0:00:19 > 0:00:22Thank you very much so that that you're the first two panels we have
0:00:22 > 0:00:32the second. People are coming and going to advance and, just for the
0:00:32 > 0:00:35benefit for those who are not in the room, I'm going to ask you to
0:00:35 > 0:00:39introduce yourselves.I'm the head of policy for consumer and public
0:00:39 > 0:00:49services from citizens advice. I'm...I'm managing to do that thank
0:00:49 > 0:00:54you very much indeed and we will have a series of questions don't
0:00:54 > 0:01:03feel...Please do chip in if you have points to make. I wanted to
0:01:03 > 0:01:12start with citizens advice and step change first. The money advice
0:01:12 > 0:01:16service have estimated separately that just under 16 of the UK adult
0:01:16 > 0:01:21population are over indebted. And he defined that as keeping up with the
0:01:21 > 0:01:27missing bills, is a heavy burden. That's a million people. I just...
0:01:27 > 0:01:31From your work, the evidence that you've collected and the people you
0:01:31 > 0:01:34work with, does that sound like a fair estimate and would you agree
0:01:34 > 0:01:41with that as a definition of over indebtedness? B would agree with
0:01:41 > 0:01:51those numbers. You have to split it down. As a charity, we help say such
0:01:51 > 0:02:06earn 20,000 people here. -- 620,000 people. You're -- and in some places
0:02:06 > 0:02:11in the Northeast, it's one in 50 people. We recognise the numbers as
0:02:11 > 0:02:21not only folks who are in financial difficulty, which by... Those who
0:02:21 > 0:02:27are in some distress or at risk of financial difficulty, being in 8-9
0:02:27 > 0:02:34and quite often their individuals who you would expect to measure
0:02:34 > 0:02:43lives on a day-to-day basis but through overspending for under
0:02:43 > 0:02:54£50,000 a month, -- of £150 a...Do you think that's fair, the
0:02:54 > 0:02:58definition of indebtedness keeping up with the missing bills and credit
0:02:58 > 0:03:05commitment being a heavy burden, set a summary? DeLaet is that a fair
0:03:05 > 0:03:14summary -- is that a fair summary? It's right that you combine a
0:03:14 > 0:03:23combination of measures. It chimes with our experience, that sees --
0:03:23 > 0:03:30that is the second biggest issue we see people with. To .7 million
0:03:30 > 0:03:35people -- 2.7 million people... We help bridge and 50,000 individuals
0:03:35 > 0:03:42pretty with that and still sad about the demographic breakdown of some
0:03:42 > 0:03:56those issues, -- Phil talked about. There are differences between people
0:03:56 > 0:04:00in long-term debt and short-term debt, but that analysis recently and
0:04:00 > 0:04:05found that about 1 million people who struggled with long-term debt
0:04:05 > 0:04:10from 2006 all the way through to 2014, so eight years of persistent
0:04:10 > 0:04:19debt. Sunday headline figures hide that.In your experience, you've
0:04:19 > 0:04:29already hinted at some of it, the reasons for, like shocks and
0:04:29 > 0:04:36employment and everything else. Do you think it's become easier to
0:04:36 > 0:04:41become over indebted? Are you finding people are slipping into
0:04:41 > 0:04:45that over indebtedness more quickly? I think we are seeing both the
0:04:45 > 0:04:52average numbers of the amount going up slightly at the moment. The
0:04:52 > 0:04:56amount that's owed on individual credit cards going up to over £8,000
0:04:56 > 0:05:02on the individual. What we are seeing is that individuals aren't
0:05:02 > 0:05:05just only the one creditor, they are averaging to just over five
0:05:05 > 0:05:12creditors. That creates difficulty in terms of how you're going to
0:05:12 > 0:05:17manage, who shouts loudest and what that intervention that is. You see
0:05:17 > 0:05:29that as a significant challenge.We are not going to get into a macro
0:05:29 > 0:05:33economic debate, but what we're seeing is a picture of increased
0:05:33 > 0:05:36insecurity, whether it be through stagnant wages, rises in inflation,
0:05:36 > 0:05:44Universal Credit, having fewer pounds in the pocket to ride out
0:05:44 > 0:05:55shocks when they happen. But also people are increasingly -- are on
0:05:55 > 0:06:03increasingly volatile income. We see people's incomes fluctuate a
0:06:03 > 0:06:05significant level from month-to-month and many more see
0:06:05 > 0:06:11their incomes fluctuate from year to year. That adds to the problems that
0:06:11 > 0:06:15we see, and it makes it easy for people to slide into high levels of
0:06:15 > 0:06:21debt.Does this all sound familiar to you, John? Slightly different
0:06:21 > 0:06:27perspective on it.We are the biggest investor now in the social
0:06:27 > 0:06:34ethical lenders, and I think that about I think the challenge we have
0:06:34 > 0:06:39is people talk about debt, the measures we do on debt, we talk
0:06:39 > 0:06:45about affordability, we haven't talked about suitability, how do we
0:06:45 > 0:06:52change data sets and how do we look at stuff that actually people can
0:06:52 > 0:06:58understand it. Some of the adverts are Santelli now, you think, it
0:06:58 > 0:07:10reminds me of the mall -- Malboro adverts. There is a predatory nature
0:07:10 > 0:07:19to them. The promotion of debt seems to be acceptable. And it's moving to
0:07:19 > 0:07:24the tempo Magdeburg. I'm not going to name any particular ones, but the
0:07:24 > 0:07:29adverts are sexy. There are alternatives but it's a predatory
0:07:29 > 0:07:34lenders with the big box that are advertising that people are
0:07:34 > 0:07:38attracted to. How do we actually open up the market and let people
0:07:38 > 0:07:41know the credit unions exist, that other alternatives are there,
0:07:41 > 0:07:45because it's a very singularly focused market, who's got the
0:07:45 > 0:07:50biggest budget?Where the things we've had evidence about is that we
0:07:50 > 0:08:00should worried about the overall picture, but it's problematic that.
0:08:00 > 0:08:07As defined, do you agree that the the Toys "R" Us, Carillion, I think
0:08:07 > 0:08:16they just extensions of over indebtedness.This country has the
0:08:16 > 0:08:20biggest credit Bill get going, doesn't? How do we get people to
0:08:20 > 0:08:23understand that it is, because I think there is a this conception
0:08:23 > 0:08:42about it. How do we change and take away that, talk about suitability.
0:08:42 > 0:08:49Some rates could be suitable for short-term fix. A talk about Ford
0:08:49 > 0:08:54ability but the data that is collected, it is debt data. It's not
0:08:54 > 0:09:04spend data. The biggest expenditure of any household is the housing. So
0:09:04 > 0:09:11how do we make sure that people's expenditures alone. Your team is
0:09:11 > 0:09:16when going through a stop going to William Hill or don't drink so much.
0:09:16 > 0:09:19You're not looking at the suitability of the debt. We are
0:09:19 > 0:09:24looking at theoretically at the affordability based on indebtedness?
0:09:24 > 0:09:33It seems upside down to me.We don't see credit in itself as a bad thing.
0:09:33 > 0:09:38The question is, is it affordable? Is appropriate? Is a sustainable?
