Brits 'most debt in Western Europe'

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The consumer credit market in the UK is in danger of reaching "saturation point", analysts warn, with lenders urged to look to other European countries instead.

Today's report from research firm Datamonitor claims that although the average Briton owes twice as much to creditors than their western European counterparts, the 314 billion (£215 billion) UK market is being eclipsed by growth elsewhere on the continent.

Datamonitor says that the average western European is 2,278 (£1,558) in (consumer) debt, compared to levels of 4,642 (£3,008) for UK residents, while the continental market is said to have increased 8.3 per cent over the last five years.

In contract, the British consumer credit sector has grown by 2.7 per cent during the same period.

Report in today's The Guardian: Britons leave prudence to Europe

I'm wondering, how figures for other look like.

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Today's Independent headlines: Britain becomes 'never, never land' as personal debt runs out of control

Quote:

UK borrowers account for one third of unsecured debt in western Europe
On average, a Briton has twice the debt of a European
Total consumer debt in the UK is at a record £1.3 trillion
New debt last year came to an unprecedented £215bn
Citizens Advice faced 1.25 million new debt cases last year - the figure is rising

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Britain becomes 'never, never land' as personal debt runs out of control says The Independent today:

Quote:

UK borrowers account for one third of unsecured debt in western Europe
On average, a Briton has twice the debt of a European
Total consumer debt in the UK is at a record £1.3 trillion
New debt last year came to an unprecedented £215bn
Citizens Advice faced 1.25 million new debt cases last year - the figure is rising

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The national pastime here is shopping - I am not surprised to see this.

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This, I think, is mainly to do with our very lax legislation in the UK, regarding credit.

At the moment, it's left up to the banks to "self regulate", with the presumption that banks will act in a responsible manner.

This doesn't work, however, as day after day, junk mail comes through every letter box in Britain, inviting people to apply for some new, super duper credit card or other, all offering the dream of being able to afford that luxury holiday/new car/lifestyle.

There was a programme about this on TV not long ago, where a couple of bank "whistleblowers" told about tactics used to sell credit cards, of how much pressure is put onto bank sales people to foist credit onto customers, and what they considered to be an "ideal" customer.

An ideal customer, apparently, is someone who is owing a significant amount of money to the bank, and can only just pay the minimum amount each month, thereby ensuring that the credit loan runs for ever, at a very healthy rate of interest to the bank.

I'm sure I'm correct in thinking (Francis will correct me if I'm wrong) that the French banks don't issue credit cards at all?

In France, from what I understand, if someone needs extra money, they have to talk to the bank and arrange a good, old fashioned loan, after the bank has assessed their ability to pay it back.

Personally, I think that credit cards should only be issued on this basis. An amount of credit limit is calculated, based on earnings and outgoings. The bank then issues a card with that limit, and if the customer wants to "up" their credit, they should have to prove to the bank that their circumstances have improved in order to accomodate the extra payments required.

Too many young people now have been lured into this financial trap, and in addition to this, a fair few of these 18 - 30 year olds have massive amounts of student loans to pay back, usually amounting to at least £10K.

This craziness wasn't around in the 70's, when I was a young adult. If you wanted money, you went to see the dreaded bank manager. More often than not, a loan would be refused.

If it WERE around in the 70's, there is no doubt in my mind that I would probably have ended up in considerable debt.

I say change the legislation, stopping the sharks from the banks "encouraging" unneccesary borrowing.

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I don't agree Lordy. Why should banks act as a moral guardian to the society? Banks are commercial enterprises - they are in the business to make money, not only for themselves, but for their shareholders as well.

Next, people will say - stop all forms of advertising - cause it encourages people to buy more !!!

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I'm not sure about France either (though I think, you're not quite correct).

Here, in Germany, we have similar problems like in Britain .... but as I've learnt now, only 1/3 of it.

To get a credit card (which is offered from supermarkets [with a bank in the background] over bookclubs to the banks themselves), you must prove your income, get a credit line ... and pay the debt back once a month.

If you can't, the bank will offer you a schedule for monthly rates - your credit line is reduced by the amount of debt.

If you want a second, third .... card, they'll ask for your debt (may even 'look' at it), and you really don't have a (big) chance of getting more money than before.

More money, you usually get at the bank, the way LE described it above.
Or not.

