Treasury Committee Select Committees


Treasury Committee

Treasury Committee's session on household incomes, saving and debt with evidence from the Cash Shop, BrightHouse and Morses Club, from Wednesday 28 February.


Similar Content

Browse content similar to Treasury Committee. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

Thank you very much so that that

you're the first two panels we have

0:00:190:00:22

the second. People are coming and

going to advance and, just for the

0:00:220:00:32

benefit for those who are not in the

room, I'm going to ask you to

0:00:320:00:35

introduce yourselves.

I'm the head

of policy for consumer and public

0:00:350:00:39

services from citizens advice.

I'm...

I'm managing to do that thank

0:00:390:00:49

you very much indeed and we will

have a series of questions don't

0:00:490:00:54

feel...

Please do chip in if you

have points to make. I wanted to

0:00:540:01:03

start with citizens advice and step

change first. The money advice

0:01:030:01:12

service have estimated separately

that just under 16 of the UK adult

0:01:120:01:16

population are over indebted. And he

defined that as keeping up with the

0:01:160:01:21

missing bills, is a heavy burden.

That's a million people. I just...

0:01:210:01:27

From your work, the evidence that

you've collected and the people you

0:01:270:01:31

work with, does that sound like a

fair estimate and would you agree

0:01:310:01:34

with that as a definition of over

indebtedness? B would agree with

0:01:340:01:41

those numbers. You have to split it

down. As a charity, we help say such

0:01:410:01:51

earn 20,000 people here. -- 620,000

people. You're -- and in some places

0:01:510:02:06

in the Northeast, it's one in 50

people. We recognise the numbers as

0:02:060:02:11

not only folks who are in financial

difficulty, which by... Those who

0:02:110:02:21

are in some distress or at risk of

financial difficulty, being in 8-9

0:02:210:02:27

and quite often their individuals

who you would expect to measure

0:02:270:02:34

lives on a day-to-day basis but

through overspending for under

0:02:340:02:43

£50,000 a month, -- of £150 a...

Do

you think that's fair, the

0:02:430:02:54

definition of indebtedness keeping

up with the missing bills and credit

0:02:540:02:58

commitment being a heavy burden, set

a summary? DeLaet is that a fair

0:02:580:03:05

summary -- is that a fair summary?

It's right that you combine a

0:03:050:03:14

combination of measures. It chimes

with our experience, that sees --

0:03:140:03:23

that is the second biggest issue we

see people with. To .7 million

0:03:230:03:30

people -- 2.7 million people... We

help bridge and 50,000 individuals

0:03:300:03:35

pretty with that and still sad about

the demographic breakdown of some

0:03:350:03:42

those issues, -- Phil talked about.

There are differences between people

0:03:420:03:56

in long-term debt and short-term

debt, but that analysis recently and

0:03:560:04:00

found that about 1 million people

who struggled with long-term debt

0:04:000:04:05

from 2006 all the way through to

2014, so eight years of persistent

0:04:050:04:10

debt. Sunday headline figures hide

that.

In your experience, you've

0:04:100:04:19

already hinted at some of it, the

reasons for, like shocks and

0:04:190:04:29

employment and everything else. Do

you think it's become easier to

0:04:290:04:36

become over indebted? Are you

finding people are slipping into

0:04:360:04:41

that over indebtedness more quickly?

I think we are seeing both the

0:04:410:04:45

average numbers of the amount going

up slightly at the moment. The

0:04:450:04:52

amount that's owed on individual

credit cards going up to over £8,000

0:04:520:04:56

on the individual. What we are

seeing is that individuals aren't

0:04:560:05:02

just only the one creditor, they are

averaging to just over five

0:05:020:05:05

creditors. That creates difficulty

in terms of how you're going to

0:05:050:05:12

manage, who shouts loudest and what

that intervention that is. You see

0:05:120:05:17

that as a significant challenge.

We

are not going to get into a macro

0:05:170:05:29

economic debate, but what we're

seeing is a picture of increased

0:05:290:05:33

insecurity, whether it be through

stagnant wages, rises in inflation,

0:05:330:05:36

Universal Credit, having fewer

pounds in the pocket to ride out

0:05:360:05:44

shocks when they happen. But also

people are increasingly -- are on

0:05:440:05:55

increasingly volatile income. We see

people's incomes fluctuate a

0:05:550:06:03

significant level from

month-to-month and many more see

0:06:030:06:05

their incomes fluctuate from year to

year. That adds to the problems that

0:06:050:06:11

we see, and it makes it easy for

people to slide into high levels of

0:06:110:06:15

debt.

Does this all sound familiar

to you, John? Slightly different

0:06:150:06:21

perspective on it.

We are the

biggest investor now in the social

0:06:210:06:27

ethical lenders, and I think that

about I think the challenge we have

0:06:270:06:34

is people talk about debt, the

measures we do on debt, we talk

0:06:340:06:39

about affordability, we haven't

talked about suitability, how do we

0:06:390:06:45

change data sets and how do we look

at stuff that actually people can

0:06:450:06:52

understand it. Some of the adverts

are Santelli now, you think, it

0:06:520:06:58

reminds me of the mall -- Malboro

adverts. There is a predatory nature

0:06:580:07:10

to them. The promotion of debt seems

to be acceptable. And it's moving to

0:07:100:07:19

the tempo Magdeburg. I'm not going

to name any particular ones, but the

0:07:190:07:24

adverts are sexy. There are

alternatives but it's a predatory

0:07:240:07:29

lenders with the big box that are

advertising that people are

0:07:290:07:34

attracted to. How do we actually

open up the market and let people

0:07:340:07:38

know the credit unions exist, that

other alternatives are there,

0:07:380:07:41

because it's a very singularly

focused market, who's got the

0:07:410:07:45

biggest budget?

Where the things

we've had evidence about is that we

0:07:450:07:50

should worried about the overall

picture, but it's problematic that.

0:07:500:08:00

As defined, do you agree that the

the Toys "R" Us, Carillion, I think

0:08:000:08:07

they just extensions of over

indebtedness.

This country has the

0:08:070:08:16

biggest credit Bill get going,

doesn't? How do we get people to

0:08:160:08:20

understand that it is, because I

think there is a this conception

0:08:200:08:23

about it. How do we change and take

away that, talk about suitability.

0:08:230:08:42

Some rates could be suitable for

short-term fix. A talk about Ford

0:08:420:08:49

ability but the data that is

collected, it is debt data. It's not

0:08:490:08:54

spend data. The biggest expenditure

of any household is the housing. So

0:08:540:09:04

how do we make sure that people's

expenditures alone. Your team is

0:09:040:09:11

when going through a stop going to

William Hill or don't drink so much.

0:09:110:09:16

You're not looking at the

suitability of the debt. We are

0:09:160:09:19

looking at theoretically at the

affordability based on indebtedness?

0:09:190:09:24

It seems upside down to me.

We don't

see credit in itself as a bad thing.

0:09:240:09:33

The question is, is it affordable?

Is appropriate? Is a sustainable?