0:09:38 > 0:09:41And do you understand when we're getting into it what you're getting
0:09:41 > 0:09:46yourself into? Are using it appropriately? For instance if you
0:09:46 > 0:09:53are using credit cards to pay your utility bills or you are paying off
0:09:53 > 0:10:04credit. It's a spiral. It's a spiral out, and then we move onto the next
0:10:04 > 0:10:10question, which is rather than being an adequate ambulance at the bottom
0:10:10 > 0:10:14of the clip to help these individuals, the question for us is
0:10:14 > 0:10:17what are we doing to stop people falling into this in the first
0:10:17 > 0:10:23place. We moved straight on to the concept of rainy day savings, people
0:10:23 > 0:10:33having an ability to pay out of some savings or being able to go to a
0:10:33 > 0:10:44low-cost provider of debt rather than a publicised ones as John says.
0:10:44 > 0:10:47Your question about growth and consumer credit versus problematic
0:10:47 > 0:10:52debt. I think it's right because people can get fixated on this 200
0:10:52 > 0:10:56billion, 210 billion figure in itself, and borrowing is not bad in
0:10:56 > 0:11:01itself. A couple of points I would make about it is, one thing that is
0:11:01 > 0:11:09worth focusing on is, are those debts, which have more significant
0:11:09 > 0:11:19consequences, household debt, rent arrears, being cut off, or debts
0:11:19 > 0:11:24that can involve imprisonment. One of the real dangers I think is that
0:11:24 > 0:11:29a lot of those debts, the not consumer credit debts, are all
0:11:29 > 0:11:33captured as part of this figure so you have the Bank of England and
0:11:33 > 0:11:37other bodies, very clear on the size of this consumer credit bubble, but
0:11:37 > 0:11:42no attention being paid to these much more damaging debts that went
0:11:42 > 0:11:46into the billions of pounds, and have those more saviours
0:11:46 > 0:11:49consequences. There's a sense that people need to grip the overall
0:11:49 > 0:11:55picture rather than just obsessing over consumer credit. Where the
0:11:55 > 0:11:59other sides that were focused on is I think we should be focused more on
0:11:59 > 0:12:03problem that where actually it is the product itself, which can often
0:12:03 > 0:12:08cause a death, I know we will be talking about high-cost credit and
0:12:08 > 0:12:17whether it be credit cards or short term credit... Rent own or do less
0:12:17 > 0:12:31rent to own -- rent to own...We were hosted by... One of the things
0:12:31 > 0:12:38we explored there was none credit defaults, such as on council tax and
0:12:38 > 0:12:45utilities. That is a growing trend. I just want to perhaps look at your
0:12:45 > 0:12:50point of view how you see it, because we heard that government
0:12:50 > 0:12:57departments can be very inflexible in terms of dealing with it, making
0:12:57 > 0:13:02arrangements.It's something we are seeing, and it's something we've
0:13:02 > 0:13:13seen council tax debts, over £1000 on average now, around 31% of our
0:13:13 > 0:13:19clients last year. Quite often, the governmental organisations are very
0:13:19 > 0:13:27aggressive in the way they go about getting the payments made. There's a
0:13:27 > 0:13:35quick jump to the use of bailiffs which we are concerned about.We
0:13:35 > 0:13:42talked about at length this past week. I think people find acai be
0:13:42 > 0:13:48difficult to grasp because when people first hear government
0:13:48 > 0:13:57collection, local authority question is effectively the that perhaps
0:13:57 > 0:13:59emotionally, it's difficult to accept, because the Government must
0:13:59 > 0:14:05do better than some of these firms that we hear about. I think there
0:14:05 > 0:14:10often a lot the Government could learn in terms of forbearance or
0:14:10 > 0:14:12understanding from some of those consumer creditors and part of that
0:14:12 > 0:14:17is because regulation has brought some of those firms online, but
0:14:17 > 0:14:23partly, if you talk to banks, it's because lots of organisations agree
0:14:23 > 0:14:26that aggressive collection methods are not effective in and of
0:14:26 > 0:14:28themselves and actually getting money in the door because people
0:14:28 > 0:14:34don't respond well to some of those tactics. Does a couple of reasons
0:14:34 > 0:14:42why they should look at the way they collect that.
0:14:42 > 0:14:49There will be people who are two months behind on the rent, haven't
0:14:49 > 0:15:05paid the council tax, but on all CRAs will say job's a good un. The
0:15:05 > 0:15:10difference in attitudes is one of the reasons that price is so high,
0:15:10 > 0:15:17they are factoring in failure. The way to get high costs down apart. In
0:15:17 > 0:15:23some predatory action is to lower down the failure record.I'm so
0:15:23 > 0:15:30tempted to go right down the path of what happens to people in crisis but
0:15:30 > 0:15:33I'm going to stick to creditworthiness and financial
0:15:33 > 0:15:41inclusion. Apologies by the way if I leave shortly afterwards but one of
0:15:41 > 0:15:46my constituents here is part of the lobby of Parliament and they are my
0:15:46 > 0:15:52boss so don't think it's a reflection of my interest in this
0:15:52 > 0:16:04topic. The big issues behind the credit assessment Bill, taking into
0:16:04 > 0:16:08council tax and council tax payment history, what problems do you think
0:16:08 > 0:16:15this will solve and how much practical difference do you expect
0:16:15 > 0:16:21it to make to borrowers?At the moment, everyone concentrates on
0:16:21 > 0:16:35their mortgage. Actually there are 12 million renters and growing. We
0:16:35 > 0:16:45have people growing from 22, not going to buy a house until 35, they
0:16:45 > 0:16:49don't have digital footprints or any record of doing stuff. Why am I
0:16:49 > 0:16:55still paying my kids' mobile phone bills, because they cannot get the
0:16:55 > 0:16:59credit account themselves. They are paying rent, it's not recorded
0:16:59 > 0:17:03anywhere, they don't exist so some of it is about digital
0:17:03 > 0:17:09authentication. About 30% would not even past digital authentication
0:17:09 > 0:17:20because the data is not there. We developed a credit system... What
0:17:20 > 0:17:37was experienced cold 20 years ago? Push what was Experian called? It
0:17:37 > 0:17:40was Gus, a catalogue company, which grew from providing affordable
0:17:40 > 0:17:46credit of the masses. The whole CRA system has moved from where it
0:17:46 > 0:17:49started to actually excluding the masses because the nature of the
0:17:49 > 0:17:57data of its been recorded is not necessarily... Ariel Sharon upon
0:17:57 > 0:18:01creditworthiness is what are the datasets we should be recording
0:18:01 > 0:18:04whether it's calculating someone's credit rating will reportedly the
0:18:04 > 0:18:07data is available to look at affordability unsuitability of
0:18:07 > 0:18:19products.I will broaden it out to the panel because one of the things
0:18:19 > 0:18:22we see in our case work as constituency MPs is there is a real
0:18:22 > 0:18:28cliff edge in consumer credit ratings and this kind of perverse
0:18:28 > 0:18:34situation where anyone with adverse credit history is pushed towards
0:18:34 > 0:18:38high cost lenders because they are the only lenders prepared to lend to
0:18:38 > 0:18:43them so we end up effectively, because of bad credit history,
0:18:43 > 0:18:48pushing people towards a higher cost of borrowing. If you've been in the
0:18:48 > 0:18:54poverty trap you are more likely to spiral further into that trap. Do
0:18:54 > 0:19:02you think the proposal of including rent assessments would help?I think
0:19:02 > 0:19:09the only counter argument to the point here is that's fine if the
0:19:09 > 0:19:13thing that is going to be included is something you are paid well for a
0:19:13 > 0:19:18long time. If you are behind on your rent and council tax payments, all
0:19:18 > 0:19:25that will do is enhanced social exclusion. For a minority of people
0:19:25 > 0:19:33it could push them further into social exclusion.There's a lot of
0:19:33 > 0:19:36good in the proposal, it's important to acknowledge it's a double-edged
0:19:36 > 0:19:43sword. Obviously we will get onto broader topics as well but a lot of
0:19:43 > 0:19:46the clients we see who struggle to access credit, there is a proportion
0:19:46 > 0:19:54for which credit referencing is a factor but it's not the big factor.
