UK’s Consumer Debt Binge Worrying the Bank of England
April 5, 2017
The growth in consumer debt among households throughout the UK has been highlighted as a cause for concern by the Bank of England.
Policymakers at the central bank have suggested that the issue could ultimately pose a threat to the financial security and stability of lenders if they’re offering credit too freely to people who subsequently become unable to pay back their debts.
The bank’s concerns are based on its own data which show that the scale of consumer credit nationwide has been rising “particularly rapidly” in recent months.
“It had reached an annual growth rate of 10.9 per cent in November 2016 – the fastest rate of expansion since 2005,” the bank’s financial policy committee (FPC) members noted during a meeting in late March.
Meanwhile, official data has also shown that credit card debt levels across the UK increased more sharply during February 2017 than they have during any single month over the past 11 years.
The issue of credit card debt in particular has been in the news of late with the Financial Conduct Authority (FCA) making clear that it wants to see lenders in the sector doing much more to help people who struggle with sizable debts on a persistent basis.
Bank of England policymakers are worried about the rise in credit card debts as well but have also pointed out that the use of personal loans and car finance continues to rise.
“Dealership car finance had seen the fastest expansion in recent years,” notes from the FPC’s recent meeting said.
“Credit cards and personal loans contributed materially to the acceleration in consumer credit in 2016,” they continued.
The FCA recently revealed its estimate that there are close to 3.3 million people in the UK who can be considered to have persistent credit card debt problems.
That description is given to people whose credit card debt problems have been getting progressively worse for a period of 18 months or longer.
For its part, the debt help charity StepChange has said that credit card debt “remains the biggest single category of problem debt” for its clients throughout the UK.
If you live anywhere in Scotland and have high levels of any form of consumer debt then Scotland Debt Solutions can help. Contact us today to arrange a free and confidential consultation.
If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances. As council tax arrears […]
A debt payment programme (DPP) remains on your credit file for six years, along with other default markers and court judgments that have been made against you. This can seriously affect your ability to borrow for this period of time, and longer. Even if you can secure borrowing, lenders are only likely to offer unfavourable […]
If you owe a debt of £5,000 or less, your creditor may send you a Simple Procedure Notice of Claim. This is a relatively new procedure that was brought in by the Scottish government and commenced on 28th November 2016 – their intention being to make it easier to resolve debt disputes. So if you’ve […]
A Bankruptcy Restriction Order may be made against you if it’s believed that you acted dishonestly, recklessly or unlawfully before you were made bankrupt, or during your bankruptcy. Your Trustee will inform the Accountant in Bankruptcy (AiB), and if their suspicions are upheld, a BRO of 2-15 years can be made depending on the seriousness […]
Debt payment programmes (DPPs) are an intrinsic part of the Debt Arrangement Scheme, which allows you to pay off unsecured debt at an affordable rate. If a debt payment programme is rejected by one or more creditors, the DAS Administrator can apply their discretion on whether to approve the plan, after using a test to […]
If you’re struggling to pay your unsecured debts, a debt payment programme could help you to regain control of the situation, and become financially stable again. Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time. These programmes involve […]