0:09:330:09:38

And do you understand when we're

getting into it what you're getting

0:09:380:09:41

yourself into? Are using it

appropriately? For instance if you

0:09:410:09:46

are using credit cards to pay your

utility bills or you are paying off

0:09:460:09:53

credit. It's a spiral. It's a spiral

out, and then we move onto the next

0:09:530:10:04

question, which is rather than being

an adequate ambulance at the bottom

0:10:040:10:10

of the clip to help these

individuals, the question for us is

0:10:100:10:14

what are we doing to stop people

falling into this in the first

0:10:140:10:17

place. We moved straight on to the

concept of rainy day savings, people

0:10:170:10:23

having an ability to pay out of some

savings or being able to go to a

0:10:230:10:33

low-cost provider of debt rather

than a publicised ones as John says.

0:10:330:10:44

Your question about growth and

consumer credit versus problematic

0:10:440:10:47

debt. I think it's right because

people can get fixated on this 200

0:10:470:10:52

billion, 210 billion figure in

itself, and borrowing is not bad in

0:10:520:10:56

itself. A couple of points I would

make about it is, one thing that is

0:10:560:11:01

worth focusing on is, are those

debts, which have more significant

0:11:010:11:09

consequences, household debt, rent

arrears, being cut off, or debts

0:11:090:11:19

that can involve imprisonment. One

of the real dangers I think is that

0:11:190:11:24

a lot of those debts, the not

consumer credit debts, are all

0:11:240:11:29

captured as part of this figure so

you have the Bank of England and

0:11:290:11:33

other bodies, very clear on the size

of this consumer credit bubble, but

0:11:330:11:37

no attention being paid to these

much more damaging debts that went

0:11:370:11:42

into the billions of pounds, and

have those more saviours

0:11:420:11:46

consequences. There's a sense that

people need to grip the overall

0:11:460:11:49

picture rather than just obsessing

over consumer credit. Where the

0:11:490:11:55

other sides that were focused on is

I think we should be focused more on

0:11:550:11:59

problem that where actually it is

the product itself, which can often

0:11:590:12:03

cause a death, I know we will be

talking about high-cost credit and

0:12:030:12:08

whether it be credit cards or short

term credit... Rent own or do less

0:12:080:12:17

rent to own -- rent to own...

We

were hosted by... One of the things

0:12:170:12:31

we explored there was none credit

defaults, such as on council tax and

0:12:310:12:38

utilities. That is a growing trend.

I just want to perhaps look at your

0:12:380:12:45

point of view how you see it,

because we heard that government

0:12:450:12:50

departments can be very inflexible

in terms of dealing with it, making

0:12:500:12:57

arrangements.

It's something we are

seeing, and it's something we've

0:12:570:13:02

seen council tax debts, over £1000

on average now, around 31% of our

0:13:020:13:13

clients last year. Quite often, the

governmental organisations are very

0:13:130:13:19

aggressive in the way they go about

getting the payments made. There's a

0:13:190:13:27

quick jump to the use of bailiffs

which we are concerned about.

We

0:13:270:13:35

talked about at length this past

week. I think people find acai be

0:13:350:13:42

difficult to grasp because when

people first hear government

0:13:420:13:48

collection, local authority question

is effectively the that perhaps

0:13:480:13:57

emotionally, it's difficult to

accept, because the Government must

0:13:570:13:59

do better than some of these firms

that we hear about. I think there

0:13:590:14:05

often a lot the Government could

learn in terms of forbearance or

0:14:050:14:10

understanding from some of those

consumer creditors and part of that

0:14:100:14:12

is because regulation has brought

some of those firms online, but

0:14:120:14:17

partly, if you talk to banks, it's

because lots of organisations agree

0:14:170:14:23

that aggressive collection methods

are not effective in and of

0:14:230:14:26

themselves and actually getting

money in the door because people

0:14:260:14:28

don't respond well to some of those

tactics. Does a couple of reasons

0:14:280:14:34

why they should look at the way they

collect that.

0:14:340:14:42

There will be people who are two

months behind on the rent, haven't

0:14:420:14:49

paid the council tax, but on all

CRAs will say job's a good un. The

0:14:490:15:05

difference in attitudes is one of

the reasons that price is so high,

0:15:050:15:10

they are factoring in failure. The

way to get high costs down apart. In

0:15:100:15:17

some predatory action is to lower

down the failure record.

I'm so

0:15:170:15:23

tempted to go right down the path of

what happens to people in crisis but

0:15:230:15:30

I'm going to stick to

creditworthiness and financial

0:15:300:15:33

inclusion. Apologies by the way if I

leave shortly afterwards but one of

0:15:330:15:41

my constituents here is part of the

lobby of Parliament and they are my

0:15:410:15:46

boss so don't think it's a

reflection of my interest in this

0:15:460:15:52

topic. The big issues behind the

credit assessment Bill, taking into

0:15:520:16:04

council tax and council tax payment

history, what problems do you think

0:16:040:16:08

this will solve and how much

practical difference do you expect

0:16:080:16:15

it to make to borrowers?

At the

moment, everyone concentrates on

0:16:150:16:21

their mortgage. Actually there are

12 million renters and growing. We

0:16:210:16:35

have people growing from 22, not

going to buy a house until 35, they

0:16:350:16:45

don't have digital footprints or any

record of doing stuff. Why am I

0:16:450:16:49

still paying my kids' mobile phone

bills, because they cannot get the

0:16:490:16:55

credit account themselves. They are

paying rent, it's not recorded

0:16:550:16:59

anywhere, they don't exist so some

of it is about digital

0:16:590:17:03

authentication. About 30% would not

even past digital authentication

0:17:030:17:09

because the data is not there. We

developed a credit system... What

0:17:090:17:20

was experienced cold 20 years ago?

Push what was Experian called? It

0:17:200:17:37

was Gus, a catalogue company, which

grew from providing affordable

0:17:370:17:40

credit of the masses. The whole CRA

system has moved from where it

0:17:400:17:46

started to actually excluding the

masses because the nature of the

0:17:460:17:49

data of its been recorded is not

necessarily... Ariel Sharon upon

0:17:490:17:57

creditworthiness is what are the

datasets we should be recording

0:17:570:18:01

whether it's calculating someone's

credit rating will reportedly the

0:18:010:18:04

data is available to look at

affordability unsuitability of

0:18:040:18:07

products.

I will broaden it out to

the panel because one of the things

0:18:070:18:19

we see in our case work as

constituency MPs is there is a real

0:18:190:18:22

cliff edge in consumer credit

ratings and this kind of perverse

0:18:220:18:28

situation where anyone with adverse

credit history is pushed towards

0:18:280:18:34

high cost lenders because they are

the only lenders prepared to lend to

0:18:340:18:38

them so we end up effectively,

because of bad credit history,

0:18:380:18:43

pushing people towards a higher cost

of borrowing. If you've been in the

0:18:430:18:48

poverty trap you are more likely to

spiral further into that trap. Do

0:18:480:18:54

you think the proposal of including

rent assessments would help?

