our advisers see both sides of the financial challenge facing small companies and the self-employed – with some calling us because they are falling behind on payments themselves, and others as they are struggling due to late payments owed to them.
The Trust’s learning manager Chloe Willis blogs about Wiseradviser’s new resource to help debt advisers supporting clients in vulnerable circumstances.
We are always exploring ways that new technology can support us in our work at the Trust, and years of experience tells us that sometimes the simplest things can be the most effective in helping people in need of advice. This is true for those who deliver it too.
With that in mind, we’re pleased that Wiseradviser is today launching a new resource to support debt advisers in their work with vulnerable people. Two sets of visually-striking cards that bring together useful phrases, tips and behaviours, demonstrated by clear examples, will support advisers to identify, and respond to, vulnerability during advice sessions.