Held two days before the release of the Department of Trade and Industry's insolvency statistics for Q1 2007, the IVA.co.uk Debt Evening saw the presentation of new research conducted for IVA.co.uk by Ipsos Mori, followed by comments from a panel of experts and questions from the audience.
The research and debate looked at the key factors to blame for rising insolvencies and evaluated the need for regulation of both the debt solutions and credit and lending industry. The need for financial education was also discussed.
The expert panel was made up of:
Andy Davie, site manager and spokesperson for IVA.co.uk who has successfully completed an IVA
Melanie Giles, an Insolvency Practitioner with over 20 years experience in the insolvency industry
James Falla, a debt expert and author with over 10 years experience in helping people with debt
Glen Bullivant, VP of the Institute of Credit Management with over 40 years experience in the credit industry
The audience was made of IVA.co.uk community members, press, and the general public.
Key factors to blame for rising insolvencies
A combination of poor lending and poor borrowing practices were blamed for Britain’s worsening debt crisis. According to the latest research conducted by IVA.co.uk, 43% of consumers believe that the key factor to blame for the national debt crisis in Britain is irresponsible lending by creditors. However, 32% considered irresponsible borrowing by consumers to be the key factor. Lack of financial education and lack of government action were rated as key factors by just 18% and 4% respectively.
Looking at the crisis on the level of the individual, consumers were also asked to identify the main reasons people get into debt. Over half those surveyed (52%) identified poor money management as the main reason for personal debt, with factors such as unemployment and ill health, coming top in just 11% and 2% of cases respectively.
The panel responded by highlighting the responsibility of both borrower and lender:
Andy Davie: “I would certainly agree it’s a live now pay later culture. Years ago my parents didn’t have credit, didn’t use credit, used to save up for anything to do with the house. Now it’s so easy to get credit.”
Melanie Giles: “There are faults on both sides. I think lenders need to become far more aware than individuals over all circumstances in deciding to lend, and determining whether somebody is providing adequate security for those lendings. But also […] there is far too much reliance on credit out in the marketplace. […] A lot of the clients that come to my office don’t actually realise how much they actually do owe on credit until they sit down in the cold light of day.”
James Falla: “Banks need to take some responsibility for the money that they lend, and they, in my view, need to take more time and put more effort into looking at somebody’s circumstances, perhaps working more closely with individuals who want to borrow money, and actually getting underneath their income and expenditure and saying can you really afford to repay this money, rather than just saying well, let’s lend it to you anyway and worry about the consequences later.”
Glen Bullivant: “UK GDP is driven by consumer spending. It accounts for about 68% to 70% of gross GDP. If that slows down, as a nation we are in trouble. There's no question about that. So there is considerable pressure to keep the consumer economy going at full steam in the UK […] everybody has a responsibility, but let us not forget that it is a cornerstone of the UK economy.”