I think

0:18:540:19:02

the only counter argument to the

point here is that's fine if the

0:19:020:19:09

thing that is going to be included

is something you are paid well for a

0:19:090:19:13

long time. If you are behind on your

rent and council tax payments, all

0:19:130:19:18

that will do is enhanced social

exclusion. For a minority of people

0:19:180:19:25

it could push them further into

social exclusion.

There's a lot of

0:19:250:19:33

good in the proposal, it's important

to acknowledge it's a double-edged

0:19:330:19:36

sword. Obviously we will get onto

broader topics as well but a lot of

0:19:360:19:43

the clients we see who struggle to

access credit, there is a proportion

0:19:430:19:46

for which credit referencing is a

factor but it's not the big factor.

0:19:460:19:54

Anything too hard?

We have had

discussions about negative, but the

0:19:540:20:04

last thing in the credit worthiness

bill is about promoting people get

0:20:040:20:08

into more debt. It's about making

sure data is recorded so the

0:20:080:20:13

suitability and access to products

is improved. Whether that be... If

0:20:130:20:17

you go and try and provide insurance

and putting your correct address you

0:20:170:20:25

will get one quote. Change your

postcode by two digits, your quote

0:20:250:20:31

will go up by 20% because it's going

ping ping ping, we will price the

0:20:310:20:43

risk automatically. If you don't

have a digital footprints you are

0:20:430:20:47

automatically paying more. That is

right.

Can I ask a broader question

0:20:470:20:53

because this is the kind of policy

maker's dilemma so hopefully you

0:20:530:21:00

will solve it this afternoon.

Broadly speaking, in terms of how we

0:21:000:21:05

approach problematic debt and

tackling it, you can either restrict

0:21:050:21:11

access to credit but then

potentially deny people opportunity

0:21:110:21:15

to smooth their incomes or to

overstep those bumps on the road

0:21:150:21:19

without hitting crisis or reform

credit products so they become more

0:21:190:21:29

sustainable. Do you think the latter

option is realistic or is preventing

0:21:290:21:35

people from accessing products in

the first place?

It is a complicated

0:21:350:21:45

answer. Clearly we talked about

borrowing is a positive thing,

0:21:450:21:53

whether people borrow to smooth

expenditure and so on. There is no

0:21:530:21:57

doubt receive certain proportion of

clients and it is right extra

0:21:570:22:03

borrowing will get them into further

financial difficulty and to some

0:22:030:22:07

extent it isn't the answer for them.

But I think the thing I would want

0:22:070:22:12

to be very careful of is we will get

into conversation about arguments

0:22:120:22:19

whether to regulate or not, say high

cost lenders for example. It's often

0:22:190:22:25

an argument that use which is if you

regulate you will just deny people

0:22:250:22:31

access to credit. It is a simple

trade-off and all of our evidence

0:22:310:22:36

shows it's not the case. If you look

back at payday loans, those are the

0:22:360:22:42

arguments made about payday lending,

the vast majority of people who need

0:22:420:22:51

credit but all the stops is the

predatory side of it which means you

0:22:510:22:55

have a group who are not shopping

around according to cost and value.

0:22:550:22:59

They are just desperate for credit

and it means those people can be

0:22:590:23:04

exploited to the same extent so I

don't see it as a trade-off between

0:23:040:23:09

access to credit and improving

credit products.

I would break it

0:23:090:23:17

down into four stages really. I

think the first element is an

0:23:170:23:22

educational and awareness element

which we must talk about because it

0:23:220:23:28

is extremely important that

individuals understand what good

0:23:280:23:33

personal financial management looks

like and can avoid getting

0:23:330:23:37

themselves into difficulty. That

goes on to the second element, which

0:23:370:23:40

is talking about having a safety net

and soaks you are not immediately

0:23:400:23:45

recall seeing to debt. Or at least

access to a social lender who is

0:23:450:23:54

going to do things at a reasonable

rate. If you do have to take on

0:23:540:23:59

debt, it has to be affordable and it

has to be sustainable and

0:23:590:24:05

appropriate for you. Then if you do

get yourself into difficulty with

0:24:050:24:10

that, there has to be measures in

place such as for breathing space

0:24:100:24:15

legislation which is going through

at the moment which gives you a

0:24:150:24:18

little bit of time so that if you

get yourself into difficulty you are

0:24:180:24:24

given a bit of time without penalty

interest to get yourself back on

0:24:240:24:27

your feet and to start putting in

place a proper debt management plan.

0:24:270:24:35

It's important because in terms of

step change as a charity, we say if

0:24:350:24:42

you have borrowed it you should pay

it back and we give people the

0:24:420:24:46

opportunity to pay it back even if

it is over a long period of time.

0:24:460:24:53

There's a lot of people who don't

have a bank overdraft, who don't

0:24:530:24:56

have a credit card. End of the

month, the washing machine is

0:24:560:25:03

broken, it's a five-week month. We

have got to accept some of the

0:25:030:25:08

payday lending is what many in this

room may do because the cat got sick

0:25:080:25:12

or whatever. I don't think we should

demonise the fact people at some

0:25:120:25:19

point in a month are couple of quid

short, it's just life happens. We

0:25:190:25:24

have got to have that ability, we

have got to accept people are living

0:25:240:25:30

to the ends of their means. In the

old days, go to Nottinghamshire and

0:25:300:25:37

people would go, you know, the Lady

of the House would go to the pit on

0:25:370:25:43

a Friday, pick up the wage packet,

he would go to the pub but they've

0:25:430:25:47

managed on a week by week basis and

people are still managing on a very

0:25:470:25:54

tight budget with no cushion. I

think are important thing on the

0:25:540:25:58

stuff we are doing is we are not

hold up too much about interest

0:25:580:26:04

rates. We are hung up about the

suitability but more importantly

0:26:040:26:11

what happens when things go wrong.

We spend a lot of time looking at

0:26:110:26:15

affordable members saying what do

you do when it goes wrong because

0:26:150:26:18

that's the critical point for these

people. If it just spirals out, it

0:26:180:26:23

is that. Also some of the education

stuff, fair money .com just launched

0:26:230:26:34

trying to provide a website to more

better lending decisions and it

0:26:340:26:38

starts with credit unions and

explains what it is. How do we get

0:26:380:26:44

education out there that understands

stuff because things have gone

0:26:440:26:50

wrong, you see the advert on the

telly. We are a society of very

0:26:500:26:57

poor... Those with the biggest

marketing budgets can be the most

0:26:570:27:01

predatory. I think we have all

experienced that feeling of watching

0:27:010:27:05

someone would come to us sooner for

advice before they hit crisis point.

0:27:050:27:10

Am I finish with a question on the

FCA's consultation on assessing

0:27:100:27:17

creditworthiness. They are proposing

an explicit definition of

0:27:170:27:21

affordability risk to show where

repayments could have an adverse

0:27:210:27:28

effect on people even if they don't

default. Do you think about the

0:27:280:27:33

right approach? Is there a risk this

will cut people's access to credit?

0:27:330:27:41

If particularly for you, John, how

do you see their state of

0:27:410:27:48

objectives?

