Ulster in the middle of a debt crisis, claims CAB
Published 01/10/2007 | 11:33
Citizens Advice called today for tighter regulation of the finance industry after reporting that Northern Ireland was in the grip of a debt crisis.
The organisation said that a Department of Enterprise funded project which it was managing had handled 1,600 people in the year to March, and dealt with £15m worth of new debt.
Speaking at the launch of its annual report, called Dealing with Debt, Citizens Advice chief executive Derek Alcorn said easy personal credit was at the root of the problem.
He said: "Of the £15m of debt dealt with over one year, £10m was personal credit - personal loans £3.5m, credit cards £5.4m, and bank loans £1.4m.
"Against the collapse of public confidence in the finance industry which we have seen in recent weeks, it is clear that the deregulation of the finance industry in 1988 went too far, and that inappropriate and irresponsible loans are being made to the public.
"This is accompanied by pressurised advertising containing questionable assertions. Citizens Advice has been saying this for some time."
Mr Alcorn said that in 2004, the amount of debt amassed by households in the UK had hit more than £1 trillion (including mortgages) for the first time.
He said this was double its level of £500bn, reached just seven years earlier.
"Since then, personal debt has continued to increase," he added.
The report included several case studies. These were:
? A Co Armagh woman who lived in rented accommodation and was in receipt of state pension, pension credit and a small occupational pension.
Despite this limited fixed income, she had managed to accrue almost £40,000 of debt with 17 different creditors.
After consultation the client was declared bankrupt in February and all the debts had been included in the bankruptcy, relieving much of the pressure she was under.
? A man from Co Armagh had been referred to the bureau for help after experiencing health problems which resulted in his mortgage going into arrears.
A repayment proposal was agreed, which averted court action and enabled the client to go back to work.
Citizens Advice said that before the involvement of DETI in money advice, Northern Ireland had had no long term sustainable funding programme.
It said a report published in February last year by the Office of the First Minister and Deputy First Minister had estimated that 11% of the population in Northern Ireland aged 16 and over were potentially struggling with debts, a figure which equated to almost 150,000 people.
That report said that 5% of the population, or 67,000 people, were behind with at least one credit commitment or domestic bill.