Author Lauren Howells
Andrew Bailey, chief executive of the Financial Conduct Authority, has told the BBC that there is a “pronounced build up of indebtedness amongst the younger age group” in order fund basic living costs.
Speaking about what he described as a “clear shift in the generational pattern of wealth and income”, which he said translated into “a greater indebtedness at a younger age” and reflected lower levels of asset ownership and real income, he pointed out that this borrowing shouldn’t be seen as reckless borrowing but rather borrowing that is taking place to cover basic living costs.
“Not credit in the classic sense”
“It is not credit in the classic sense, it is [about] the affordability of basic living in many cases,” Bailey told the BBC. “There are particular concentrations [of debt] in society, and those concentrations are particularly exposed to some of the forms and practices of high-cost debt which we are currently looking at very closely because there are things in there that we don’t like.”
Report reveals 37% of 18-24-year-olds already in debt
This interview comes after the Money Advice Trust, the charity which runs National Debtline, released its ‘Borrowed Years’ report, which revealed that one in five of 18-24-year-olds sometimes loses sleep as a result of worrying about money.
The survey of 2,042 18 to 24-year-olds also found that 37% were already in debt, owing an average of £2,989 (excluding student loans and mortgages).
National Debtline warned that too few people in this age group were seeking free advice from debt charities when they fell into difficulties.
Joanna Elson OBE, chief executive of the Money Advice Trust said: “With many young people beginning to build up debts soon after they turn 18, we have a real battle on our hands as a society to make sure they receive the support they need. This is particularly important given the widespread worry that money issues are causing to under 25s.
“This support should range from ensuring they are provided with basic financial skills, timely support when they first apply for credit and practical reforms to student finance payments to help those at university to manage their money well.”
Leader of Lib Dems reportedly says Conservatives have forgotten about their manifesto pledge to create a ‘breathing space’ scheme
According to the Guardian, Vince Cable, the leader of the Liberal Democrat party, said that the Conservatives had forgotten about their manifesto pledge to “create a ‘breathing space’ scheme so that people in serious difficulties can have legal protection from interest, charges and bailiffs for six weeks.” He reportedly added that the FCA making this intervention, showed how urgently this needed to be introduced.
Sustainable credit is “a necessary part of society”
Mr Bailey also spoke to the BBC about the so-called gig economy, where people work as freelancers or on short-term contracts, rather than in permanent jobs and how one of the features of this was that more people had “erratic income flows.”
Mr Bailey added that sustainable credit was “a necessary part of society”.