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G, I'm agreeing with you.

Banks SHOULDN'T be left as moral guardians - as they've proven that they can't/won't do it. It should be put into legislation somewhere, that banks aren't ALLOWED to give more than a certain amount of credit, based on an agreed formula regarding income versus outgoings.

Then we wouldn't have loads of 18-30 year olds (my son incuded) buying piles of new whatever (most of it totally unneccessary), every week, simply by handing over a pretty piece of plastic that doesn't seem at all threatening, until the bill arrives on the doormat.

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.....back later......gotta go now.

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Banks are highly regulated by FSA in terms of provision of bad debts, and risk weighted assets they maintain.

A pretty through credit scoring process is followed before a loan or a card is issued to someone - an invitation to get a credit card does not automatically get you one !

Sorry, I get pretty worked up when banks are blamed for people's debt problems - which is totally unfair. It is like saying McDonald is making people fat !! People should leran to be responsible for their own actions !!

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Lord Ellpus wrote:

I'm sure I'm correct in thinking (Francis will correct me if I'm wrong) that the French banks don't issue credit cards at all?

In France, from what I understand, if someone needs extra money, they have to talk to the bank and arrange a good, old fashioned loan, after the bank has assessed their ability to pay it back.

You are not entirely wrong, LE.

In France, banks issue "bank cards", generally of two types: those of immediate debt and those of differed debt. The latter are reserved for people who proved being able to afford paying timely.

On the other hand, as Walter said, you have big stores and financial institutions that issue "credit cards", that means they offer you a certain amount of money that you pay monthly for and this amount is replaced as long as you pay.

As a rule, banks don't give you any more loans if your monthly payments are above 30% of your income.

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Here's the link re. the TV Programme.

"Britain's streets of debt : Whistleblower"
http://news.bbc.co.uk/1/hi/business/5029530.stm

...and another relevant link....
http://news.bbc.co.uk/1/hi/business/5009510.stm

I agree, that in the ideal world, everyone should have both the intelligence and maturity to realise what a credit card is all about, and act sensibly when using one.
However, in the real world, young people are not very worldly wise, and there are others of ALL age groups who don't have the degree of inteligence, or "nowse" to think about the implications of overspending.

Most people are swayed, to some degree, by slick salesmen or advertising. It is when the two meet, ie a "vulnerable" person being sold to by clever marketing or an efficient salesman, that the REAL trouble starts.

It would be interesting to see what the banks would do, if the Government made it a rule that any money lent that was deemed to be over an agreed formulaic limit, would be written off in the event of arrears, meaning that the lending bank would have to bear the loss.

eg....Mr Brown earns £15K and has outgoings of £12K. Government formula says that no more than £2K can be given as credit.
Bank agrees a limit of £6K on his credit card, which goes into arrears owing the full limit.
Mr Brown has to pay £2K, the bank loses the rest, as it is written off.

I bet the selling of credit would slow down a bit then, don't you?

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Lord Ellpus wrote:

It would be interesting to see what the banks would do, ...

It's quite some time ago, nealry 20 by now.

I was one of the first to do debt advice and regulations in the probation office. (No, they didn't put the fox in charge of the henhouse :wink: )

The easiest really was, when money was given to persons with no income: in those days (!), the banks just wanted to see the good will and then abated the debts ...

(The worst were lawyers/law firms, who had bought the debts from mail order businesses: they went to court for less than one pound.)

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We used to have a specialist debt counsellor in our office, Walter, but this position was chopped in the major cuts about three years ago.
We now arrange appointments for our "clients" to go and see the Citizens Advice Bureaux, but we've just heard that they are also likely to cease functioning in the near future.

Just a relevant aside, from today's paper.....

JUNK MAIL TOP 30. (I won't list ALL 30, but here's the top 3 and a few others)

1. MBNA Europe (credit card) - 99 million items sent to Brit homes (year)
2. Lloyds-TSB (credit card) - 91.2 million items.
3. Capitol One (credit card) - 67.8 million items

10. Halifax (credit card/mortgage) 34.4 million items

16. American Express (credit card) 25.8 million items.

20. Loans.co.uk (loans, usually to help pay off bad debt) 24.4 million items

23. First Direct (banking/credit card) 21.8 million items.

24. Barclaycard (credit card) 21.5 million items.

25. Mint (credit card) 21 million items.

28. NatWest (banking/credit card) 19.2 million items.

TOTAL UNSOLICITED "finance" MAIL ITEMS = 425.7 MILLION IN ONE YEAR!

