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Living life on the edge – a blog by Philip King

17 April 2014

I returned to work on Monday after a week spent painting and decorating, and sharing some quality time with the family. I enjoyed the latter far more than the former and let me take this opportunity to thank Paul Brooker, Chair of the ICM’s Bristol & West Branch for stepping in as our guest blog writer. His words on the power of networking were interesting and wise.

As always, after a few days off, the list of things to read was pretty large and two have caught my attention in particular. First was R3′s March Personal Debt Snapshot, and the second was ‘Life on the Edge’, a report published by StepChange Debt Charity.

R3′s research showed that more than 40% of the population is struggling to reach payday as a result of the rising cost of living and half of the population is worried about their levels of debt. The percentage of adults worried about their levels of debt is at its highest since September 2012, and a quarter of British adults expect their personal finances to worsen in the next six months. Credit cards are the most common debt concern for those worried about their debts, and 28% say they do not have any savings at all at the moment.

The StepChange report reinforced the R3 findings. It states that 15 million people are falling behind on bills and using credit to pay for essential costs, including almost 6 million people using credit to make it through until payday, and almost 3 million using credit to keep up with existing credit commitments. Some 13 million people do not have enough savings to last a month if their income dropped by a quarter. The bottom line is that people lack resilience when it comes to coping with shocks and changes in their lives, such as changes in their employment or rising costs from essential bills.

The report calls for “a national strategy to tackle personal debt, led at Cabinet Minister level, to bring together all the government departments, utility companies, landlords, lenders and charities who, together, can make a real impact on improving people’s financial resilience and ensuring there is a comprehensive safety net in place for people in need”.

All of this serves as a salutary reminder for those involved in consumer credit. We may be entering a period of recovery but there’s pain ahead for many customers, particularly when interest rates rise, and managing debt portfolios alongside the changing face of compliance and regulation is going to present a real challenge.

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