0:19:54 > 0:20:04Anything too hard?We have had discussions about negative, but the
0:20:04 > 0:20:08last thing in the credit worthiness bill is about promoting people get
0:20:08 > 0:20:13into more debt. It's about making sure data is recorded so the
0:20:13 > 0:20:17suitability and access to products is improved. Whether that be... If
0:20:17 > 0:20:25you go and try and provide insurance and putting your correct address you
0:20:25 > 0:20:31will get one quote. Change your postcode by two digits, your quote
0:20:31 > 0:20:43will go up by 20% because it's going ping ping ping, we will price the
0:20:43 > 0:20:47risk automatically. If you don't have a digital footprints you are
0:20:47 > 0:20:53automatically paying more. That is right.Can I ask a broader question
0:20:53 > 0:21:00because this is the kind of policy maker's dilemma so hopefully you
0:21:00 > 0:21:05will solve it this afternoon. Broadly speaking, in terms of how we
0:21:05 > 0:21:11approach problematic debt and tackling it, you can either restrict
0:21:11 > 0:21:15access to credit but then potentially deny people opportunity
0:21:15 > 0:21:19to smooth their incomes or to overstep those bumps on the road
0:21:19 > 0:21:29without hitting crisis or reform credit products so they become more
0:21:29 > 0:21:35sustainable. Do you think the latter option is realistic or is preventing
0:21:35 > 0:21:45people from accessing products in the first place?It is a complicated
0:21:45 > 0:21:53answer. Clearly we talked about borrowing is a positive thing,
0:21:53 > 0:21:57whether people borrow to smooth expenditure and so on. There is no
0:21:57 > 0:22:03doubt receive certain proportion of clients and it is right extra
0:22:03 > 0:22:07borrowing will get them into further financial difficulty and to some
0:22:07 > 0:22:12extent it isn't the answer for them. But I think the thing I would want
0:22:12 > 0:22:19to be very careful of is we will get into conversation about arguments
0:22:19 > 0:22:25whether to regulate or not, say high cost lenders for example. It's often
0:22:25 > 0:22:31an argument that use which is if you regulate you will just deny people
0:22:31 > 0:22:36access to credit. It is a simple trade-off and all of our evidence
0:22:36 > 0:22:42shows it's not the case. If you look back at payday loans, those are the
0:22:42 > 0:22:51arguments made about payday lending, the vast majority of people who need
0:22:51 > 0:22:55credit but all the stops is the predatory side of it which means you
0:22:55 > 0:22:59have a group who are not shopping around according to cost and value.
0:22:59 > 0:23:04They are just desperate for credit and it means those people can be
0:23:04 > 0:23:09exploited to the same extent so I don't see it as a trade-off between
0:23:09 > 0:23:17access to credit and improving credit products.I would break it
0:23:17 > 0:23:22down into four stages really. I think the first element is an
0:23:22 > 0:23:28educational and awareness element which we must talk about because it
0:23:28 > 0:23:33is extremely important that individuals understand what good
0:23:33 > 0:23:37personal financial management looks like and can avoid getting
0:23:37 > 0:23:40themselves into difficulty. That goes on to the second element, which
0:23:40 > 0:23:45is talking about having a safety net and soaks you are not immediately
0:23:45 > 0:23:54recall seeing to debt. Or at least access to a social lender who is
0:23:54 > 0:23:59going to do things at a reasonable rate. If you do have to take on
0:23:59 > 0:24:05debt, it has to be affordable and it has to be sustainable and
0:24:05 > 0:24:10appropriate for you. Then if you do get yourself into difficulty with
0:24:10 > 0:24:15that, there has to be measures in place such as for breathing space
0:24:15 > 0:24:18legislation which is going through at the moment which gives you a
0:24:18 > 0:24:24little bit of time so that if you get yourself into difficulty you are
0:24:24 > 0:24:27given a bit of time without penalty interest to get yourself back on
0:24:27 > 0:24:35your feet and to start putting in place a proper debt management plan.
0:24:35 > 0:24:42It's important because in terms of step change as a charity, we say if
0:24:42 > 0:24:46you have borrowed it you should pay it back and we give people the
0:24:46 > 0:24:53opportunity to pay it back even if it is over a long period of time.
0:24:53 > 0:24:56There's a lot of people who don't have a bank overdraft, who don't
0:24:56 > 0:25:03have a credit card. End of the month, the washing machine is
0:25:03 > 0:25:08broken, it's a five-week month. We have got to accept some of the
0:25:08 > 0:25:12payday lending is what many in this room may do because the cat got sick
0:25:12 > 0:25:19or whatever. I don't think we should demonise the fact people at some
0:25:19 > 0:25:24point in a month are couple of quid short, it's just life happens. We
0:25:24 > 0:25:30have got to have that ability, we have got to accept people are living
0:25:30 > 0:25:37to the ends of their means. In the old days, go to Nottinghamshire and
0:25:37 > 0:25:43people would go, you know, the Lady of the House would go to the pit on
0:25:43 > 0:25:47a Friday, pick up the wage packet, he would go to the pub but they've
0:25:47 > 0:25:54managed on a week by week basis and people are still managing on a very
0:25:54 > 0:25:58tight budget with no cushion. I think are important thing on the
0:25:58 > 0:26:04stuff we are doing is we are not hold up too much about interest
0:26:04 > 0:26:11rates. We are hung up about the suitability but more importantly
0:26:11 > 0:26:15what happens when things go wrong. We spend a lot of time looking at
0:26:15 > 0:26:18affordable members saying what do you do when it goes wrong because
0:26:18 > 0:26:23that's the critical point for these people. If it just spirals out, it
0:26:23 > 0:26:34is that. Also some of the education stuff, fair money .com just launched
0:26:34 > 0:26:38trying to provide a website to more better lending decisions and it
0:26:38 > 0:26:44starts with credit unions and explains what it is. How do we get
0:26:44 > 0:26:50education out there that understands stuff because things have gone
0:26:50 > 0:26:57wrong, you see the advert on the telly. We are a society of very
0:26:57 > 0:27:01poor... Those with the biggest marketing budgets can be the most
0:27:01 > 0:27:05predatory. I think we have all experienced that feeling of watching
0:27:05 > 0:27:10someone would come to us sooner for advice before they hit crisis point.
0:27:10 > 0:27:17Am I finish with a question on the FCA's consultation on assessing
0:27:17 > 0:27:21creditworthiness. They are proposing an explicit definition of
0:27:21 > 0:27:28affordability risk to show where repayments could have an adverse
0:27:28 > 0:27:33effect on people even if they don't default. Do you think about the
0:27:33 > 0:27:41right approach? Is there a risk this will cut people's access to credit?
