Concern over growing debt among young people

FCA chief executive Andrew Bailey has warned of a “pronounced” build up of debt among young people.

In an interview with the BBC, he said the young were having to borrow for basic living costs. The regulator also said he “did not like” some high cost lending schemes.

The head of the Financial Conduct Authority said consumers, and institutions that lend to them, should be aware that interest rates may rise in the future and that credit should be “affordable”.

He promised action was being taken to curb long-term credit card debt and high-cost pay-day loans.

The regulator is also looking at charges in the rent-to-own sector which can leave people paying high levels of interest for buying white goods such as washing machines.

“There is a pronounced build up of indebtedness amongst the younger age group,” Mr Bailey said. “We should not think this is reckless borrowing, this is directed at essential living costs. It is not credit in the classic sense, it is [about] the affordability of basic living in many cases.”

“There has been a clear shift in the generational pattern of wealth and income, and that translates into a greater indebtedness at a younger age.

“That reflects lower levels of real income, lower levels of asset ownership. There are quite different generational experiences,” he said.

Could your younger members of staff be affected? Do you supply on credit to those who could be vulnerable? CPA doesn’t work with pay day loan providers, banks or credit card companies, rather it works predominantly with the SME market on invoiced debt. However members of the Credit Protection Association will as always be concerned at news of such systematic issues within the credit market and want to take steps to act responsibly and prudently when dealing with those who could be affected.

BBC News