Past Articles for May, 2007

The committee’s aims have attracted the interest of Citizens Advice, which has been taking steps to assist those who were affected by the Farpak collapse and subsequently pushed closer to debt management disaster.

Citizens Advice is keen to see the debt committee bring the short-term savings industry under some form of independent regulatory control and to intoduce a savings aspect to debt solution arrangements.

Director of policy at Citizens Advice Teresa Perchard said: “Many [of our] clients were among the 150,000 casualties of the Farepak collapse, which left them without any of their savings, any proper compensation or any regulatory safety net.”

“Steps must now be taken to ensure these people and others on low incomes are not put off saving for good as a result and that there can be no repeat of the Farepak collapse next Christmas,” she added.

Trade and industry secretary Ian McCartney is involved with the committee aiming to tackle the growing debt problem nationwide and he said last year: “We are doing as much as we can to try to help those with the highest levels of debt”.

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Figures from Picture Financial also demonstrate that the lack of action does not there as around eight million Britons take steps to organise their money only once a year or even less often.

Additionally, the recent study suggests that around 16 per cent of people in the UK have difficulty when it comes to fully understanding the details of financial products and services, which equates to nearly 7.5 million consumers.

Julia Dallimore, marketing director of Picture Financial, commented: “Keeping a track of our incomings and outgoings and being clear about what we want to achieve with our money management can also make a real difference to our bank balance.”

Earlier this week, head of mortgages at Bradford & Bingley Andy Wiggins reflected that online resources could have a positive impact in terms of improving financial awareness around the country.

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Paying back any overpaid amounts can cause debt management difficulties and serious financial hardships for consumers across the country, the not-for-profit organisation has claimed.

And the problem has been impacting households nationwide for many months, Citizens Advice suggests, citing statistics that show millions families have been overpaid via the tax credit scheme for each of the last three years.

“People find themselves struggling to repay large overpayments without receiving proper explanations of how they have arisen and without being given notice before recovery starts, so they have no time to budget or even challenge the overpayment,” commented Katie Lane, policy officer at Citizens Advice.

More than 1.4 million people across the UK approached Citizens Advice about debt problems during 2006, the charity’s own figures have shown.

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In the wake of the release of figures from the Office of National Statistics showing that Welsh unemployment is on the increase, Ms Willot has called for more action from the government to tackle personal debt problems nationwide.

To make her case the MP claims that the personal debt level in Wales is rising by around £18 million each day and that house prices are becoming increasingly unaffordable for consumers throughout the province.

“Thousands of vulnerable families and young people in Wales are already walking the financial tightrope,” she said.

“Sadly, Labour’s continuing failure to combat rising personal debt, build affordable houses and generate sustainable job growth in Wales will result in many more falling into financial ruin.”

Meanwhile, figures from the UK-wide not-for-profit group Credit Action suggest that the personal debt level around the country is increasing by around £1 million every four minutes.

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According to Life Insurance Online, the number of people entering into Individual Voluntary Arrangements (IVAs) and declaring bankruptcy could leave many of the country’s children with a “grim” financial future.

While many UK consumers consider credit card debt and personal loan arrears to be part of modern life, there could be unwanted consequences for future generations whose inheritance is in jeopardy, suggest the financial service firm.

“Whilst borrowers may have a strategy for how they are going to pay off their debts in the future, the best-laid plans will stand for nothing if they die before they have achieved their aim and have no safety net either,” said the company’s boss John Williams.

“If a parent dies and a large chunk – or all – the household income disappears, the prospect of the children’s carefully-planned future suddenly looks very different.”

Figures released by the Insolvency Service earlier this month revealed that during the first three months of this year there were more than 30,000 IVA entered into nationwide.

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With debt management difficulties affecting millions nationwide, experts from the Alliance Trust Research Centre claim his reforms have failed to address the financial problems being faced by Britain’s elderly and poor populations.

“Brown has failed to address the spiralling cost of living of the oldest and the poorest groups in society,” remarked Shona Dobbie, head of the research centre.

“Inflation for Britain’s over-75s is currently running at four per cent – that’s 43 per cent more than headline inflation,” she added.

Headline consumer price inflation last month topped three per cent, which contributed to the Bank of England’s decision to increase the base rate of interest and add to the financial pressures of Britons facing debt management.

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Figures from the House of Commons have demonstrated that the number of mortgage possession orders issued by courts in Suffolk had more than doubled over the course of the past ten years.

And these statistics were described as presenting concerns for home owners across the region by the MP for Stowmarket David Ruffley, who suggested that personal debts are having a “disastrous effect” on people in and around his constituency, reports local news service the Evening Star.

“People are being encouraged to borrow too much and lenders are making poor lending decisions,” Mr Ruffley is quoted as saying.

“These statistics are just the latest symptom of an economy built on debt. Hundreds of people a year are being forced into financial ruin,” he continued.

Meanwhile, mortgage borrowers in the UK look likely to face increased mortgage repayments following the Bank of England’s recent decision to raise the base rate of interest to 5.5 per cent.

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The claim from Helen Wanless from Age Concern comes after a public accounts committee revealed that around a third of elderly Britons are not taking up their credits and a report from the Consumer Credit Counselling Service which suggests the burden of debt management is increasingly shifting to older generations in the UK.

It is important that pensioners are fully informed of the credits they are eligible to access and that they are encouraged to ease their own financial difficulties by going through the relevant claims process, Ms Wanless has made clear.

“There needs to be more awareness-raising of the benefits of what people are entitled to,” she said.

“It doesn’t have to be complicated because there are people – from Age Concern or Citizens Advice bureau or pension services – who can sit down and go through those forms with you,” she added.

Around 1.4 million British consumers approached Citizens Advice about debt over the course of last year, according to official figures form the charitable organisation.

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Bradford & Bingley’s head of mortgage products Andy Wiggins insists that money lenders are doing their part towards enhancing financial understanding and that their websites offering relevant information are “pretty well used”.

And with debt management concerns being dealt with by consumers across the country, Mr Wiggins suggests that given the importance of good personal finance handling it is an aspect of life people ought to be well informed about.

“There is a need for better financial education, not just on mortgages, but on all sorts of financial products about what are the risks involved with taking those sorts of financial products - what are the upsides, what are the downsides and just how they work,” he said.

To this end “the internet certainly has the potential to be a good a tool”, he concluded.

Around 300 people in the UK seek out advice on becoming debt free each day, figures from the national charity group Credit Action revealed earlier this year.

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Handbags owned by women around the country contain credit card details, National Insurance Numbers and receipts, which can give criminals an opportunity to access information they need to carry out fraudulent activities, according to the credit reference agency Equifax.

And with debt management problems facing thousands of Britons, around 80 per cent of women are increasing their risk of fraud by carrying both their credit card and debit cards around with them, Equifax research has discovered.

“According to our survey, women are carrying around enough information for a fraudster to apply for loans, mortgages, credit cards and bank accounts in their name,” said Munroe of Equifax.

“As our survey revealed anything from payslips, driving licences and mobile phones can be found in a handbag and this is all it takes to commit ID fraud,” he added.

Figures from the life assistance firm CPP released earlier this week revealed that the average credit card user in the UK spends around £150,000 on plastic over the course of their life time.

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