“Persistent debt is a very real problem plaguing the UK. While there is nothing wrong with debt in itself, when it is used poorly it can destroy a person’s finances in just a matter of months. The Financial Conduct Authority is cracking the whip on credit card firms on how they deal with their customers that have persistent debt.
“Rules introduced in March 2018 were supposed to help the public get the space they needed to pay off their debt appropriately. This was a crucial scheme as study after study has shown that poor financial wellbeing, like being stuck in a vicious circle of debt, leads to a deterioration of wellbeing in other parts of their life.
“The FCA is right to flag that repayments options offered are not reasonable and suspensions of credit cards is not a sustainable solution.
“However, while these actions are noble and necessary it is not going to fix the problem of persistent debt. How can we expect the public to avoid the pitfalls of debt if they are unaware of what they are?
“There is a severe lack of financial knowledge in the UK and the only answer is financial education. People need to, at the very least, know what questions they should be asking when a credit card is offered to them. They can then come up with a financial plan, which can ensure the way they use their money is sustainable for their lives.
“As a matter of urgency ensuring future generations should be equipped to be good with money. An evaluation report of the industry-supported KickStart Money* programme, shows that following financial lessons, two out of three primary aged children were actively working towards a saving goal, more than double the national average. On top of this over 75% of the children that received the lessons delivered by the charity, MyBnk, were able to delay spending. In short, financial education works.”
* KickStart Money is the work of twenty of Britain's leading savings and investment firms, brought together by TISA. The aim is to fill the gap in financial education provision in UK primary schools, by funding the provision of financial education, delivered by the charity MyBnk, to 20,000 primary school children over three years.