Financial debt hits record levels

18/10/2017 Rising debt is a growing problem, according to the Financial Conduct Authority. Resolver has prepared a guide to managing your financial difficulties.

James Walker, founder of Resolver says:

According to a new study by the Financial Conduct Authority, 4.1 million people are in financial difficulty as a result of missed bills – and over 25 million of us are potentially at risk of ‘financial harm’.

I’ve been warning about the financial pressures many people are under for years now – and Resolver’s stats show credit and debt complaints are reaching record levels. [see below]

As a nation, we’ve almost become used to high levels of debt. But I believe it’s good to acknowledge that many people are on the borderline of defaulting on their financial commitments – because there’s a lot we can do to help get them get back into the black.

What to do if you’re experiencing financial difficulties

1. Acknowledge the problem. This is the hardest bit. So make yourself a cup of tea (or grab a glass of wine) and work out your incomings/outgoings for the month.

2. If you don’t need it, cancel it. Not using that gym membership? Old insurance policy that you forgot to cancel? Every little bit adds up – so ditch what you don’t need.

3. Contact your creditors. The FCA’s rules about financial difficulties are clear. If you’re struggling to meet your financial commitments and ask the business for help, they should come up with some solutions for you to help you buy some time while you get back on your feet again. They should also consider suspending interest and charges for a short period if it’s making your situation worse.

4. Get a (free) plan. If your financial difficulties are ongoing, then speak to a free service like StepChange, a charity set up to help people get back on top of their finances. They’ll contact your creditors for you and negotiate payments you can afford. It’s not easy, but it’s a solution. Never pay for a debt management service – there are free options out there.

5. Be realistic. This bit sucks but I’m afraid it’s necessary sometimes. There are times when you look at your finances and it’s apparent you can’t afford your property. If that’s the case, speak to the mortgage provider about downsizing to a cheaper property. It’s a better option than defaulting on your mortgage.

Remember, if a financial business fails to help you when you tell them about your financial difficulties – or makes things worse, you have the right to make a complaint.

Record complaints about credit and debt

In our latest published statistics, credit card complaints are up 113% on the previous six months, from 1,237 cases to 2,629 from April to September 2017, with concerns about interest, charges and affordability most often cited.

High-interest lending has come in for particular criticism – and payday lending complaints are up too, with 1,546 cases, an increase of 35% on the previous six months. Traditional loans have increased by 12% to 1,481 complaints.

Mortgages – a concern for one in six people according to the FCA – are up by a shocking 60% to 2,164 with debt and affordability the main cause of complaint.