Consumer debt within the United Kingdom has increased considerably within the last year and continues to grow, according to new figures. Consumer debt which covers credit cards, car loans, and personal loans has risen by more than 10% – six times as fast as the economy’s growth rate; whilst statistics from The Guardian show that 8.3 million people in the UK are struggling with various amounts of debt.
Back in July, the Financial Conduct Authority (FCA) voiced their concerns on the high-cost of credit and their fears regarding overdrafts, home-collection credit and catalogue credit sectors. Because of the numbers involved, this issue has now been made the centre of the Watchdog’s agenda this year.
The Head of the FCA stressed that government action is urgently required as the number of consumers that are taking out new loans to pay off debts has increased significantly. It has been suggested that young adults, individuals with children and the unemployed are the most vulnerable to consumer debt.
The FCA also stated that individuals employed within the gig economy (known as short-term contracts or freelance work within employment) required access to credit in order to smooth irregular income streams but that such credit must be provided in a sustainable manner.
UK banks will also be in talks with the Bank of England to evaluate the level of exposure to increased consumer debt. Lenders may be forced to toughen their consumer lending criteria to ensure customers can repay their debts or hold additional capital to ensure they can survive any potential dip in the UK economy. An indication of its assessment of risk in the consumer credit sector will be published by The Bank’s Financial Policy Committee on September the 25th.
If you are 1 in 8.3 million struggling with your debt as a consumer, or as someone who works within the gig economy please contact Sensible Debt Advice on 01656 661426 or click here to e-mail us today.