Debt news – September 16

My pick of last week’s news is Lured into the debt trap looking at unsolicited credit card limit increases. The same applies to overdraft limits.

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 Tweet of the week

The cause of, and lessons from, Britain’s pay squeeze – a long read special edition of Top of the Charts to mark 10 years since Lehman Brothers went to the wall. We call it the financial crisis but for the public it was a wages crisis https://t.co/GhaqGhPB2U

— Torsten Bell (@TorstenBell) September 14, 2018

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Debt news

Payday loans:

• Archbishop of Canterbury to lead Wonga rescue effort Guardian: Welby to rally non-profit group to try to protect borrowers after loan firm collapsed
• Payday lender tops banking complaints table BBC: Payday lending giant CashEuroNet, which owns Quick Quid and Pounds To Pocket, is the most complained-about firm in the banking and credit category.
• Where should Wonga customers turn for credit after the firm’s collapse? Big Issue: The high-cost lender has gone from boom to bust after falling into administration. But Big Issue Invest-backed responsible lender Five Lamps believes that fair credit should be easier to find.

Lured into the debt trap: How banks are encouraging reckless spending by quadrupling your credit card limit – even if you don’t ask them to Mail: Money Mail has discovered that banks are routinely doubling customers’ credit limits unprompted. In extreme cases, credit limits are being tripled and even quadrupled.

Boot out the bailiffs – they’re a cruel, medieval way of collecting debt Guardian: Councils such as Bristol and Hammersmith and Fulham are committing to ethical schemes. Others must follow.

Claims companies:

• PPI lawyers ready to react to FCA’s verdict on PCP car finance Automotive Management Online: “There’s a risk that by talking down the car finance market as a whole that consumers revert to financing vehicles outright from their own savings”. oh the horror!
• A banned director of a rip-off payday loan firm has resurfaced – at a firm claiming to help consumers get compensation from payday lenders Mirror: Payday lenders say they’re victims of an avalanche of spurious complaints from compo firm linked to notorious Mark Kennedy
• Claims Management Regulation Bulletin 35 MoJ:  includes a lot on payday loan refund complaints eg We are receiving reports and evidence that suggest that some CMCs are routinely or automatically referring complaints rejected by the financial business to the Financial Ombudsman Service without first considering the reasons for the rejection. 

Rising debt: what to do when money is your drug of choice FT (£ paywall) Financial difficulties are commonly cited as major source of anxiety and depression.

What are the alternatives to equity release? Telegraph: on the changing types of mortgage that are available for older borrowers.

My daughter may as well be in debt to Wonga Times (£ paywall) Last year she paid off just £125 of the [student loan company debt], while interest charges pushed up her debt by £1,500.

‘Crippling debt drove our sons to suicide – don’t let it happen to you’ Sun: Dawn Scott’s son Ollie, 18, killed himself after his payday loan debts got out of control, while Tracey Rogers’ son Jerome, 20, took his own life after two unpaid £65 fines ballooned to over £1,000.

The scourge of repossessions seen in the 1990s housing crash is set to return, experts warn Mail: “A key trigger for the anticipated rise in arrears is the conversion of state benefit ‘support for mortgage interest’ to a loan”. Let’s hope that is alarmist.

Other news

Universal credit: one in six not paid on time, cabinet papers reveal Guardian: Figures emerge as archbishop of Canterbury calls for benefit system rollout to be stopped.

We need to influence culture to achieve lasting social change JRF: Here in the UK, while the political and policy machine is in such disarray, foundations, social change movements, charities and activists need to get organised, stay disciplined and use our culture as a tool.