by Stella Creasy

For 18 months now, many of us have been trying to sound the alarm about the legal loan sharks who infest Britain’s consumer credit market. These companies now lurk in every high street and across every web banner. Their increasing presence indicates not only the desperation of families who find too much month at the end of their money, but a systemic failure to tackle our financial culture. Britain has always had a credit habit much bigger than our European neighbours. But those who blame our current consumer credit crisis on a public living beyond its means fail to understand the pressures now driving millions into debt – or the importance to our economy of doing something about it.

For more and more Britons, debt is a fact of life, as food, energy and transport costs soar. Aviva has revealed 52% of UK families owe £10,500 on average, on loans, credit cards, overdrafts and other unsecured debts, a figure equal to half the average annual UK household income. The consumer credit counselling service identify 6.2 million households as financially vulnerable. Half of these are already either three months behind with a debt repayment or subject to some form of debt action such as insolvency.

For many, it is that very willingness to borrow for the future that has made them so vulnerable. New analysis of financial services authority figures estimate that the total number of mortgages in arrears, in possession or subject to forbearance is 1.2 million. This equates to nearly 11% of total outstanding loans in some form of financial distress. (more…)