My pick of last week’s news for people interested in debt policy is the FCA’s Journey into distress. And the Under the wage floor demonstrates how good regulations are not sufficient if the detection rate and the sanctions for breaking them are too small.
Tweet of the week
Yes! This ⬇️⬇️⬇️. We give employment rights to people to help offset the power imbalance between (low paid) worker and firm. But the rights are useless if they aren’t enforced https://t.co/YLMY7Y5Ytv
— Mike Brewer (@MikeBrewerEssex) January 8, 2020
Ipswich to lobby for county Citizens Advice funding to be restored Ipswich Star: A cross-county task group published its findings last week which found that the Citizens Advice Bureaux in the county brought an economic benefit of £48.1million.
Amigo founder James Benamor in £3m payday Times (paywall): The founder of Amigo Loans has banked a £2.9m dividend despite a profit warning at the guarantor lender, a surge in customer complaints and fears of a regulatory crackdown.
‘Worst credit card deals for 13 years’ as banks fear rising consumer debt Telegraph: Data from Moneyfacts, a financial industry analyst, showed that the number of 0pc balance transfer deals has fallen from 122 at the start of 2017 to 76 today.
Credit card customers who only make minimum repayments could have cards SUSPENDED under new rules Sun: STRUGGLING Brits could have their credit cards suspended next month due to new rules by the financial regulator.
In the red after Christmas? Prepare for even higher fees after overdraft charges overhaul Mail: “The effect of the increase in authorised overdraft fees cannot be underestimated.” My comment: yes, but anyone using an unarranged overdraft, or an arranged overdraft for a few days may see reductions. See my article Are your overdraft fees going up? New “simpler” charges may not be cheaper!
What’s at the heart of a credit score that can ruin a life Guardian: “I was caught in an abusive relationship but the default notice only gives the bare facts”.
“Journey into distress” – FCA analysis – A study of the credit files of hundreds of thousands of people reveals the typical financial lives of those who fall into money problems. The findings confirm, but also confound many assumptions about financial distress:
How household debt influences inequality LSE blog: household debt may actually exacerbate pre-existing inequalities by further increasing incomes for financial sector workers, asset holders, and shareholders at the upper end of the distribution scale.
Consumer Bankruptcy, Done Correctly, To Help Struggling Americans Credit Slips (American academic blog): A consumer bankruptcy system that allows the families that use it to succeed simply is good economic and social policy.
Benefits & other news
Under the wage floor – Exploring firms’ incentives to comply with the minimum wage Resolution Foundation: “even if detection rates increased significantly they would need to go hand-in-hand with higher financial penalties to provide firms with a hard, economic incentive to comply with the law.”
Greggs £300 – Bonus or Booby Prize? Gareth Morgan’s blog: Greggs generosity to their employees might seem, in practice, to be generosity to the government. Not only is the bulk of this bonus money likely to end up in the pockets of central or local government.
Can banks be forced to offer better savings rates? Watchdog considers imposing ‘minimum interest rate’ but experts fear race to the bottom Mail: ‘Savers on the very worst rates at the larger banks will see a small increase in rate but ultimately, I don’t think this remedy will work.’
Bailiffs sent to single mum on Universal Credit after bill address mix-up in Birmingham Birmingham Live: The authority sent council tax reminders, a court summons and liability order to the address they had been told was not occupied.
Feeding young minds – H&F launching free school lunches Hammersmith & Fulham council: First came free breakfasts for school pupils in Hammersmith & Fulham, now we’re launching free lunches for all in two secondary schools.
Central banks running low on ways to fight recession, warns Mark Carney FT (paywall): Bank of England governor sees threat of ‘liquidity trap’ and need for fresh monetary tools.