Their first bid came

round, a definition of high cost

0:27:480:27:54

over 100%, actually I've got a bit

of a struggle with that because it's

0:27:540:27:57

the package I want to know. What is

the suitability for the individual

0:27:570:28:03

and so on. If you look at the amount

of effort that goes into mortgage

0:28:030:28:08

lending, actually we are changing

what's happening, there has to be

0:28:080:28:17

greater effort in checking

affordability unsuitability of that.

0:28:170:28:20

That's the start of putting the

fence at the top of the cliff and

0:28:200:28:24

not the ambulance at the bottom.

From the step change perspective we

0:28:240:28:31

are absolutely welcome the

suggestions and recommendations.

0:28:310:28:34

There are some areas where we need

to go further and particularly on

0:28:340:28:38

revolving products, persistent

overdrafts that kind of thing but we

0:28:380:28:43

welcome it.

0:28:430:28:48

We still see too many cases where,

especially with small loans, where

0:28:480:28:55

it is properly assessed. Anything to

strengthen that is a positive step.

0:28:550:29:04

The head of the SCA told this

committee, I don't think we have a

0:29:040:29:10

sustainable means of providing

low-income households with credit at

0:29:100:29:17

the moment. Do you agree with that

and what might we have done about

0:29:170:29:20

it?

One of the challenges, if you're

looking the that we're doing a tip

0:29:200:29:30

of the iceberg investigation into

ethical and social lenders, but

0:29:300:29:33

because of the legal structure, its

lending its loan, how do they ever

0:29:330:29:42

pay back if they grow? It's having

that large lump of capital that can

0:29:420:29:49

support the other that they haven't

got the capital to do it. Barclays

0:29:490:29:54

may run big equity, the legal

structure where is that big lump, is

0:29:540:30:01

the hundred millions, the 200

millions that is supporting the

0:30:010:30:04

growth of that sector, along 25-30

your position. People can't grow

0:30:040:30:11

businesses on short-term positions.

We agree entirely. I think one of

0:30:110:30:19

the challenges we have to ask

ourselves about is the reasoning

0:30:190:30:23

behind the lending of the doubt

whether one of the reasons is is

0:30:230:30:32

they might follow the difficulty in

some way and create a profitable

0:30:320:30:36

situation for the lenders. I agree

with John, the challenge... There is

0:30:360:30:44

no way developed market in terms of

social and low-cost lenders so

0:30:440:30:49

people have to resort to lenders who

do a fully risk-based pricing

0:30:490:30:55

approach in the way they lend money,

so interest rates are very high, so

0:30:550:31:02

we are welcoming of the cap on

overall borrowing costs, but we do

0:31:020:31:11

need to extend into other areas like

rent to own.

They will consult on

0:31:110:31:17

proposals to reform high-cost credit

including overdrafts, rent to own,

0:31:170:31:23

in the spring. What changes would

you like to see?

I echo what Bill

0:31:230:31:28

just said. We'd like to see the cap

and payday applied successfully. --

0:31:280:31:33

what Phil just sent. There

0:31:330:31:54

opportunities... All the spectres

were raised before it was brought in

0:31:550:32:01

about denying access to credit and

people going to illegal

0:32:010:32:04

moneylenders. These things sound

emotive in a forum like this,

0:32:040:32:09

especially things like moving into

illegal moneylenders. No 1's bought

0:32:090:32:16

any evidence that this is actually

happening. There was such a strong

0:32:160:32:21

argument, don't shop around and

differentiate, there on these

0:32:210:32:30

particular markets, exploding with

exponential interest rates and

0:32:300:32:32

holdover loans. That's something we

would like to see. Rent to own is a

0:32:320:32:42

big market. Very much towards a

vulnerable... They're young, usually

0:32:420:32:52

female, usually very vulnerable, you

have the individuals put into a

0:32:520:32:57

situation where there is no cap on

the cost of credit, and then it's

0:32:570:33:03

compounded by the the... So when you

do the overall costs, it's

0:33:030:33:15

absolutely horrendous. Quite

frankly, it just has to stop. It's

0:33:150:33:17

not right.

Just to pick an example.

The figures we had, about 20% of

0:33:170:33:27

rent-to-own customers pay a fifth of

their income on rent to own

0:33:270:33:32

repayments, that's phenomenal amount

of money, we're not talking about

0:33:320:33:37

small in the margins.

Just looking

at rent to own, many of my

0:33:370:33:47

constituents complain about the of

interest and that the goods

0:33:470:33:50

themselves are more expensive than

it would be able to find in their

0:33:500:33:56

local curries. They could also find

better credit in terms on offer as

0:33:560:33:58

well. What sort of caps do you think

should be placed?

We think there

0:33:580:34:10

should be 100% cap that we have on

payday lending. But as I said, I

0:34:100:34:18

think we have to look more widely.

You need to decouple the warranty

0:34:180:34:24

and it just needs properly

regulating because it serves a

0:34:240:34:29

really useful purpose. There's a lot

of people who use it and if used

0:34:290:34:33

well, it can be effective. But it's

deeply under regulated stop it needs

0:34:330:34:39

to change.

To an extent, a

relatively simple headline cap would

0:34:390:34:49

solve some of the problems because

you are then able to see, even if

0:34:490:34:54

the upfront costs are usually

inflated, which in many cases it is,

0:34:540:34:58

it is easier as a consumer to see

that it is incredibly highly priced,

0:34:580:35:04

and there are other ways around that

if you costed out. The cost it out,

0:35:040:35:11

even though it's a slightly

different product to payday.

Would

0:35:110:35:18

you don't see in these, by the time

you're finished, you have paid £3500

0:35:180:35:24

for the television and it's only

worth 1500. Some of the

0:35:240:35:29

presentation, you will see. £10 a

week. It's how we promoted. It's not

0:35:290:35:35

being insulting to people. We need

to have the explanation of what that

0:35:350:35:42

really means, read loud and bold.

One of the problems is some of these

0:35:420:35:47

things actually promote this

unending cycle of debt. We have to

0:35:470:35:54

stop products that promote that.

Did

I just moved to credit cards? The

0:35:540:36:02

credit card market study... Early

warnings and interventions for those

0:36:020:36:12

getting into difficulty. What do you

think of these ideas?

We just don't

0:36:120:36:20

think it went far enough, for about

6 million of us, getting those

0:36:200:36:27

increases every year, I'm sure

people in the committee have had

0:36:270:36:29

that letter through the letterbox.

Melamed has gone up without having

0:36:290:36:36

tested. The best might limit -- my

lemon has gone up. -- limit. For

0:36:360:36:55

those who are in distress and who

get the increase, 50% increased his

0:36:550:37:00

spending. It has a number of holes

in it, and you've got to ask why.

0:37:000:37:10

It's a phenomenal amount of money to

be made out of pushing credit on the

0:37:100:37:14

people, and you have to ask why the

banks fought so hard for a voluntary

0:37:140:37:21

arrangement. It's one of those

things that, if I'm honest, and five

0:37:210:37:26

years' time, we will be sitting here

would it being banned and we will

0:37:260:37:29

think of this incredible situation

that we used to have where people

0:37:290:37:33

just to get credit without asking,

thinking how it was something we

0:37:330:37:37

considered to be fair game. May be

that they ridiculous concept was up

0:37:370:37:45

I just think it's a very strange

move to not bother the piercing

0:37:450:37:52

regulators should just come along

and then at.

