Hitting the shops to start your Christmas shopping? Or shopping online, maybe? However you shop, it’s far too easy to get caught up in the annual festive shopping frenzy. Here are some seasonal tips from Citizens Advice Scotland to help make sure you don’t start the New Year with a debt hangover …
Credit Unions play key role in tackling debt
A new Financial Health Service offering a one-stop-shop for money advice services has been launched by Business Minister Fergus Ewing. Scotland’s Financial Health Service website provides links to a range of organisations offering information and advice on debt, managing money, housing, homelessness and ethical lending.
A key part of the new website is a Financial Education module which aims to help people to manage their money to stop any future problems.
The website also allows users to search for their local credit unions and find out about the products offered by them, and to search for approved money advisers.
A new law, the Bankruptcy and Debt Advice (Scotland) Act, which comes into force in April 2015, ensures appropriate debt relief and management and includes mandatory provision of money advice.
Launching Scotland’s Financial Health Service in Edinburgh yesterday Mr Ewing said:
“It is important that we take action to help those people in Scotland who are struggling under the burden of debt. We have developed Scotland’s Financial Health Service because we must ensure that people who need to access debt and budgeting advice, do so easily with credible sources.
“Last year, the Accountant in Bankruptcy’s ‘12 Days of Debtmas’ campaign targeted people who may get into financial trouble over the festive period by using high interest, short-term credit.
“During the six months between October 2013 and March 2014 – during which time the ‘12 days of Debtmas’ and ‘Helping Hand with debt’ campaigns ran – 14,307 new members joined credit unions in Scotland. This is a 4.2 per cent increase in total membership.
“People across Scotland can join credit unions – all sorts of people from all walks of life use credit unions to save and borrow responsibly, and the most successful attract a diverse membership.”
Welcoming the launch Paul Walsh, CEO of CUNA Mutual said: “With the ever widening protection gap continuing to spread – leaving 86 per cent of Scottish residents in trouble if their income was lost – it is vital that the right support is provided to those who become financially vulnerable.
Initiatives like this government website, supporting those shouldering the burden of debt, are imperative alongside the practical credit and protection solutions offered by credit unions throughout Scotland. “The credit union movement in Scotland both funds and protects thousands of Scottish residents and has become a solid part of the Scottish financial community.”
ABCUL Scotland Policy Manager Frank McKillop said: “Since Scotland’s first credit union was founded in 1970, generations of volunteers, directors and staff have been focused on helping people in their communities and workplaces to get on top of – and stay in control of – their finances.
“By encouraging a responsible approach to saving, borrowing and budgeting, Scotland’s credit unions are well placed to play their part in building the nation’s financial health.”
Edinburgh’s ‘Making Advice Work’ (MAW) programme is now one year old, and delegates to a Scottish Parliament reception heard that the service has delivered quality advice and support to clients in desperate need of help across the city.
Last October the Scottish Legal Aid Board (SLAB) was asked by the Scottish Government and the Money Advice Service to run a new grant funding programme to focus on improving access to advice. A wide range of Edinburgh-based organisations joined together and successfully bid for MAW funding and an interim report on progress was presented at an event at Holyrood last night.
The statistics are impressive – over twelve months MAW-funded organisations gave advice to 1632 people who reported accumulated debts of over £1.2 million. Clients were represented at 119 tribunals or Sheriff Court cases and financial gains achieved for clients totalled over £1.8 million. It’s worth noting that in many cases these figures are in addition to organisations’ other client groups – organisations like Granton Information Centre have been able to see more people in need as a direct result of SLAB funding.
Statistics only tell part of the story, however, and behind ever figure there is a person or family in need of help and support. The recession and subsequent welfare reforms have hit communities hard and all advice agencies have struggled to cope with record numbers of clients. For some, it’s being unable to understand complicated forms, for others it’s an unexpected change of circumstances. Some are these are on the verge of losing their family home, some facing mounting debts with seemingly nowhere to turn – and all of them need help.
Housing and Welfare Minister Margaret Burgess MSP knows more than most the value and importance of good quality advice – she has front line experience as a former adviser with Citizens Advice. One grateful former client recently recognised and approached the Minister – not as a politician but as a person who was there to provide support when it was most needed – fully nine years ago!
