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Similar to Debt action ni report launch presentation with paul lewis slides Oct 2014
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Debt action ni report launch presentation with paul lewis slides Oct 2014
- 2. Welcome Bob Stronge Advice NI
- 3. Overview of Advice NI Money & Debt Advice Services Sinead Campbell Advice NI
- 4. Launch of Debt Action 2013/14 Report Minister Arlene Foster DETI
- 5. Project Overview & Presentation of Report Gemma Willis Advice NI
- 9. Reason for Debt • The main reasons for debt are – 31% Low/reduced income – 23% Over commitment – 11% Relationship breakdown and – 11% Redundancy 43% of our clients had been experiencing financial difficulty for over 2 years
- 11. Top 10 Debts by Amount & by Agreement
- 12. Average Debt per Council Area Council Area Total Debt (£) Average debt per client Antrim 1,883,142 25,448 Ards 1,141,398 13,120 Armagh 2,306,140 16,472 Ballymena 2,005,716 15,429 Belfast 14,696,705 15,702 Coleraine 1,673,858 13,609 Cookstown 1,120,923 12,884 Craigavon 2,724,132 13,419 Down 593,500 13,189 Dungannon 213,089 2,841 Fermanagh 3,760,538 18,434 Limavady 2,855,795 22,487 Lisburn 4,085,539 14,965 L/Derry 4,449,212 15,890 Magherafelt 1,247,201 6,174 Newry 7,981,636 27,334 Newtownabbey 1,157,306 21,836 Omagh 1,337,791 6,463 Strabane 3,055,833 17,462
- 13. Client Profile
- 14. Resolution for clients Outcomes recorded in over 5,600 cases
- 15. Quality of Service Excellent/Very Happy Very Good/Fairly Happy Fair/Unhappy Poor/Very Unhappy Location 72 23 4 1 Waiting time 90 9 1 0 Quality of Advice 94 5 1 0 Effect on situation 92 7 1 0 Importance of Service 97 2 1 0 Overall Experience 95 4 1 0
- 17. Audio Clips Clients’ Stories
- 18. Paul Lewis Money Box Radio 4 Guest Speaker
- 20. PROBLEMS OF DEBT “Look if you have somebody in the desert, and you offer him dirty water and he’s very thirsty he will drink it. So the question is why do we do deserts and dirty water and then ask the people what do you want. If you have no choice, you take what you get and that’s the problem.” Professor Hugo Reifner, The Price of Poverty, Radio 4, 20 April 2004 @paullewismoney © 2014
- 21. PAYDAY LENDING MARKET 2013 • 10.2 million payday loans • 1.6 million people • 6 loans each • Total borrowing £2.5 billion • Firms take £1.1 billion in interest, fees and charges • So borrow £250 and on average pay £110 in charges. Source: Financial Conduct Authority July 2014 Proposals for a price cap on high-cost short-term credit Chapter 3 @paullewismoney © 2014
- 22. Annual Percentage Rate APR Borrow £100 over a year and pay £25. Over a year 25% APR Over three months 144.1% Over a month 1355.2% Over four weeks 1719% Over two weeks 32,987% Over one week 109,475,544.3% APR @paullewismoney © 2014
- 23. Annual Percentage Rate APR Borrow £20 A week later pay it back and buy friend a pint £3.10 APR = 179,482.2% If the mathematics says one thing but your brain says another, trust the maths. @paullewismoney © 2014
- 24. FINANCIAL CONDUCT AUTHORITY Changes from 1 July • Rollovers • limit of two • information on getting help and advice • Continuous Payment Authority • limit of two 1 April 2014 • Risk warnings on adverts @paullewismoney © 2014
- 25. FINANCIAL CONDUCT AUTHORITY CAP ON COSTS From 2 January 2015 • Charges cap = 0.8% of loan per day Wonga Borrow £200 for 28 days WAS £63.04 WILL BE £44.80 29%CUT • Default charges no more than £15 • Overall cap of 100% of loan – so £200 on £200 loan @paullewismoney © 2014
- 26. FINANCIAL CONDUCT AUTHORITY CAP ON COSTS From 2 January 2015 Borrow £200 for 28 days Daily charge £1.60 = 28* £1.60 = £44.80 APR 1284.1% Owe £244.80 Add £15 = £259.80 APR = 2898.6% Daily interest 0.8% on that total sum After 95 days = £399 APR around 1300% @paullewismoney © 2014
