The Financial Conduct Authority (FCA) has said it expects the coronavirus pandemic to prompt a sharp rise in demand for expert debt advice.
Estimates suggest that British households have close to £250 billion worth of consumer credit debt outstanding, with problem debt issues known to have increased over the course of the Covid-19 crisis.
Against a backdrop of widespread job losses and financial difficulties, the FCA has said it expects around 1.5 million people to find themselves newly looking for third party debt advice as a result of the pandemic.
The main regulator of the UK’s financial services industry has described debt advice as being “critical” to the sustainability of consumer credit markets and highlighted the need for debt help services to be made more widely available.
Reflecting on the impact of the pandemic recently, the FCA’s chair Charles Randall said that while lots of people have been able to increase their savings and reduce their debts, many others have “exhausted any savings and run up more debts”.
“All the authorities which cover debt and debt advice must act together systematically to prevent problem debt and to help people get out of a spiral of debt through properly funded debt advice,” he said.
A series of recommendations have been made by the FCA in what is being called the Woolard Review, with the buy-now-pay-later (BNPL) sector highlighted as an area of particular concern in the context of trends relating to personal debts.
Plans are now being put in place for the BNPL sector to be formally regulated in ways that it hasn’t been to date, partly because of the sharp rise in the popularity of the associated products since the start of the pandemic.
Remarkably, the rate at which UK consumers were using BNPL products is believed to have increased fourfold over the course of 2020.
“The emergence and expansion of unregulated BNPL products gives consumers a significant alternative to more expensive credit, but this also comes with significant potential for consumer harm,” the FCA’s Woolard Review explains.
If you live anywhere in Scotland and you are worried about your personal debt situation for any reason then Scotland Debt Solutions can help. Contact us directly to arrange a FREE and confidential consultation.
Politicians planning to stand in the upcoming Holyrood elections are being urged to take action to help tackle key issues relating to poverty among families across Scotland.
The number of Scots struggling to keep a roof over their heads is sure to rise in the coming months as the impact of the pandemic continues to be felt.
Our Scottish based team can help advise you on your debt problems.