Government Support for Proactive Debt Management Needed Sooner Rather Than Later says Burgess

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As personal debt levels continue to spiral out of control and national charities are coming under increasing pressure to help people solve their financial problems, Payment Protection Insurance lobbyist Sara-Ann Burgess suggests a policy that pays a monthly benefit if redundancy occurs, could reduce the number of those suffering financial distress.

Sara-Ann Burgess, MD Burgesses

Measures need to be put in place to manage the debt before it gets out of control - perhaps some of the Government's funding should have gone towards helping the most financially vulnerable pay for a PPI policy.

As personal debt levels continue to spiral out of control and national charities are coming under increasing pressure to help people solve their financial problems, Payment Protection Insurance lobbyist Sara-Ann Burgess suggests a policy that pays a monthly benefit if redundancy occurs, could reduce the number of those suffering financial distress.

According to the debt advice charity, National Debtline, an average of 23,000 calls have been taken each month this year and its total up until the beginning of December was 241,153. In 2007, 208,224 calls were handled and in 1998 this figure was 116,608.

The majority of calls in 07 were from people with debts relating to bank and building society loans, overdrafts and credit card or store cards and one in four owed between £5,000 and £15,000.
Sara-Ann comments; "In the space of 10 years the number of callers has doubled, indicating just how irresponsible lenders and credit providers have been. They've authorised loans and credit to people who may not have had the means to repay their debts within a given timescale and given their full support to those keen to follow the mantra 'buy now, pay later'.

"It's only now, amidst a recession, that common sense is prevailing - lenders and credit providers are not so free and easy with their money and people are being encouraged to live within their means."

With unemployment figures soaring and news of redundancies now a daily occurrence, Sara-Ann believes anyone with monthly bill commitments should undertake some proactive debt management in the form of a PPI policy that will meet those commitments should they lose an income stream.

"No one wants to see an increase in calls to National Debtline next year, but if people don't put measures in place now to protect their financial security, then the number of calls will continue to rise to unprecedented levels."

In anticipation of increased pressure on charities due to soaring debt levels, the Treasury is releasing £5.85m worth of funding over two years, allowing National Debtline to increase its capacity with the recruitment and training of up to 50 debt advisers.    

The charity, which is run by the Money Advice Trust, says it will allow it to keep up with demand for debt advice and expects a high proportion of calls next year to be from consumers facing redundancy or the threat of mortgage repossession.

Sara-Ann continues: "PPI helps prevent the mountain of debt piling up and so will reduce the number of people compelled to contact debt advice charities. It provides monthly payments that will meet some or all of your monthly bills, dependent on the premium paid, and the outlay compared to the return is miniscule - less than one family take-away a month."

Independent PPI provider British Insurance charges £3.40 per £100 for unemployment cover, £3.90 per £100 for accident, sickness and unemployment and £1.90 per £100 for accident and sickness. A person looking to receive a benefit of £600 per month for up to a year should a job loss occur would pay a monthly premium of £20.40.

British Insurance has policies for home owners, those renting and people in shared ownership schemes and offers a back to work assistance programme. It has this year won a string of accolades for its policies and way in which it treats customers fairly.

Sara-Ann concludes: It's great to see the Government pumping so much money into charities to help them cope with the demand for their services, but wouldn't it be better to proactively manage the situation now, rather than offer to help consumers when they are struggling?
"Measures need to be put in place to manage the debt before it gets out of control - perhaps some of the Government's funding should have gone towards helping the most financially vulnerable pay for a PPI policy."

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