- 27. PAYDAY LENDING MARKET 2013 • 10.2 million payday loans • 1.6 million people • 6 loans each Average loan £260 over 30 days Cost £62.40 Those six loans cost £374.40 in charges alone – even if paid back on time. Source: Financial Conduct Authority July 2014 Proposals for a price cap on high-cost short-term credit Chapter 3 @paullewismoney © 2014
- 28. PAYDAY LENDING MARKET 2013 Borrowers income £18,000 vs average of £26,500 • 65% have no savings • 64% have other outstanding debts • 55% said they used money for everyday spending Before the loan • Credit scores already getting worse • Debt had increased in previous year overdraft breaches 23% missed payments 40% After the loan • Debt continued to increase – overdraft breaches 33% missed payments 60% 30% of their outstanding balances in default Source: Financial Conduct Authority July 2014 Proposals for a price cap on high-cost short-term credit Chapter 3 @paullewismoney © 2014
- 29. FINANCIAL CONDUCT AUTHORITY CAP ON COSTS “Our model estimates complete market closure at 0.4% and we consider that at levels below 0.8%, given that our models are estimates and have some uncertainty, there is a risk that fewer than three firms would remain. This risk is greater at lower levels of cap. At an initial cost cap level of 0.8%, we can be more confident that the three largest firms will continue to offer HCSTC, particularly as we would expect all firms to respond to the cap to limit the impact on them, and reduce the risk of exit.” And it fixed it at 0.8% because “We do not think it is desirable to leave consumers entirely without the option of using HCSTC.” @paullewismoney © 2014
- 30. PROBLEMS OF DEBT “Look if you have somebody in the desert, and you offer him dirty water and he’s very thirsty he will drink it. So the question is why do we do deserts and dirty water and then ask the people what do you want. If you have no choice, you take what you get and that’s the problem.” Professor Hugo Reifner, The Price of Poverty, Radio 4, 20 April 2004 @paullewismoney © 2014
- 31. FINANCIAL CAPABILITY Life event Financial problems Financial capability Have a baby +19% DOWN Become unemployed +63% DOWN * On Jobseeker’s Allowance +88% DOWN Divorce or separate +17% DOWN especially women Retire +31% Enter work -27% UP Have employed partner -15% UP Get married DOUBLES Source: The impact of life events on financial capability, Consumer research paper 79, FSA, September 2009, foreword p iii-iv @paullewismoney © 2014
- 32. WELFARE REFORMS Unimplemented in Northern Ireland 1. Universal credit, 2. PIP to replace DLA 3. Bedroom tax 4. Contribution based ESA limited to 12 months for those in work related activity group 5. Benefit cap £26,000 – to be cut to £23,000 6. Appeal rights weakened 7. Social Fund to be replaced with local discretionary support. 8. Council Tax Benefit replaced by local council tax support @paullewismoney © 2014
- 33. WELFARE REFORMS Changes planned from 2015 • £25bn to be cut in first two years of next Parliament • £13bn from departmental savings – perhaps including pay @paullewismoney © 2014 freeze • £12bn from welfare cuts £3.2bn of that from freezing rates of working age benefits for two years 2016/17 and 2017/18 JSA, most of ESA, Carer’s Allowance, Income Support, working tax credit, child tax credit, housing benefit, and child benefit. • Pensioner benefits and pensions excluded from cuts
- 34. www.paullewis.co.uk @paullewismoney www.paullewismoney.blogspot.co.uk @paullewismoney © 2014
- 36. APRs Borrow £200 Pay back £263.04 Over a year APR is £63.04/£200 = 31.5% APR Over 28 days the APR is 4866.1% Over two weeks the APR is 12,036.4% Over one week APR is 54,612.3% Borrow £20 One week later give me back £20 and buy me a half a pint of beer at £1.50 APR = 4197.7% @paullewismoney © 2014 Source: DualCalc
- 39. • Paul Lewis - Money Box Radio 4 • Kevin Higgins – Advice NI • Ursula Toner – Housing Rights Service • Michele Loughran – Omagh Independent Advice Services • Susanne Downey – Trussell Trust Q&A Panel