by News Team on December 19th, 2012
Regulation of the consumer credit market is not providing value for money.
This is the opinion of the National Audit Office (NAO), which found that the structures currently in place are failing to minimise the harm facing customers from unscrupulous trading practices.
Some £176 million was borrowed from credit card companies, small businesses offering hire purchase arrangements and payday lenders in the 2011-12 financial year.
However, the Office of Fair Trading (OFT) is not resourced to carry out the day-to-day tasks required to stay on top of the sector and the NAO pointed to the fact that consumers lost £450 million in 2010-11 because of insufficient regulation.
Amyas Morse, head of the NAO, stated the OFT has "achieved a good return for a small outlay", but it is not in a position to "tackle the full extent of harm to consumers in credit markets" because it has not been given the right powers to regulate effectively.
By James Francis
Posted in Creditor Behaviour | No Comments »
by News Team on December 18th, 2012
Some 74 per cent of people in the UK with debt worries think it is damaging their mental health.
Research by Citizens Advice has highlighted the scale of the problem facing individuals who are struggling to make ends meet. Some 51 per cent said their work performance was suffering, while 56 per cent have also seen their personal relationships falter because of their money problems.
Nearly eight in ten (79 per cent) are experiencing sleepless nights as a result of their circumstances, while 51 per cent have suffered an anxiety attack. At the end of September 2012, outstanding personal debt – including mortgages – stood at £1.415 trillion.
Some 1,700 people were interviewed as part of the study and most owed between £1,000 and £20,000, but one in ten had arrears of over £30,000. For those who are in excess of £15,000 of debt, an Individual Voluntary Arrangement (IVA) may be the best course of action.
The legally-binding agreement will typically last for five years and freeze interest and charges on all unsecured debts, while all of the debt not repaid within the IVA is written off. It helps consumers to avoid bankruptcy and prevents unwanted contact from creditors, although people need to make sure they are prepared to be dedicated.
Recent figures from the Insolvency Service have found there were 28,062 individual insolvencies in England and Wales in the third quarter of 2012 as people seek to bring their financial situation under control.
Citizens Advice chief executive Gillian Guy said: "We are seeing a debt epidemic in the UK which is affecting people from all walks of life. Debt can play havoc with family relationships, work and mental health which is why we are urging people struggling with money worries to [seek] advice."
She added people should not hesitate to talk to experts in order to bring their situation under control, as failing to do so could see their debts "spiral out of control".
By James Francis
Posted in IVAs | No Comments »
by News Team on December 18th, 2012
Some 59 per cent of Britons are going to buy Christmas presents using their credit card.
New research from uSwitch.com highlights how nearly two-thirds of consumers will resort to plastic when it comes to financing their festive spending.
The combination of pay freezes – or below-inflation rises – coupled with an increase in the cost of essentials, means many people in the nation are struggling to get by at present.
However, they still feel the need to provide their families with presents on December 25th, which could lead to a big problem long-term.
If individuals do not clear the balance of their credit card in the new year, then they could end up needing debt help in an effort to bring their financial situation under control.
Michael Ossei, personal finance expert at uSwitch.com, said: "The high number of consumers willing to put themselves deeper in debt just to stave off the embarrassment of not giving presents sends alarm bells ringing."
By Joe White
Posted in Debt Management | No Comments »
by News Team on December 17th, 2012
Action needs to be taken to halt the pattern of people falling into fuel poverty.
The annual report from the government's Fuel Poverty Advisory Group has warned there will be 300,000 more individuals struggling to heat their homes than at the same time last year. A household is considered to be in fuel poverty if it needs to spend more than ten per cent of its income on fuel for adequate heating.
With five of the big six energy providers announcing price hikes for the end of this year, while E.ON will increase its charges in January, many people are being forced to choose how long they can afford to have their heating on for.
Mike O'Connor, chief executive of Consumer Focus, has called on the government to introduce radical measures to address the problem, which will spiral out of control if it is left unchecked. At the moment, six million households already plan to cut back on their heating this winter because they are worried about money.
"Current government plans for energy efficiency schemes are inadequate to deal with the scale of the fuel poverty problem. Millions of older people, families and people with disabilities will be left living in cold homes and struggling to afford their bills unless extra measures are taken.
"A much more ambitious energy-efficiency programme is vital. Not only could this slash fuel poverty levels, it would also create economic growth," he added.
If individuals are struggling to pay their heating bills, there could also be issues with keeping on top of their other outgoings. If this is the case, then they might want to seek out debt advice to prevent the situation from getting any worse.
Anyone who owes over £1,500 in total to at least two creditors can use a debt management plan to bring their situation under control, while the repayment schedule will be altered to make it more affordable.
By James Francis
Posted in Debt Management | No Comments »
by News Team on December 17th, 2012
Some 37 per cent of consumers have dipped into their savings in the past three months to cover their living costs.
Research by Halifax shows that on average £1,186 was withdrawn by individuals so they could afford to meet various demands and this highlights how some people may be overstretching themselves.
Among the most popular reasons for seeking out additional funds is for emergency home or car repairs (23 per cent), holiday costs (18 per cent) and overspending on a current account (16 per cent).
Over one-quarter (27 per cent) of those surveyed said they do not make a conscious effort to stop themselves from raiding their savings, while 72 per cent do not have a buffer limit – an amount of money they try not to let their savings fall below.
Richard Fearon, head of Halifax Savings, said: "Raiding your savings can sometimes be inevitable, but in the run-up to Christmas the data shows the average amount being raided from savings is much higher than the average amount being saved. Managing your savings is an important part of managing your money overall."
If people do not look after their financial situation, then they may need to seek out a debt solution further down the line. This is why individuals have to stay on top of their outgoings and look to put some cash aside out of every wage.
In an effort to prevent themselves from using their savings, 25 per cent of those questioned keep them in a separate bank account, while 14 per cent have fixed-term accounts. As well as this, 34 per cent prefer to cut back on other expenses, rather than dip into their savings pot.
People in the north-east (42 per cent) were found to be the most likely to take money out of their savings, while those in the Yorkshire and the Humber region (30 per cent) resorted to this method the least.
By Joe White
Posted in Personal Debt | No Comments »
by News Team on December 14th, 2012
UK living standards have fallen to the sixth best in Europe in 2012.
Figures from Eurostat show that people in the country are facing a tougher time now than 12 months ago, when it was ranked fourth.
Trades Union Congress general secretary Brendan Barber said the data is not a surprise as plenty of British people are struggling to make ends meet at the moment and so could be facing debt worries further down the line.
"Families are having to watch every penny so high street spending is down and that's hitting shops and businesses. We need people to spend and businesses to invest and so expand," he added.
Mr Barber is calling on the government to make sure the public do not have to bear the brunt of the cuts introduced through poor economic policies.
Luxembourg, Norway, Switzerland, Germany and Austria are the European nations ahead of the UK in the latest living standards league table.
By James Francis
Posted in Personal Debt | No Comments »
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