0:27:41 > 0:27:48If particularly for you, John, how do you see their state of
0:27:48 > 0:27:54objectives?Their first bid came round, a definition of high cost
0:27:54 > 0:27:57over 100%, actually I've got a bit of a struggle with that because it's
0:27:57 > 0:28:03the package I want to know. What is the suitability for the individual
0:28:03 > 0:28:08and so on. If you look at the amount of effort that goes into mortgage
0:28:08 > 0:28:17lending, actually we are changing what's happening, there has to be
0:28:17 > 0:28:20greater effort in checking affordability unsuitability of that.
0:28:20 > 0:28:24That's the start of putting the fence at the top of the cliff and
0:28:24 > 0:28:31not the ambulance at the bottom. From the step change perspective we
0:28:31 > 0:28:34are absolutely welcome the suggestions and recommendations.
0:28:34 > 0:28:38There are some areas where we need to go further and particularly on
0:28:38 > 0:28:43revolving products, persistent overdrafts that kind of thing but we
0:28:43 > 0:28:48welcome it.
0:28:48 > 0:28:55We still see too many cases where, especially with small loans, where
0:28:55 > 0:29:04it is properly assessed. Anything to strengthen that is a positive step.
0:29:04 > 0:29:10The head of the SCA told this committee, I don't think we have a
0:29:10 > 0:29:17sustainable means of providing low-income households with credit at
0:29:17 > 0:29:20the moment. Do you agree with that and what might we have done about
0:29:20 > 0:29:30it?One of the challenges, if you're looking the that we're doing a tip
0:29:30 > 0:29:33of the iceberg investigation into ethical and social lenders, but
0:29:33 > 0:29:42because of the legal structure, its lending its loan, how do they ever
0:29:42 > 0:29:49pay back if they grow? It's having that large lump of capital that can
0:29:49 > 0:29:54support the other that they haven't got the capital to do it. Barclays
0:29:54 > 0:30:01may run big equity, the legal structure where is that big lump, is
0:30:01 > 0:30:04the hundred millions, the 200 millions that is supporting the
0:30:04 > 0:30:11growth of that sector, along 25-30 your position. People can't grow
0:30:11 > 0:30:19businesses on short-term positions. We agree entirely. I think one of
0:30:19 > 0:30:23the challenges we have to ask ourselves about is the reasoning
0:30:23 > 0:30:32behind the lending of the doubt whether one of the reasons is is
0:30:32 > 0:30:36they might follow the difficulty in some way and create a profitable
0:30:36 > 0:30:44situation for the lenders. I agree with John, the challenge... There is
0:30:44 > 0:30:49no way developed market in terms of social and low-cost lenders so
0:30:49 > 0:30:55people have to resort to lenders who do a fully risk-based pricing
0:30:55 > 0:31:02approach in the way they lend money, so interest rates are very high, so
0:31:02 > 0:31:11we are welcoming of the cap on overall borrowing costs, but we do
0:31:11 > 0:31:17need to extend into other areas like rent to own.They will consult on
0:31:17 > 0:31:23proposals to reform high-cost credit including overdrafts, rent to own,
0:31:23 > 0:31:28in the spring. What changes would you like to see?I echo what Bill
0:31:28 > 0:31:33just said. We'd like to see the cap and payday applied successfully. --
0:31:33 > 0:31:54what Phil just sent. There
0:31:55 > 0:32:01opportunities... All the spectres were raised before it was brought in
0:32:01 > 0:32:04about denying access to credit and people going to illegal
0:32:04 > 0:32:09moneylenders. These things sound emotive in a forum like this,
0:32:09 > 0:32:16especially things like moving into illegal moneylenders. No 1's bought
0:32:16 > 0:32:21any evidence that this is actually happening. There was such a strong
0:32:21 > 0:32:30argument, don't shop around and differentiate, there on these
0:32:30 > 0:32:32particular markets, exploding with exponential interest rates and
0:32:32 > 0:32:42holdover loans. That's something we would like to see. Rent to own is a
0:32:42 > 0:32:52big market. Very much towards a vulnerable... They're young, usually
0:32:52 > 0:32:57female, usually very vulnerable, you have the individuals put into a
0:32:57 > 0:33:03situation where there is no cap on the cost of credit, and then it's
0:33:03 > 0:33:15compounded by the the... So when you do the overall costs, it's
0:33:15 > 0:33:17absolutely horrendous. Quite frankly, it just has to stop. It's
0:33:17 > 0:33:27not right.Just to pick an example. The figures we had, about 20% of
0:33:27 > 0:33:32rent-to-own customers pay a fifth of their income on rent to own
0:33:32 > 0:33:37repayments, that's phenomenal amount of money, we're not talking about
0:33:37 > 0:33:47small in the margins.Just looking at rent to own, many of my
0:33:47 > 0:33:50constituents complain about the of interest and that the goods
0:33:50 > 0:33:56themselves are more expensive than it would be able to find in their
0:33:56 > 0:33:58local curries. They could also find better credit in terms on offer as
0:33:58 > 0:34:10well. What sort of caps do you think should be placed?We think there
0:34:10 > 0:34:18should be 100% cap that we have on payday lending. But as I said, I
0:34:18 > 0:34:24think we have to look more widely. You need to decouple the warranty
0:34:24 > 0:34:29and it just needs properly regulating because it serves a
0:34:29 > 0:34:33really useful purpose. There's a lot of people who use it and if used
0:34:33 > 0:34:39well, it can be effective. But it's deeply under regulated stop it needs
0:34:39 > 0:34:49to change.To an extent, a relatively simple headline cap would
0:34:49 > 0:34:54solve some of the problems because you are then able to see, even if
0:34:54 > 0:34:58the upfront costs are usually inflated, which in many cases it is,
0:34:58 > 0:35:04it is easier as a consumer to see that it is incredibly highly priced,
0:35:04 > 0:35:11and there are other ways around that if you costed out. The cost it out,
0:35:11 > 0:35:18even though it's a slightly different product to payday.Would
0:35:18 > 0:35:24you don't see in these, by the time you're finished, you have paid £3500
0:35:24 > 0:35:29for the television and it's only worth 1500. Some of the
0:35:29 > 0:35:35presentation, you will see. £10 a week. It's how we promoted. It's not
0:35:35 > 0:35:42being insulting to people. We need to have the explanation of what that
0:35:42 > 0:35:47really means, read loud and bold. One of the problems is some of these
0:35:47 > 0:35:54things actually promote this unending cycle of debt. We have to
0:35:54 > 0:36:02stop products that promote that.Did I just moved to credit cards? The
0:36:02 > 0:36:12credit card market study... Early warnings and interventions for those
0:36:12 > 0:36:20getting into difficulty. What do you think of these ideas?We just don't
0:36:20 > 0:36:27think it went far enough, for about 6 million of us, getting those
0:36:27 > 0:36:29increases every year, I'm sure people in the committee have had
0:36:29 > 0:36:36that letter through the letterbox. Melamed has gone up without having
0:36:36 > 0:36:55tested. The best might limit -- my lemon has gone up. -- limit. For
0:36:55 > 0:37:00those who are in distress and who get the increase, 50% increased his
0:37:00 > 0:37:10spending. It has a number of holes in it, and you've got to ask why.