Full stop.

Voluntary

0:37:520:38:01

schemes can be good. We don't push

for regulation for regulation sake.

0:38:010:38:07

If someone sense among the text and

asks, it's one thing. It's a huge

0:38:070:38:17

barrier for a bank to pass. It's a

very different issue, just raising

0:38:170:38:20

it unilaterally without asking them

in the first place.

It seems

0:38:200:38:23

strange. We think it's a good start

in terms of the suggestions.

0:38:230:38:32

However, it does work on individuals

who've gotten themselves and the

0:38:320:38:37

troubles that it's not doing enough

to address the ability of people to

0:38:370:38:42

get themselves into trouble in the

future because there's not proper

0:38:420:38:46

assessments done of an individual

buys likability to pay off the

0:38:460:38:50

credit cards going forward. It's a

good... We are not sure what it does

0:38:500:38:58

going for.

They say they don't

propose to restrict normal sense

0:38:580:39:03

credit card balance transfers.

That's good news for consumers,

0:39:030:39:08

isn't it?

Or is it exploitative?

It's an interesting leading

0:39:080:39:22

question. It depends what you are

going to do with that zero balance

0:39:220:39:25

transfer. If you're going to use it

in a sophisticated manner, to have a

0:39:250:39:31

continuing rolling 0% bound

structure. If you get to the point

0:39:310:39:39

where points out as a zero balance

transfer period, and you might want

0:39:390:39:44

to higher overall costs... Then

obviously, that is a problem. If you

0:39:440:39:50

gain it is fine, if you get caught

up by it it's not. It again goes

0:39:500:39:56

back to financial education and

being aware of what you're getting

0:39:560:40:00

yourself into.

The minute you spend

on that 0% credit card, the debt you

0:40:000:40:07

are paying off and you paid opposite

not percent debt, another... It's

0:40:070:40:13

promoted in a way that actually

isn't, to a lot of people, there is

0:40:130:40:18

a clarity.

As you say, some people

are good at this, a lot of people

0:40:180:40:24

just use credit cards in the wrong

way. It's not a particularly good

0:40:240:40:31

way to use a credit, not necessarily

what it was intended for. Some of

0:40:310:40:36

the other remedies that the SCA

brought were positive, -- FCA.

So I

0:40:360:40:56

want to focus on the rainy day

savings ideas. Mr Andrew, that

0:40:560:41:03

change has written... If every

household in Great Britain had £1000

0:41:030:41:09

saved, this could reduce the number

and problem debt by 500,000. Is this

0:41:090:41:15

realistic in your view? The actual

cost would be very significant. Can

0:41:150:41:20

you say bit more about that?

Obviously it's not going to be easy

0:41:200:41:25

to get everybody to put aside £1000

in excess Bill cash savings. It has

0:41:250:41:34

to be -- in excess cash savings. But

I think for us... The matching

0:41:340:41:50

through the UK savings Gateway pilot

was very successful and we applaud

0:41:500:41:55

that and we would like to see that

extended out. An area where there's

0:41:550:42:01

been suggestions that it would be

very helpful is on giving tax

0:42:010:42:05

relief, we don't feel that works so

well at the lower income and of the

0:42:050:42:13

spectrum. We are not soaking on

that, though it has a place, though

0:42:130:42:21

probably not for the types of

individuals who come in and conduct

0:42:210:42:24

step changes.

You would say that the

schemes are not well targeted

0:42:240:42:29

towards the most indebted or...

They

are not because if you are paying

0:42:290:42:35

little to no tax, something that is

tax-free is irrelevant. The marginal

0:42:350:42:39

savings were getting is very small.

It may sound shallow as a structure,

0:42:390:42:48

but what we've seen in other

environments is a savings scheme,

0:42:480:42:54

like premium bonds, forgive them an

incentive to save by getting prizes

0:42:540:43:01

and potential... Something that will

give you a jump up, which is free to

0:43:010:43:09

you at the point of saving. We have

found it worked in other parts of

0:43:090:43:18

the world, and it's something that

needs to be looked

0:43:180:43:25

the world, and it's something that

needs to be looked.

Backspace

0:43:250:43:31

incentives don't have a benefit or

appealed to lower income households.

0:43:310:43:34

Very much agree.

One of the things

that are a bit more innovative is

0:43:340:43:42

the modelling of the credit union,

which is to borrow as you pay but

0:43:420:43:46

you save the same time. How can we

think of depositions were if you are

0:43:460:43:51

paying off her credit card and the

percentage of that is going to a

0:43:510:43:57

savings account. I keep paying with

a love again. I don't pay, and will

0:43:570:44:02

be used or whatever, but it can be

handled in a more innovative way

0:44:020:44:06

that can encourage the it could

actually reduce the interest rate

0:44:060:44:12

because if IRD have money and that,

I will keep a because I want that

0:44:120:44:16

back. This bit of animation about --

there is a bit of innovation and how

0:44:160:44:22

can look of the product that could

be credit and saving at the same

0:44:220:44:26

time.

0:44:260:44:32

To build on that point, it is a

slightly different way to look at

0:44:320:44:36

it, and it's been a really positive

take-up of the standard financial

0:44:360:44:40

statement, where people are paying

back their debts and building in the

0:44:400:44:46

element of saving as part of it

which is an incredible positive

0:44:460:44:50

because of the habits it built. Much

less adopted by the public sector

0:44:500:44:56

creditors and collectors so you will

often see a situation where someone

0:44:560:45:00

has a plan in place if their

consumer creditors is able to save

0:45:000:45:05

something. Excessive amounts taken

back by the state then stops them

0:45:050:45:12

saving the amount which might solve

their problem in the long term so

0:45:120:45:16

another challenge of the Government

and public sector taking with one

0:45:160:45:19

hand but causing problems with

another.

You have kind of answered

0:45:190:45:26

my question I was going to ask you.

In a way this whole session, thank

0:45:260:45:32

you for giving your time, this whole

session is thoroughly depressing.

0:45:320:45:43

That's why I picked the section,

because I was keen to understand

0:45:430:45:47

better why the big interventions

could be made by government. On the

0:45:470:45:52

one hand my questions and my section

is about what the indebted

0:45:520:45:58

individual, how they can be

supported to save but as you talked

0:45:580:46:08

about the labour market and the

pressures and there is even greater

0:46:080:46:12

pressures on changes in the benefits

system and so on, where do you

0:46:120:46:17

think... In a sense what I'm trying

to get up as to what extent do you

0:46:170:46:24

think this is going to be resolved

by coming up with new innovative

0:46:240:46:32

mechanisms to help people save. But

if you don't have the money, if you

0:46:320:46:36

just can't make ends meet, how are

you men to save and what's your

0:46:360:46:40

proposal to government about what

they should be doing to address that

0:46:400:46:45

side of the equation?