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Lord Ellpus wrote:

We used to have a specialist debt counsellor in our office, Walter, but this position was chopped in the major cuts about three years ago.
We now arrange appointments for our "clients" to go and see the Citizens Advice Bureaux, but we've just heard that they are also likely to cease functioning in the near future.

Just a relevant aside, from today's paper.....

JUNK MAIL TOP 30. (I won't list ALL 30, but here's the top 3 and a few others)

1. MBNA Europe (credit card) - 99 million items sent to Brit homes (year)
2. Lloyds-TSB (credit card) - 91.2 million items.
3. Capitol One (credit card) - 67.8 million items

10. Halifax (credit card/mortgage) 34.4 million items

16. American Express (credit card) 25.8 million items.

20. Loans.co.uk (loans, usually to help pay off bad debt) 24.4 million items

23. First Direct (banking/credit card) 21.8 million items.

24. Barclaycard (credit card) 21.5 million items.

25. Mint (credit card) 21 million items.

28. NatWest (banking/credit card) 19.2 million items.

TOTAL UNSOLICITED "finance" MAIL ITEMS = 425.7 MILLION IN ONE YEAR!

As I said before - getting an invite for a credit card does not actually mean you can get one - so this data is irrelevant.

Do car dealerships take yr driving test before they sell you a car?

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I'm just illustrating that the banks and credit card companies, account for a third of the top 30 junk mail posters in the UK.

Once upon a time, banks were seen as a reliable and trustworthy place to keep one's money. Now, as the BBC whistleblower says, everyone should be VERY wary of these places. They are there to make money for their shareholders, by whatever means neccesarry sometimes, it would seem.

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There was one young lady in the programme, who was fresh out of college and due to get married. She had no "life experience" as far as finance was concerned, and went to her bank in order to get a £1k loan, to buy the wedding dress of her dreams. She was quite adamant that she wanted nothing more than the £1K loan at the time she sat down in the bank to discuss her situation.
A suit from the bank chatted to her in a very soothing manner, about how she could have more than the £1k, so that she could have all the trimmings. A lovely honeymoon, spending money, clothes to go away in etc etc.
He assured her that this was well within her payment capabilities, and even though she stated she told the suit on three occasions that she didn't really come in for any more than £1k, she ended up walking out of the bank with a £10k loan.....which, being young and foolish, as we all were, she promptly spent.

Years later and she was STILL trying to pay off the loan.

THAT would NOT have happened in the days when banks took a GENUINE interest in the financial welfare of their customers, methinks.

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Lord Ellpus wrote:

There was one young lady in the programme, who was fresh out of college and due to get married. She had no "life experience" as far as finance was concerned, and went to her bank in order to get a £1k loan, to buy the wedding dress of her dreams. She was quite adamant that she wanted nothing more than the £1K loan at the time she sat down in the bank to discuss her situation.
A suit from the bank chatted to her in a very soothing manner, about how she could have more than the £1k, so that she could have all the trimmings. A lovely honeymoon, spending money, clothes to go away in etc etc.
He assured her that this was well within her payment capabilities, and even though she stated she told the suit on three occasions that she didn't really come in for any more than £1k, she ended up walking out of the bank with a £10k loan.....which, being young and foolish, as we all were, she promptly spent.

Years later and she was STILL trying to pay off the loan.

THAT would NOT have happened in the days when banks took a GENUINE interest in the financial welfare of their customers, methinks.

When I was buying my new car, I had a budget in mind and what I all I wanted. The sales guy tried to sell me all the extras under the sun and I did end up buying a couple of things which I never really wanted.

The point I am trying to make is that banks and financial institutions are just like any other commercial enterprise. All that matters is the bottomline. This is the world today and if banks have to survive, they have to keep up with the way market moves.

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There is study that showed MBA's are the biggest cheats and the business world rewards cheats. These business schools seem to teach their graduates that as long as it makes money it is okay to use whatever means. Democracy is on the ropes as the pillars of democracy are being bull-dozed by multi-national corporations and the MBA cheats.

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The USA is run by an MBA cheat from Harvard.

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Brits 'most debt in Western Europe'

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