Debt news – 12 June 2022

My pick of last week’s news is ‘It is so easy to lose everything’: tales of poverty, despair and dignity at a Citizens Advice centre  “These are very, very scary times,” he says. “And the worst is yet to be seen.”

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Graph of the week

from A tale of two crises: the cost of living and mental health, a research report from the Money & Mental Health Policy Institute.

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‘It is so easy to lose everything’: tales of poverty, despair and dignity at a Citizens Advice centre Guardian: Green and his team of 85 volunteers and 36 full-time staff are the last port of call for the soon-to-be-evicted and people with no food in the fridge. “These are very, very scary times,” he says. “And the worst is yet to be seen.”

FCA fines guarantor lender TFS FCA: £800k fine imposed for deficient affordability checks on 3,150 guarantors

Do Nudges Reduce Borrowing and Consumer Confusion in the Credit Card Market? Academic paper: 96% of respondents underestimate the time it would take to fully repay a debt if the cardholder made only the minimum required payment. The nudges reduce this confusion, but underestimation remains overwhelmingly common.

BNPL:

• Can buy now, pay later survive the cost of living crisis? FT (paywall): High energy bills and rising inflation have raised doubts about a sector that relies on consumers who might struggle to meet repayments
• Two fifths borrowed to pay off Buy Now Pay Later Citizens Advice: Younger shoppers were most likely to borrow to pay off BNPL purchases. The charity found 51% of 18-34 year olds borrowed money to pay off BNPL debt
• Motatos – new budget online only supermarket Skint Dad blog – the only payment options are Klarna or Paypal.
• The ugly economics behind Apple’s new Pay Later system The Verge: Apple’s foray into the buy now, pay later scheme [which at the moment is only palnned for the US] poses some serious questions about consumer safety

Mortgages:

• Right to buy extension to make home ownership possible for millions more people gov.uk: in this pretty bonkers policy idea is one unambigious good – the goverment is planning to reduce the waiting time to claim Support for Mortgage Interest back down to 3 months.
• How will Boris’s Universal Credit mortgages and Right to Buy plans work – and who will be able to take advantage? Mail: a lot more questions and problems than there are answers, with one person predicting ‘The result: increased homelessness, incredibly expensive and often poor quality private rental accommodation, and a skyrocketing housing benefit bill.’

Council tax rebate cheques cashed at pawnbrokers BBC: A large queue formed outside the Cash Shop in Rotherham, which deducts a £15 fee for the service. Some of those waiting in line said they could not afford to wait days for a cheque to clear through their bank.

Record UK petrol price risks a mass exodus of essential workers Guardian: the fuel price rise had outstripped the reimbursement they were given for petrol costs, so staff were now paying not just to get to work, but also to drive to patients’ houses to do their job.

The food bank that ran out of food – because people can no longer afford to donate Sky: As hard times continue for many families across the UK, a centre in Yorkshire is finding people who have always donated food are no longer able to do so because they are also now struggling to make ends meet

Energy bills:

• Harrowing plight of Britain’s prepayment energy users left sitting in the dark FT (paywall): The hidden problem of ‘self-disconnection’ mounts as electricity and gas prices soar
• Is it time to fix my energy bill or should I stick on the price cap? MSE.
• Major overhaul to standing charges could help SLASH energy bills Sun: But Mr Brearley told BBC Breakfast that Ofgem could potentially slash this charge – meaning some customers could pay less on their bills.

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