0:37:10 > 0:37:14It's a phenomenal amount of money to be made out of pushing credit on the
0:37:14 > 0:37:21people, and you have to ask why the banks fought so hard for a voluntary
0:37:21 > 0:37:26arrangement. It's one of those things that, if I'm honest, and five
0:37:26 > 0:37:29years' time, we will be sitting here would it being banned and we will
0:37:29 > 0:37:33think of this incredible situation that we used to have where people
0:37:33 > 0:37:37just to get credit without asking, thinking how it was something we
0:37:37 > 0:37:45considered to be fair game. May be that they ridiculous concept was up
0:37:45 > 0:37:52I just think it's a very strange move to not bother the piercing
0:37:52 > 0:38:01regulators should just come along and then at.Full stop.Voluntary
0:38:01 > 0:38:07schemes can be good. We don't push for regulation for regulation sake.
0:38:07 > 0:38:17If someone sense among the text and asks, it's one thing. It's a huge
0:38:17 > 0:38:20barrier for a bank to pass. It's a very different issue, just raising
0:38:20 > 0:38:23it unilaterally without asking them in the first place.It seems
0:38:23 > 0:38:32strange. We think it's a good start in terms of the suggestions.
0:38:32 > 0:38:37However, it does work on individuals who've gotten themselves and the
0:38:37 > 0:38:42troubles that it's not doing enough to address the ability of people to
0:38:42 > 0:38:46get themselves into trouble in the future because there's not proper
0:38:46 > 0:38:50assessments done of an individual buys likability to pay off the
0:38:50 > 0:38:58credit cards going forward. It's a good... We are not sure what it does
0:38:58 > 0:39:03going for.They say they don't propose to restrict normal sense
0:39:03 > 0:39:08credit card balance transfers. That's good news for consumers,
0:39:08 > 0:39:22isn't it?Or is it exploitative? It's an interesting leading
0:39:22 > 0:39:25question. It depends what you are going to do with that zero balance
0:39:25 > 0:39:31transfer. If you're going to use it in a sophisticated manner, to have a
0:39:31 > 0:39:39continuing rolling 0% bound structure. If you get to the point
0:39:39 > 0:39:44where points out as a zero balance transfer period, and you might want
0:39:44 > 0:39:50to higher overall costs... Then obviously, that is a problem. If you
0:39:50 > 0:39:56gain it is fine, if you get caught up by it it's not. It again goes
0:39:56 > 0:40:00back to financial education and being aware of what you're getting
0:40:00 > 0:40:07yourself into.The minute you spend on that 0% credit card, the debt you
0:40:07 > 0:40:13are paying off and you paid opposite not percent debt, another... It's
0:40:13 > 0:40:18promoted in a way that actually isn't, to a lot of people, there is
0:40:18 > 0:40:24a clarity.As you say, some people are good at this, a lot of people
0:40:24 > 0:40:31just use credit cards in the wrong way. It's not a particularly good
0:40:31 > 0:40:36way to use a credit, not necessarily what it was intended for. Some of
0:40:36 > 0:40:56the other remedies that the SCA brought were positive, -- FCA.So I
0:40:56 > 0:41:03want to focus on the rainy day savings ideas. Mr Andrew, that
0:41:03 > 0:41:09change has written... If every household in Great Britain had £1000
0:41:09 > 0:41:15saved, this could reduce the number and problem debt by 500,000. Is this
0:41:15 > 0:41:20realistic in your view? The actual cost would be very significant. Can
0:41:20 > 0:41:25you say bit more about that? Obviously it's not going to be easy
0:41:25 > 0:41:34to get everybody to put aside £1000 in excess Bill cash savings. It has
0:41:34 > 0:41:50to be -- in excess cash savings. But I think for us... The matching
0:41:50 > 0:41:55through the UK savings Gateway pilot was very successful and we applaud
0:41:55 > 0:42:01that and we would like to see that extended out. An area where there's
0:42:01 > 0:42:05been suggestions that it would be very helpful is on giving tax
0:42:05 > 0:42:13relief, we don't feel that works so well at the lower income and of the
0:42:13 > 0:42:21spectrum. We are not soaking on that, though it has a place, though
0:42:21 > 0:42:24probably not for the types of individuals who come in and conduct
0:42:24 > 0:42:29step changes.You would say that the schemes are not well targeted
0:42:29 > 0:42:35towards the most indebted or...They are not because if you are paying
0:42:35 > 0:42:39little to no tax, something that is tax-free is irrelevant. The marginal
0:42:39 > 0:42:48savings were getting is very small. It may sound shallow as a structure,
0:42:48 > 0:42:54but what we've seen in other environments is a savings scheme,
0:42:54 > 0:43:01like premium bonds, forgive them an incentive to save by getting prizes
0:43:01 > 0:43:09and potential... Something that will give you a jump up, which is free to
0:43:09 > 0:43:18you at the point of saving. We have found it worked in other parts of
0:43:18 > 0:43:25the world, and it's something that needs to be looked
0:43:25 > 0:43:31the world, and it's something that needs to be looked.Backspace
0:43:31 > 0:43:34incentives don't have a benefit or appealed to lower income households.
0:43:34 > 0:43:42Very much agree.One of the things that are a bit more innovative is
0:43:42 > 0:43:46the modelling of the credit union, which is to borrow as you pay but
0:43:46 > 0:43:51you save the same time. How can we think of depositions were if you are
0:43:51 > 0:43:57paying off her credit card and the percentage of that is going to a
0:43:57 > 0:44:02savings account. I keep paying with a love again. I don't pay, and will
0:44:02 > 0:44:06be used or whatever, but it can be handled in a more innovative way
0:44:06 > 0:44:12that can encourage the it could actually reduce the interest rate
0:44:12 > 0:44:16because if IRD have money and that, I will keep a because I want that
0:44:16 > 0:44:22back. This bit of animation about -- there is a bit of innovation and how
0:44:22 > 0:44:26can look of the product that could be credit and saving at the same
0:44:26 > 0:44:32time.
0:44:32 > 0:44:36To build on that point, it is a slightly different way to look at
0:44:36 > 0:44:40it, and it's been a really positive take-up of the standard financial
0:44:40 > 0:44:46statement, where people are paying back their debts and building in the
0:44:46 > 0:44:50element of saving as part of it which is an incredible positive
0:44:50 > 0:44:56because of the habits it built. Much less adopted by the public sector
0:44:56 > 0:45:00creditors and collectors so you will often see a situation where someone
0:45:00 > 0:45:05has a plan in place if their consumer creditors is able to save
0:45:05 > 0:45:12something. Excessive amounts taken back by the state then stops them
0:45:12 > 0:45:16saving the amount which might solve their problem in the long term so
0:45:16 > 0:45:19another challenge of the Government and public sector taking with one
0:45:19 > 0:45:26hand but causing problems with another.You have kind of answered
0:45:26 > 0:45:32my question I was going to ask you. In a way this whole session, thank
0:45:32 > 0:45:43you for giving your time, this whole session is thoroughly depressing.