I think it was

still make a huge difference. I'm

0:46:450:46:48

not going to pretend there is and to

challenge with how much money people

0:46:480:46:56

have in their pockets. Of course

that's the case but I go back to

0:46:560:46:59

high-cost credit and I won't dwell

on it too long, but certain

0:46:590:47:05

products, it's not that they just

don't help the problem, they

0:47:050:47:09

actively make it worse. You regulate

some of those products effectively

0:47:090:47:12

and I think you can make a huge

difference. If you give people a

0:47:120:47:17

small savings offer, you can make a

huge difference. Focus on savings

0:47:170:47:21

and regulating the market and

focusing on not, again debt

0:47:210:47:27

collection from the state, a classic

example might be what we spoke about

0:47:270:47:32

last week, someone having a fossil

tax debt, the council calling in

0:47:320:47:43

bailiffs and suddenly it is doubled.

Can I ask you to say more about the

0:47:430:47:54

Help To Save programme and how well

targeted you think that is.

We

0:47:540:48:01

welcome it. The a -- clearly it

cannot help people in crisis today

0:48:010:48:11

but it will help people falling into

that in the future. We think there's

0:48:110:48:19

about 3.5 million low-income adults

eligible for Help To Save and we

0:48:190:48:27

recommend that fully support doing

that. The question I think for us is

0:48:270:48:32

how are the Government going to help

maximise take-up of that? Because it

0:48:320:48:38

is deeply countercultural as it

stands at the moment because we have

0:48:380:48:44

got ourselves into a culture of

absolute immediacy and a culture

0:48:440:48:49

where building the dead as a student

as an example is deemed as

0:48:490:48:55

absolutely acceptable. If you are an

undergraduate, you are actively

0:48:550:49:00

encouraged to get yourself £40,000

into debt, don't worry about the

0:49:000:49:04

interest rate, you might not have to

pay toffs so don't worry about it.

0:49:040:49:11

We are giving that message -- you

might not have to pay it off. And

0:49:110:49:20

the message is so far off kilter

with normal culture that it will be

0:49:200:49:24

difficult to sell. It will require a

real drive.

I think education and

0:49:240:49:35

people's understanding of stuff is

awful. People are going for advice

0:49:350:49:43

after the event. How do we promote

people understanding that and what

0:49:430:49:49

£10 a week really means, but how do

we promote a product that is both

0:49:490:49:56

credit and saving at the same time.

Because I think that would be good.

0:49:560:50:03

And do you think the Government has

got the wrong balance in terms of

0:50:030:50:06

tax breaks. If you look at the ISAs?

They are middle class.

Middle

0:50:060:50:21

classes tend to do better out of

those products. Do you think they

0:50:210:50:26

could refocus on some of the

incentives towards those who are

0:50:260:50:29

more indebted so we are coming at

the problem from both directions,

0:50:290:50:33

more aggressive government

interventions to target that group

0:50:330:50:40

of people as well as encouraging

people to save themselves.

If you

0:50:400:50:45

look at promotion writers, you can

save up to 20,000 per year, that

0:50:450:50:51

this cloud cuckoo land for lots of

people.

That is not even a lot of my

0:50:510:50:58

constituents' salaries.

You can save

£5 a week. And actually that £5

0:50:580:51:04

could be £6. The language is wrong.

20,000 quid and the promotion of to

0:51:040:51:15

get in before...

And there are lots

of concerns about not being able to

0:51:150:51:20

take your money out, not being able

to access it. If you are in a cycle

0:51:200:51:29

of expenditure, up and down, what

would you recommend the Government

0:51:290:51:44

to do around those sorts of concerns

people have?

If you take the

0:51:440:51:47

mortgage industry went very much and

there was the joint account between

0:51:470:51:50

the current account and mortgage

account to actually he will be using

0:51:500:51:54

the mortgage quite often, the

majority of these people are

0:51:540:52:01

invented and it's how we link rent

and so on. We all have good times

0:52:010:52:18

and bad times, the problem is in the

good times we are just not... And

0:52:180:52:23

these buffers are small. Ten, 20

quid is the difference. Out of

0:52:230:52:27

Leicester we have a couple of

housing association tenants going

0:52:270:52:31

into the food bank, now selling the

big issue, ten a week, but that's

0:52:310:52:39

money is transformational. We are

not talking about £20,000, we are

0:52:390:52:46

talking up the grass root level of

20 quid a week transforms people's

0:52:460:52:50

lives.

You are right and it's not

just the small amounts of money but

0:52:500:52:54

the speed at which people might need

to spend it. We might traditionally

0:52:540:52:59

imagine saving over several years

but high velocity saving is natural

0:52:590:53:06

to a lot of our clients, saving for

six weeks to pay the 50 quid

0:53:060:53:11

exponents which otherwise would tip

them over the edge. That should be

0:53:110:53:15

encouraged because it's the reality

of how their lives are. It shouldn't

0:53:150:53:19

be discouraged.

Some of the response

to this inquiry has suggested part

0:53:190:53:27

of their pension savings under auto

enrolment could be made available as

0:53:270:53:31

liquid savings in the sidecar

account. Would you support this, and

0:53:310:53:36

what limits would you need to put in

place?

There are so many people who

0:53:360:53:49

will be in such poverty in their old

age. To rub it now really is Peter

0:53:490:53:55

and Paul from my point of view.

We

think there is a place for this if

0:53:550:54:01

it is properly policed haven't done

for a small portion of your overall

0:54:010:54:08

pot so it too is a very short-term

small bridging element, then we are

0:54:080:54:15

OK with that, but the concept of

allowing it to ebb away your overall

0:54:150:54:19

pension pot in a material way would

be a significant challenge.

We would

0:54:190:54:26

encourage the principle but anything

that dabs away the pension wouldn't

0:54:260:54:30

be.

John, you have already touched

upon this in some of your previous

0:54:300:54:38

answers so I was going to direct

this at Bill. In your organisation's

0:54:380:54:46

experience, what level of financial

awareness do you think people have

0:54:460:54:51

in terms of education?

It's a really

difficult question and the reason

0:54:510:54:56

it's a difficult question to answer

is that one of the challenges we

0:54:560:55:02

have is that we always ask our

clients, do you understand what we

0:55:020:55:07

are recommending, do you understand

your financial position. Generally

0:55:070:55:11

speaking we will say yes we do. That

can mean one of three things, it can

0:55:110:55:17

mean yes I completely understand,

thank you very much indeed. It can

0:55:170:55:22

mean I don't understand but I trust

you are doing the right thing for

0:55:220:55:27

me. Or it can mean I don't really

understand what I'm too embarrassed

0:55:270:55:31

to say. We find ourselves having to

iterate roundabout which makes calls

0:55:310:55:36

very long, in order to see whether

people are really understanding what

0:55:360:55:41

they are getting themselves into. A

lot of that is around basic

0:55:410:55:48

education and understanding. The one

caution I would give is it doesn't

0:55:480:55:53

matter how well financially educated

you are, sometimes you simply cannot

0:55:530:55:59

earn any more money and then you

will fall into shock through illness

0:55:590:56:04

or job loss or whatever it happens

to me and doesn't matter how well

0:56:040:56:09

educated you are, you fall into

these issues. If you look at the

0:56:090:56:15

cohorts coming through to step

change, very many of the people who

0:56:150:56:20

come to us are very highly educated,

have previously been very well paid

0:56:200:56:28

and have got a single or multiple

circumstances that have hit them

0:56:280:56:33

which they just didn't see coming.

