Men’s debt problems increase

June 9th, 2010

The number of men seeking help from the Consumer Credit Counselling Service (CCCS) has increased by 51% in the last three years according to the latest figures, leading to fears that there is an emerging underclass of debtors made up mainly of men.

The CCCS blames the emerging trend on a combination of rising unemployment, reduced pay growth and higher living costs. There is some good news though, with men typically having lower debt levels than in previous years.

Men still controversially earn more than women, however, they are also less able to repay what they owe than women, with many struggling to meet even their living costs.

The CCCS said it has seen the number of men contacting it for help soar from 146,000 in 2007 to 221,000 last year, which is an enormous 51% increase in just two years.

The men who contacted the charity during 2009 owed an average of £26,957, which is down from nearly £30,000 in 2008, but still significantly higher than the £21,915 that women typically owed.

The main reason (26%) given by men for getting into debt was a sudden decrease in their income, while 23% said they had lost their jobs. A deeply troubling 20% of men stated that they had taken out more credit than they could handle.

The deterioration in the economic circumstances of so many men has much deeper consequences since they are still the main breadwinner in most households. These knock on effects will also be reducing the living standards of many children around the UK.

For comparison, the number of women seeking help increased by only half the amount of men, although women were still marginally more likely to contact the CCCS, accounting for 52% of its caseload.

Nationwide, figures show that the average income of men in debt dropped to £17,460 in 2009, down from £17,724 the previous year. More worryingly, men have had to deal with a sharp decrease in the amount of surplus income they have available to repay debt after meeting their living costs. This has fallen from an average of £84 in 2007 to minus £42 in 2009.

This means that that men in debt are spending £42 more each month than they have coming in just meeting their day-to-day expenses. Women’s disposable income has also fallen, but at a slower rate, dropping from £73 in 2007 to minus £38 last year.

The general fall in disposable income has been caused by expenditure rising at a faster pace than income during the past three years, largely due to increases in the cost of gas and electricity bills and higher rents.

There is a lot that is concerning in these figures and little from which to take comfort. The new government clearly has its work cut in changing the country’s mindset that for the past thirteen years was built on ever increasing mountains of public and private debt. We must all face up to the fact that the time has come to pay it back.

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Challenge late payment fees and win

June 2nd, 2010

Late payment fees have come under the spotlight this week after a successful challenge by a borrower who will now be repaid over five hundred pounds. Mike Parry challenged the fees charged by Close Premium Finance (CPF) and will now be repaid the fees plus costs and interest.

Last year, as readers of this blog will be only too aware, the Supreme Court rejected a well publicised challenge of the legality of bank overdraft charges by the Office of Fair Trading (OFT). Because of that ruling a judge rejected Mr Parry’s original claim against CPF.

The redoubtable Mr Parry then made his claim more specific and managed to get it reinstated by pointing out that the Supreme Court ruling applied to bank overdraft charges only, not to charges imposed on other loans. This meant that the 1999 Unfair Terms in Consumer Contract regulations (UTCCR) could be applied to the late payment fees levied by CPF on the grounds that they were arguably unfair.

CPF somehow failed to even submit a defence against this new line of argument, and Mr Parry was awarded his claim by default. This means a court did not actually make a ruling on his legal argument but, when bailiffs were authorised to begin seizing property, CPF magically agreed to pay up.

However, CPF has said that the court’s decision was founded on an administrative error and it will still dispute the settlement.

Mr Parry was supported in his claim by the Consumer Action Group, who believe, rightfully, that the OFT should make it much clearer to financial services customers that the Supreme Court ruling only applies to bank charges and not to late payment charges.

This case has the potential to begin a long hard journey towards redressing the balance of fairness towards customers after the ludicrous Supreme Court decision last year. If CPF’s challenge to the court decision is unsuccessful it could open the way for many other people to try to reclaim late payment charges. However, at the moment that is a big if.

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