0:45:43 > 0:45:47That's why I picked the section, because I was keen to understand
0:45:47 > 0:45:52better why the big interventions could be made by government. On the
0:45:52 > 0:45:58one hand my questions and my section is about what the indebted
0:45:58 > 0:46:08individual, how they can be supported to save but as you talked
0:46:08 > 0:46:12about the labour market and the pressures and there is even greater
0:46:12 > 0:46:17pressures on changes in the benefits system and so on, where do you
0:46:17 > 0:46:24think... In a sense what I'm trying to get up as to what extent do you
0:46:24 > 0:46:32think this is going to be resolved by coming up with new innovative
0:46:32 > 0:46:36mechanisms to help people save. But if you don't have the money, if you
0:46:36 > 0:46:40just can't make ends meet, how are you men to save and what's your
0:46:40 > 0:46:45proposal to government about what they should be doing to address that
0:46:45 > 0:46:48side of the equation?I think it was still make a huge difference. I'm
0:46:48 > 0:46:56not going to pretend there is and to challenge with how much money people
0:46:56 > 0:46:59have in their pockets. Of course that's the case but I go back to
0:46:59 > 0:47:05high-cost credit and I won't dwell on it too long, but certain
0:47:05 > 0:47:09products, it's not that they just don't help the problem, they
0:47:09 > 0:47:12actively make it worse. You regulate some of those products effectively
0:47:12 > 0:47:17and I think you can make a huge difference. If you give people a
0:47:17 > 0:47:21small savings offer, you can make a huge difference. Focus on savings
0:47:21 > 0:47:27and regulating the market and focusing on not, again debt
0:47:27 > 0:47:32collection from the state, a classic example might be what we spoke about
0:47:32 > 0:47:43last week, someone having a fossil tax debt, the council calling in
0:47:43 > 0:47:54bailiffs and suddenly it is doubled. Can I ask you to say more about the
0:47:54 > 0:48:01Help To Save programme and how well targeted you think that is.We
0:48:01 > 0:48:11welcome it. The a -- clearly it cannot help people in crisis today
0:48:11 > 0:48:19but it will help people falling into that in the future. We think there's
0:48:19 > 0:48:27about 3.5 million low-income adults eligible for Help To Save and we
0:48:27 > 0:48:32recommend that fully support doing that. The question I think for us is
0:48:32 > 0:48:38how are the Government going to help maximise take-up of that? Because it
0:48:38 > 0:48:44is deeply countercultural as it stands at the moment because we have
0:48:44 > 0:48:49got ourselves into a culture of absolute immediacy and a culture
0:48:49 > 0:48:55where building the dead as a student as an example is deemed as
0:48:55 > 0:49:00absolutely acceptable. If you are an undergraduate, you are actively
0:49:00 > 0:49:04encouraged to get yourself £40,000 into debt, don't worry about the
0:49:04 > 0:49:11interest rate, you might not have to pay toffs so don't worry about it.
0:49:11 > 0:49:20We are giving that message -- you might not have to pay it off. And
0:49:20 > 0:49:24the message is so far off kilter with normal culture that it will be
0:49:24 > 0:49:35difficult to sell. It will require a real drive.I think education and
0:49:35 > 0:49:43people's understanding of stuff is awful. People are going for advice
0:49:43 > 0:49:49after the event. How do we promote people understanding that and what
0:49:49 > 0:49:56£10 a week really means, but how do we promote a product that is both
0:49:56 > 0:50:03credit and saving at the same time. Because I think that would be good.
0:50:03 > 0:50:06And do you think the Government has got the wrong balance in terms of
0:50:06 > 0:50:21tax breaks. If you look at the ISAs? They are middle class.Middle
0:50:21 > 0:50:26classes tend to do better out of those products. Do you think they
0:50:26 > 0:50:29could refocus on some of the incentives towards those who are
0:50:29 > 0:50:33more indebted so we are coming at the problem from both directions,
0:50:33 > 0:50:40more aggressive government interventions to target that group
0:50:40 > 0:50:45of people as well as encouraging people to save themselves.If you
0:50:45 > 0:50:51look at promotion writers, you can save up to 20,000 per year, that
0:50:51 > 0:50:58this cloud cuckoo land for lots of people.That is not even a lot of my
0:50:58 > 0:51:04constituents' salaries.You can save £5 a week. And actually that £5
0:51:04 > 0:51:15could be £6. The language is wrong. 20,000 quid and the promotion of to
0:51:15 > 0:51:20get in before...And there are lots of concerns about not being able to
0:51:20 > 0:51:29take your money out, not being able to access it. If you are in a cycle
0:51:29 > 0:51:44of expenditure, up and down, what would you recommend the Government
0:51:44 > 0:51:47to do around those sorts of concerns people have?If you take the
0:51:47 > 0:51:50mortgage industry went very much and there was the joint account between
0:51:50 > 0:51:54the current account and mortgage account to actually he will be using
0:51:54 > 0:52:01the mortgage quite often, the majority of these people are
0:52:01 > 0:52:18invented and it's how we link rent and so on. We all have good times
0:52:18 > 0:52:23and bad times, the problem is in the good times we are just not... And
0:52:23 > 0:52:27these buffers are small. Ten, 20 quid is the difference. Out of
0:52:27 > 0:52:31Leicester we have a couple of housing association tenants going
0:52:31 > 0:52:39into the food bank, now selling the big issue, ten a week, but that's
0:52:39 > 0:52:46money is transformational. We are not talking about £20,000, we are
0:52:46 > 0:52:50talking up the grass root level of 20 quid a week transforms people's
0:52:50 > 0:52:54lives.You are right and it's not just the small amounts of money but
0:52:54 > 0:52:59the speed at which people might need to spend it. We might traditionally
0:52:59 > 0:53:06imagine saving over several years but high velocity saving is natural
0:53:06 > 0:53:11to a lot of our clients, saving for six weeks to pay the 50 quid
0:53:11 > 0:53:15exponents which otherwise would tip them over the edge. That should be
0:53:15 > 0:53:19encouraged because it's the reality of how their lives are. It shouldn't
0:53:19 > 0:53:27be discouraged.Some of the response to this inquiry has suggested part
0:53:27 > 0:53:31of their pension savings under auto enrolment could be made available as
0:53:31 > 0:53:36liquid savings in the sidecar account. Would you support this, and
0:53:36 > 0:53:49what limits would you need to put in place?There are so many people who
0:53:49 > 0:53:55will be in such poverty in their old age. To rub it now really is Peter
0:53:55 > 0:54:01and Paul from my point of view.We think there is a place for this if
0:54:01 > 0:54:08it is properly policed haven't done for a small portion of your overall
0:54:08 > 0:54:15pot so it too is a very short-term small bridging element, then we are
0:54:15 > 0:54:19OK with that, but the concept of allowing it to ebb away your overall
0:54:19 > 0:54:26pension pot in a material way would be a significant challenge.We would
0:54:26 > 0:54:30encourage the principle but anything that dabs away the pension wouldn't
0:54:30 > 0:54:38be.John, you have already touched upon this in some of your previous
0:54:38 > 0:54:46answers so I was going to direct this at Bill. In your organisation's
0:54:46 > 0:54:51experience, what level of financial awareness do you think people have
0:54:51 > 0:54:56in terms of education?It's a really difficult question and the reason
0:54:56 > 0:55:02it's a difficult question to answer is that one of the challenges we
0:55:02 > 0:55:07have is that we always ask our clients, do you understand what we
0:55:07 > 0:55:11are recommending, do you understand your financial position. Generally
0:55:11 > 0:55:17speaking we will say yes we do. That can mean one of three things, it can
0:55:17 > 0:55:22mean yes I completely understand, thank you very much indeed. It can
0:55:22 > 0:55:27mean I don't understand but I trust you are doing the right thing for
0:55:27 > 0:55:31me. Or it can mean I don't really understand what I'm too embarrassed
0:55:31 > 0:55:36to say. We find ourselves having to iterate roundabout which makes calls
0:55:36 > 0:55:41very long, in order to see whether people are really understanding what
0:55:41 > 0:55:48they are getting themselves into. A lot of that is around basic
0:55:48 > 0:55:53education and understanding. The one caution I would give is it doesn't
0:55:53 > 0:55:59matter how well financially educated you are, sometimes you simply cannot
0:55:59 > 0:56:04earn any more money and then you will fall into shock through illness
0:56:04 > 0:56:09or job loss or whatever it happens to me and doesn't matter how well
0:56:09 > 0:56:15educated you are, you fall into these issues. If you look at the
0:56:15 > 0:56:20cohorts coming through to step change, very many of the people who
0:56:20 > 0:56:28come to us are very highly educated, have previously been very well paid
0:56:28 > 0:56:33and have got a single or multiple circumstances that have hit them
0:56:33 > 0:56:39which they just didn't see coming. Add-ons that the overlay of the
0:56:39 > 0:56:43culture of actually it's all right for you not really to have any
0:56:43 > 0:56:48back-up savings and no safety net. People switch into crisis extremely
0:56:48 > 0:56:52quickly regardless of how well educated they are.Have you got
0:56:52 > 0:56:58anything in particular you need to add to that?No, it is nine or ten
0:56:58 > 0:57:06of our clients who get into debt because of a change in their
0:57:06 > 0:57:10circumstances.OK. I guess that goes back to the whole savings issue,
0:57:10 > 0:57:17doesn't it?I think there is two different bits. One is people who
0:57:17 > 0:57:23are, whether it is rent to buy who increase the debt, then there was
0:57:23 > 0:57:29the crisis that. I'm sure on the day Carillion went bust a lot of
0:57:29 > 0:57:32employers had spent up over Christmas, mortgage was due in three
0:57:32 > 0:57:38days and they didn't see that coming. Many will not have heard
0:57:38 > 0:57:44that resilience, nor what many of us. We cannot model them up. There's
0:57:44 > 0:57:52the crisis debt, and unknown Carillion go bust, 4000 people, the
0:57:52 > 0:57:58pay cheque has not coming.You say we cannot model them up but in
0:57:58 > 0:58:01another sense I guess I'm asking from your experience what you think
0:58:01 > 0:58:10is the best way to, I guess, tackle one side of that coin but also
0:58:10 > 0:58:14encourage people not to get into that situation in the first place.