Add-ons that the overlay of the

0:56:330:56:39

culture of actually it's all right

for you not really to have any

0:56:390:56:43

back-up savings and no safety net.

People switch into crisis extremely

0:56:430:56:48

quickly regardless of how well

educated they are.

Have you got

0:56:480:56:52

anything in particular you need to

add to that?

No, it is nine or ten

0:56:520:56:58

of our clients who get into debt

because of a change in their

0:56:580:57:06

circumstances.

OK. I guess that goes

back to the whole savings issue,

0:57:060:57:10

doesn't it?

I think there is two

different bits. One is people who

0:57:100:57:17

are, whether it is rent to buy who

increase the debt, then there was

0:57:170:57:23

the crisis that. I'm sure on the day

Carillion went bust a lot of

0:57:230:57:29

employers had spent up over

Christmas, mortgage was due in three

0:57:290:57:32

days and they didn't see that

coming. Many will not have heard

0:57:320:57:38

that resilience, nor what many of

us. We cannot model them up. There's

0:57:380:57:44

the crisis debt, and unknown

Carillion go bust, 4000 people, the

0:57:440:57:52

pay cheque has not coming.

You say

we cannot model them up but in

0:57:520:57:58

another sense I guess I'm asking

from your experience what you think

0:57:580:58:01

is the best way to, I guess, tackle

one side of that coin but also

0:58:010:58:10

encourage people not to get into

that situation in the first place.

0:58:100:58:14

Obviously you can't... A job,

circumstance changes, but it comes

0:58:140:58:23

back to the rainy day and savings.

But also, to what extent, what can

0:58:230:58:28

the Government do is fundamentally

what I'm asking in terms of what

0:58:280:58:33

recommendations can we make, but

also where do you think the balance

0:58:330:58:37

needs to fall between putting

resource into prevention and putting

0:58:370:58:41

resource into cure. It comes down to

the issue of there are different

0:58:410:58:48

solutions but fundamentally it is

the same problem.

0:58:480:58:54

I think the challenge we are going

to have here is that the sector is

0:58:540:58:59

fundamentally underfunded, so if you

take away the £35 million a year

0:58:590:59:06

that individual debtors pay for help

and advice to pay for all her --

0:59:060:59:16

organisations. The sector gets £150

million a year to provide that it

0:59:160:59:19

finds.

And that is to help people

who got themselves into debt. So I'm

0:59:190:59:28

wondering how much of that resource

should actually go towards

0:59:280:59:30

preventing that?

The education is

tiny compared to that. So if you're

0:59:300:59:37

going to make a significant impact,

and this is an insecure not going to

0:59:370:59:42

want because it's complicated and

hard to do, it has to be a holistic

0:59:420:59:46

approach. You have to reduce the

width of the pipe the number of

0:59:460:59:51

people coming through because they

are better educated and then they

0:59:510:59:56

have a bit of a safety net and they

have been using help, so the number

0:59:561:00:01

of people falling over the cliff is

lower. But then, even if you have

1:00:011:00:06

people falling over the cliff, we

can still as a sector only help

1:00:061:00:11

about one third of the people who

need help because of the lack of

1:00:111:00:14

funding to do it. So even if you

restrict the width of the pipe, it

1:00:141:00:19

still underfunded.

You're not

suggesting we should reduce or

1:00:191:00:24

transfer funding from crisis

services to prevention services,

1:00:241:00:27

actually believe that funding...

We

have been in suppression of four

1:00:271:00:36

years because if we advertise, we

simply cannot cope with the number

1:00:361:00:40

of people who want our help. We have

to demand suppressed down my me know

1:00:401:00:56

about 1.3 - 1.8 million people could

use our systems. We could do with

1:00:561:01:01

the other that we could help three

times as many people...

But

1:01:011:01:07

obviously, that's unpalatable

answer. I think it's important to

1:01:071:01:13

say that debt advisers are

preventative as well. Our advisers

1:01:131:01:19

will help to build someone's

financial capability, thinking

1:01:191:01:24

about... The evidence is it's very

successful, both with the individual

1:01:241:01:27

but also for creditors and the money

saved to the state.

There is a

1:01:271:01:35

specific proposal in terms of the

breathing space scheme, to give

1:01:351:01:40

breathing space for people who have

gotten themselves into debt. How

1:01:401:01:44

effective do you think that will be?

How do you feel that is the

1:01:441:01:50

solution, or part of the solution?

We fundamentally supported, we have

1:01:501:01:56

been pushing very hard for a long

time. It's part of a solution, and

1:01:561:02:05

when the questions that needs

addressing quite quickly is how long

1:02:051:02:09

is that breathing space for? Because

if its own for say six weeks, it's

1:02:091:02:13

just not enough. It doesn't --

doesn't give people time to get on

1:02:131:02:18

their feet and have a sensible

conversation with their creditors

1:02:181:02:21

and work it through. We would want

it to see it at least doubled or

1:02:211:02:25

more. We are very pleased to see it

moving towards statute.

In terms of

1:02:251:02:31

the type of situations that it

should apply to. Should it

1:02:311:02:38

specifically address noncredit or

faults, council tax, and utility

1:02:381:02:44

bills or do you think it's equally

as important or more important to

1:02:441:02:53

ease the burden of meeting

repayments on financial debts as

1:02:531:02:55

well? Why do you think the scope

should be...

For us, it's the full

1:02:551:03:02

set. About 50% of people come to us

with the Government priority debts,

1:03:021:03:07

it would have to include those to be

effective from our perspective.

Have

1:03:071:03:11

you seen, I know it's in place in

Scotland already, have you seen it

1:03:111:03:17

being successful? What evidence

adducing? And what is the amount of

1:03:171:03:22

time in Scotland that's been

applied?

You don't know? We would

1:03:221:03:29

have to get back to you.

We

undertake the scheme in Scotland and

1:03:291:03:37

it works very effectively. It's more

time-consuming to set up, but it's

1:03:371:03:44

very effective.

There's also been a

proposal of thinking it to the NHS,

1:03:441:03:52

the people who are may be

experiencing a mental health crisis,

1:03:521:03:58

have you got any particular thoughts

on how that might be applied?

I

1:03:581:04:04

think you are referring to the money

and mental health policy Institute

1:04:041:04:09

space scheme. We are fully

supportive of that. We think it's an

1:04:091:04:12

excellent initiative and should go

hand-in-hand with the primary

1:04:121:04:17

legislation.

So to summarise, we

should probably just get on with

1:04:171:04:21

that. I say we, I mean the

Government.