0:58:14 > 0:58:23Obviously you can't... A job, circumstance changes, but it comes
0:58:23 > 0:58:28back to the rainy day and savings. But also, to what extent, what can
0:58:28 > 0:58:33the Government do is fundamentally what I'm asking in terms of what
0:58:33 > 0:58:37recommendations can we make, but also where do you think the balance
0:58:37 > 0:58:41needs to fall between putting resource into prevention and putting
0:58:41 > 0:58:48resource into cure. It comes down to the issue of there are different
0:58:48 > 0:58:54solutions but fundamentally it is the same problem.
0:58:54 > 0:58:59I think the challenge we are going to have here is that the sector is
0:58:59 > 0:59:06fundamentally underfunded, so if you take away the £35 million a year
0:59:06 > 0:59:16that individual debtors pay for help and advice to pay for all her --
0:59:16 > 0:59:19organisations. The sector gets £150 million a year to provide that it
0:59:19 > 0:59:28finds.And that is to help people who got themselves into debt. So I'm
0:59:28 > 0:59:30wondering how much of that resource should actually go towards
0:59:30 > 0:59:37preventing that?The education is tiny compared to that. So if you're
0:59:37 > 0:59:42going to make a significant impact, and this is an insecure not going to
0:59:42 > 0:59:46want because it's complicated and hard to do, it has to be a holistic
0:59:46 > 0:59:51approach. You have to reduce the width of the pipe the number of
0:59:51 > 0:59:56people coming through because they are better educated and then they
0:59:56 > 1:00:01have a bit of a safety net and they have been using help, so the number
1:00:01 > 1:00:06of people falling over the cliff is lower. But then, even if you have
1:00:06 > 1:00:11people falling over the cliff, we can still as a sector only help
1:00:11 > 1:00:14about one third of the people who need help because of the lack of
1:00:14 > 1:00:19funding to do it. So even if you restrict the width of the pipe, it
1:00:19 > 1:00:24still underfunded.You're not suggesting we should reduce or
1:00:24 > 1:00:27transfer funding from crisis services to prevention services,
1:00:27 > 1:00:36actually believe that funding...We have been in suppression of four
1:00:36 > 1:00:40years because if we advertise, we simply cannot cope with the number
1:00:40 > 1:00:56of people who want our help. We have to demand suppressed down my me know
1:00:56 > 1:01:01about 1.3 - 1.8 million people could use our systems. We could do with
1:01:01 > 1:01:07the other that we could help three times as many people...But
1:01:07 > 1:01:13obviously, that's unpalatable answer. I think it's important to
1:01:13 > 1:01:19say that debt advisers are preventative as well. Our advisers
1:01:19 > 1:01:24will help to build someone's financial capability, thinking
1:01:24 > 1:01:27about... The evidence is it's very successful, both with the individual
1:01:27 > 1:01:35but also for creditors and the money saved to the state.There is a
1:01:35 > 1:01:40specific proposal in terms of the breathing space scheme, to give
1:01:40 > 1:01:44breathing space for people who have gotten themselves into debt. How
1:01:44 > 1:01:50effective do you think that will be? How do you feel that is the
1:01:50 > 1:01:56solution, or part of the solution? We fundamentally supported, we have
1:01:56 > 1:02:05been pushing very hard for a long time. It's part of a solution, and
1:02:05 > 1:02:09when the questions that needs addressing quite quickly is how long
1:02:09 > 1:02:13is that breathing space for? Because if its own for say six weeks, it's
1:02:13 > 1:02:18just not enough. It doesn't -- doesn't give people time to get on
1:02:18 > 1:02:21their feet and have a sensible conversation with their creditors
1:02:21 > 1:02:25and work it through. We would want it to see it at least doubled or
1:02:25 > 1:02:31more. We are very pleased to see it moving towards statute.In terms of
1:02:31 > 1:02:38the type of situations that it should apply to. Should it
1:02:38 > 1:02:44specifically address noncredit or faults, council tax, and utility
1:02:44 > 1:02:53bills or do you think it's equally as important or more important to
1:02:53 > 1:02:55ease the burden of meeting repayments on financial debts as
1:02:55 > 1:03:02well? Why do you think the scope should be...For us, it's the full
1:03:02 > 1:03:07set. About 50% of people come to us with the Government priority debts,
1:03:07 > 1:03:11it would have to include those to be effective from our perspective.Have
1:03:11 > 1:03:17you seen, I know it's in place in Scotland already, have you seen it
1:03:17 > 1:03:22being successful? What evidence adducing? And what is the amount of
1:03:22 > 1:03:29time in Scotland that's been applied?You don't know? We would
1:03:29 > 1:03:37have to get back to you.We undertake the scheme in Scotland and
1:03:37 > 1:03:44it works very effectively. It's more time-consuming to set up, but it's
1:03:44 > 1:03:52very effective.There's also been a proposal of thinking it to the NHS,
1:03:52 > 1:03:58the people who are may be experiencing a mental health crisis,
1:03:58 > 1:04:04have you got any particular thoughts on how that might be applied?I
1:04:04 > 1:04:09think you are referring to the money and mental health policy Institute
1:04:09 > 1:04:12space scheme. We are fully supportive of that. We think it's an
1:04:12 > 1:04:17excellent initiative and should go hand-in-hand with the primary
1:04:17 > 1:04:21legislation.So to summarise, we should probably just get on with
1:04:21 > 1:04:31that. I say we, I mean the Government.I think with that, we
1:04:31 > 1:04:38have to make sure, friends included, but putting that in place, you don't
1:04:38 > 1:04:41exclude people from having access to stuff because actually, we're not
1:04:41 > 1:04:49going to do that, so there has to be some bounds because we talk about
1:04:49 > 1:04:53inclusive systems, but we also have to make sure that the systems we put
1:04:53 > 1:04:59in place aren't used by others as an excluding tool.I just wanted to ask
1:04:59 > 1:05:07a question as well about credit unions. This may seem a bit loaded,
1:05:07 > 1:05:16it's not. Do you see credit unions as benign or do you see them adding
1:05:16 > 1:05:24to the problem of over dead in this? Word you see the role of credit
1:05:24 > 1:05:26unions in supporting savings, supporting access to credit, the
1:05:26 > 1:05:30kind of creditor we are talking about. But also some of the danger