I think with that, we

1:04:211:04:31

have to make sure, friends included,

but putting that in place, you don't

1:04:311:04:38

exclude people from having access to

stuff because actually, we're not

1:04:381:04:41

going to do that, so there has to be

some bounds because we talk about

1:04:411:04:49

inclusive systems, but we also have

to make sure that the systems we put

1:04:491:04:53

in place aren't used by others as an

excluding tool.

I just wanted to ask

1:04:531:04:59

a question as well about credit

unions. This may seem a bit loaded,

1:04:591:05:07

it's not. Do you see credit unions

as benign or do you see them adding

1:05:071:05:16

to the problem of over dead in this?

Word you see the role of credit

1:05:161:05:24

unions in supporting savings,

supporting access to credit, the

1:05:241:05:26

kind of creditor we are talking

about. But also some of the danger

1:05:261:05:30

point as well.

Credit unions,

they've never scaled, it's been a

1:05:301:05:42

great story, they're very localised.

I think the danger we see with some

1:05:421:05:45

of them is borrowing 50

1:05:451:06:00

quid and going to register with the

big tallies up front. We used to

1:06:011:06:06

have our savings bank, but they are

still very localised, driven by

1:06:061:06:11

people in the community because they

want to do something.

Do you think

1:06:111:06:14

they should be encouraged to grow?

Absolutely. But to do that, there

1:06:141:06:20

just is not the capital behind that

sort of stuff. What they are is very

1:06:201:06:26

small, localised organisations. How

do we scale up? More and more they

1:06:261:06:31

tend to be based on a physical

basis. We've got people using

1:06:311:06:36

whatever it is, people expecting the

answer, why to people... How do we

1:06:361:06:43

actually move into the modern world?

A couple of questions... Apologies

1:06:431:06:53

for arriving late, but I was

presenting a bill in Parliament. We

1:06:531:07:00

cannot be at two places at once. Two

questions. I'm interested in whether

1:07:001:07:08

you have any quantifiable evidence

at all about whether gambling has

1:07:081:07:12

any impact on household finances.

We

do. We put a report out recently on

1:07:121:07:24

the impact of gambling, high-stakes

gambling particularly. We do see it,

1:07:241:07:30

it's not that of that we would be

more than happy to share it with the

1:07:301:07:35

committee.

Maybe we can present

something to you, but the only thing

1:07:351:07:44

I would say is that it's one of the

reasons that some people fall into

1:07:441:07:51

problem that, but it's not by any

means the biggest challenge that we

1:07:511:07:55

see. The biggest challenge we see is

the individuals generally just

1:07:551:08:01

overspending on a month-to-month

basis and then have to -- have a

1:08:011:08:06

shock. We will give you the numbers,

but it's not the overwhelming

1:08:061:08:15

problem...

I'm just interested in

quantifiable evidence. Second and

1:08:151:08:25

final question. Universal Credit.

I'm not interested in your view on

1:08:251:08:30

it, with respect. But are there any

specific improvements that you would

1:08:301:08:34

recommend in relation to the

Universal Credit that would have

1:08:341:08:40

been your view a significant impact

that we should be considering? A

1:08:401:08:44

positive impact.

I think we can have

a long conversation about Universal

1:08:441:08:52

Credit. We have seen lots of people

getting into debt as a result of

1:08:521:08:56

Universal Credit. We have been

sharing that evidence with DWP. We

1:08:561:09:04

were really pleased to see some of

the changes that the Government made

1:09:041:09:07

around the turn of the year to

Universal Credit to help people get

1:09:071:09:14

access to events payment and lessen

the weight of first payment. Clearly

1:09:141:09:17

there is more that could be done and

all those areas. We would be happy

1:09:171:09:21

to share those with the committee in

due course. We will be looked to see

1:09:211:09:27

how those changes take effect.

Now

that the weight has been largely

1:09:271:09:34

removed in terms of how long it

takes to get your first payment,

1:09:341:09:39

that's better. The question for us

is always, if you do run short,

1:09:391:09:44

where are you bridging it? So if you

Bridget sensibly, or could bridge it

1:09:441:09:49

sensibly by getting that money from

a credit union or some social

1:09:491:09:57

low-cost capability, then great. If

you're going to a payday lender, all

1:09:571:10:04

that's going to do is tip you into a

spiral. It doesn't create a problem,

1:10:041:10:13

it's what people do about it solve

that short-term problem. I think

1:10:131:10:16

that's the challenge.

From what

we've seen is actually some

1:10:161:10:25

landlords aren't currently positive

about preparing people for it.

1:10:251:10:29

Others are doing nothing and then

it's a disaster. It's a big shock

1:10:291:10:33

and there doesn't seem to be... The

implementation has got -- that is

1:10:331:10:46

based a better day for the bash

better data sets could be a lot

1:10:461:10:52

clever.

I am being informed that the

breathing space scheme is a

1:10:521:10:59

reasonable length of time depending

on the amount of debt and the

1:10:591:11:01

ability to pay. As opposed to the

six week... I assume you would

1:11:011:11:11

prefer the Scottish model in the UK

rather than the Limited six weeks.

1:11:111:11:18

We would, but we are also realistic

about...

It's better than nothing.

1:11:181:11:25

It is the flexibility, let's say for

example that six weeks is a period

1:11:251:11:31

of time, it may be that one of our

debt advisers is not able to get the

1:11:311:11:36

support they need within that

period, we need to have the

1:11:361:11:38

flexibility to extend as required.

Thank you very much indeed for your

1:11:381:11:45

generosity and your time. If there's

her anything you would like to

1:11:451:11:48

raise, I'm sitting around -- we

absolutely would like to hear. For

1:11:481:11:57

now, they get for your it. Thank you

very much for being here today for

1:11:571:12:05

our second panel. An inquiry on

household finances. For the benefit

1:12:051:12:11

of those were not in the room, if

you could just introduce yourselves.

1:12:111:12:18

I am Richard Fuller, we are a...

The

Paul Smith, chief executive of...

I

1:12:181:12:33

want to start with questions just

understand your customers. It would

1:12:331:12:36

be helpful just to hear about the

gender and age and income profiles

1:12:361:12:42

of those you are working with

whether they have bank accounts,

1:12:421:12:48

where in the country they would

be...

We have 230,000 customers, 66%

1:12:481:13:02

of those customers will be female,

and to give you some age

1:13:021:13:08

demographics, the proportion of

customers within the ages of 18 and

1:13:081:13:13

50 would be 66 points 7%. But the

majority, the rump of the business

1:13:131:13:19

is that the... Household nature is a

mixture of agent benefits, that is

1:13:191:13:28

about £15,000 per annum. We have a

hundred regional offices across the

1:13:281:13:33

UK from which we have 2000

self-employed agents. We have a bowl

1:13:331:13:42

and national footprint, including in

Scotland and Northern Ireland.

1:13:421:13:46

Treasury Committee's session on household incomes, saving and debt with evidence from the Cash Shop, BrightHouse and Morses Club, from Wednesday 28 February.


Download Subtitles

SRT

ASS