1:05:30 > 1:05:42point as well.Credit unions, they've never scaled, it's been a
1:05:42 > 1:05:45great story, they're very localised. I think the danger we see with some
1:05:45 > 1:06:00of them is borrowing 50
1:06:01 > 1:06:06quid and going to register with the big tallies up front. We used to
1:06:06 > 1:06:11have our savings bank, but they are still very localised, driven by
1:06:11 > 1:06:14people in the community because they want to do something.Do you think
1:06:14 > 1:06:20they should be encouraged to grow? Absolutely. But to do that, there
1:06:20 > 1:06:26just is not the capital behind that sort of stuff. What they are is very
1:06:26 > 1:06:31small, localised organisations. How do we scale up? More and more they
1:06:31 > 1:06:36tend to be based on a physical basis. We've got people using
1:06:36 > 1:06:43whatever it is, people expecting the answer, why to people... How do we
1:06:43 > 1:06:53actually move into the modern world? A couple of questions... Apologies
1:06:53 > 1:07:00for arriving late, but I was presenting a bill in Parliament. We
1:07:00 > 1:07:08cannot be at two places at once. Two questions. I'm interested in whether
1:07:08 > 1:07:12you have any quantifiable evidence at all about whether gambling has
1:07:12 > 1:07:24any impact on household finances.We do. We put a report out recently on
1:07:24 > 1:07:30the impact of gambling, high-stakes gambling particularly. We do see it,
1:07:30 > 1:07:35it's not that of that we would be more than happy to share it with the
1:07:35 > 1:07:44committee.Maybe we can present something to you, but the only thing
1:07:44 > 1:07:51I would say is that it's one of the reasons that some people fall into
1:07:51 > 1:07:55problem that, but it's not by any means the biggest challenge that we
1:07:55 > 1:08:01see. The biggest challenge we see is the individuals generally just
1:08:01 > 1:08:06overspending on a month-to-month basis and then have to -- have a
1:08:06 > 1:08:15shock. We will give you the numbers, but it's not the overwhelming
1:08:15 > 1:08:25problem...I'm just interested in quantifiable evidence. Second and
1:08:25 > 1:08:30final question. Universal Credit. I'm not interested in your view on
1:08:30 > 1:08:34it, with respect. But are there any specific improvements that you would
1:08:34 > 1:08:40recommend in relation to the Universal Credit that would have
1:08:40 > 1:08:44been your view a significant impact that we should be considering? A
1:08:44 > 1:08:52positive impact.I think we can have a long conversation about Universal
1:08:52 > 1:08:56Credit. We have seen lots of people getting into debt as a result of
1:08:56 > 1:09:04Universal Credit. We have been sharing that evidence with DWP. We
1:09:04 > 1:09:07were really pleased to see some of the changes that the Government made
1:09:07 > 1:09:14around the turn of the year to Universal Credit to help people get
1:09:14 > 1:09:17access to events payment and lessen the weight of first payment. Clearly
1:09:17 > 1:09:21there is more that could be done and all those areas. We would be happy
1:09:21 > 1:09:27to share those with the committee in due course. We will be looked to see
1:09:27 > 1:09:34how those changes take effect.Now that the weight has been largely
1:09:34 > 1:09:39removed in terms of how long it takes to get your first payment,
1:09:39 > 1:09:44that's better. The question for us is always, if you do run short,
1:09:44 > 1:09:49where are you bridging it? So if you Bridget sensibly, or could bridge it
1:09:49 > 1:09:57sensibly by getting that money from a credit union or some social
1:09:57 > 1:10:04low-cost capability, then great. If you're going to a payday lender, all
1:10:04 > 1:10:13that's going to do is tip you into a spiral. It doesn't create a problem,
1:10:13 > 1:10:16it's what people do about it solve that short-term problem. I think
1:10:16 > 1:10:25that's the challenge.From what we've seen is actually some
1:10:25 > 1:10:29landlords aren't currently positive about preparing people for it.
1:10:29 > 1:10:33Others are doing nothing and then it's a disaster. It's a big shock
1:10:33 > 1:10:46and there doesn't seem to be... The implementation has got -- that is
1:10:46 > 1:10:52based a better day for the bash better data sets could be a lot
1:10:52 > 1:10:59clever.I am being informed that the breathing space scheme is a
1:10:59 > 1:11:01reasonable length of time depending on the amount of debt and the
1:11:01 > 1:11:11ability to pay. As opposed to the six week... I assume you would
1:11:11 > 1:11:18prefer the Scottish model in the UK rather than the Limited six weeks.
1:11:18 > 1:11:25We would, but we are also realistic about...It's better than nothing.
1:11:25 > 1:11:31It is the flexibility, let's say for example that six weeks is a period
1:11:31 > 1:11:36of time, it may be that one of our debt advisers is not able to get the
1:11:36 > 1:11:38support they need within that period, we need to have the
1:11:38 > 1:11:45flexibility to extend as required. Thank you very much indeed for your
1:11:45 > 1:11:48generosity and your time. If there's her anything you would like to
1:11:48 > 1:11:57raise, I'm sitting around -- we absolutely would like to hear. For
1:11:57 > 1:12:05now, they get for your it. Thank you very much for being here today for
1:12:05 > 1:12:11our second panel. An inquiry on household finances. For the benefit
1:12:11 > 1:12:18of those were not in the room, if you could just introduce yourselves.
1:12:18 > 1:12:33I am Richard Fuller, we are a...The Paul Smith, chief executive of...I
1:12:33 > 1:12:36want to start with questions just understand your customers. It would
1:12:36 > 1:12:42be helpful just to hear about the gender and age and income profiles
1:12:42 > 1:12:48of those you are working with whether they have bank accounts,
1:12:48 > 1:13:02where in the country they would be...We have 230,000 customers, 66%
1:13:02 > 1:13:08of those customers will be female, and to give you some age
1:13:08 > 1:13:13demographics, the proportion of customers within the ages of 18 and
1:13:13 > 1:13:1950 would be 66 points 7%. But the majority, the rump of the business
1:13:19 > 1:13:28is that the... Household nature is a mixture of agent benefits, that is
1:13:28 > 1:13:33about £15,000 per annum. We have a hundred regional offices across the
1:13:33 > 1:13:42UK from which we have 2000 self-employed agents. We have a bowl
1:13:42 > 1:13:46and national footprint, including in Scotland and Northern Ireland.