After talking of the social challenges faced by families and communities, Ms Burgess told delegates: “There are undoubtedly challenges, but we can see through the case studies and your report that help is being provided to those most in need. Tonight is a night to celebrate what you have achieved”.
Projects involved in the partnership include CHAI, Citizen Advice Edinburgh, Dunedin Canmore, Deaf Action, Shelter Scotland, Hillcrest Housing Association, Granton Information Centre, The Action group, Cyrenians, Prospect Community Housing, Port of Leith Housing Association and the City of Edinburgh Council.
Making Advice Work has three programme streams – community-wide advice, helping tenants of social landlords and a thematic stream which aims to tackle barriers in accessing advice for people with disabilities and others experiencing domestic abuse.
The Making Advice Work projects operating across the city cover all three of these programme themes, and David Gardner (CHAI), Brendan Fowler (Prospect Community Housing) and Cheryl-Ann Cruickshank (Shelter Scotland) gave short presentations to give a flavour of the type of work taking place in Edinburgh.
Brendan Fowler explained: “It can be intense, but the best advice is face to face, one to one. This project is good value for money because it works. This funding has helped to change people’s lives”.
SLAB Chief Executive Lindsay Montgomery CBE (above) thanked the organisations for their efforts over the last twelve months. “When this funding was introduced we were very clear that it would be dependent on organisations being able to show that they could work in partnership with others to produce positive outcomes. The results so far have been very encouraging and it’s to be hoped that other parts of Scotland will follow Edinburgh’s lead”.
The event was co-sponsored by Labour MSPs Sarah Boyack and Kezia Dugdale.
For more information on Making Advice Work – and the organisations involved in the programme – go to http://goo.gl/HPnt9E
£2.4 million funding to help families deal with debt
Community projects which will help vulnerable families deal with debt and welfare problems are to benefit from a £2.4 million funding boost. The money will see 16 projects receive significant funding through the Scottish Legal Aid Board’s ‘Tackling Money Worries’ programme.
Local independent advice agency Granton Information Centre is a partner in two Edinburgh initiatives – with Stepping Stones and Changeworks in Canny Families, which provides help to young families and expectant mothers in North Edinburgh, and the Family Friendly Money Advice project in Leith, a collaboration with NHS Lothian, Citadel Youth Centre, Dr Bell’s Family Centre, the City of Edinburgh Council and Edinburgh Community Food.
See below for the full Tackling Money Worries project list
‘Tackling Money Worries’ support will be focused on low-income families facing a change in their circumstances, as this places them at higher risk of debt and money problems. Among the projects are:
• Eight projects focusing on the birth of a child and early years;
• Two projects focusing on changes to family structure; for example, when a relationship breakdown occurs;
• Six projects focusing on the impact of going through the criminal justice system, including families where someone is in prison or about to leave prison.
There will be direct advice and help for families to deal with crisis debt issues, as well as help with building on their money-management skills to support family life throughout their early years and childhood.
The TMW programme will bring together quality debt advice providers and agencies that are already trusted by families in their community. It will also build lasting and effective connections that will benefit families in the longer-term.
The funding of these projects has been made possible by Scottish Government approval for SLAB to spend up to £2.4m between October 2014 and the end of September 2016 on initiatives related to the Child Poverty Strategy.
This is on top of Scottish Government funds which, in combination with funding from the Money Advice Service, are already supporting 92 grant funded projects.
These programmes were due to end in March 2015, but both funders now intend continuing this funding partnership beyond that date. This would enable extension of help for people on low income in Scotland across a longer period.
Deputy First Minister Nicola Sturgeon said: “In the past week we have seen the publication of a report that laid bare the extent of child poverty in Scotland. This is a totally unacceptable situation in a country as wealthy as ours.
“It is vital that the most vulnerable members of our society are provided with the help and support that they need, at the times in their life when they need it most. The Tackling Money Worries programme will help 16 projects across Scotland deliver this support through a £2.4 million investment.
“We know that the UK Government’s benefit reforms are driving people into poverty and that is why we are investing £81 million in the next financial year to help mitigate the effects of these changes.
“This help is vital but I am clear that we must also work to address the underlying issues of poverty in our society. That is why we have set out the need for Scotland to have full responsibility over welfare and employment powers to the Smith Commission.”
Dr Lindsay Montgomery, Chief Executive of the Scottish Legal Aid Board said: “We are delighted to announce the launch of this new programme of projects. The projects will play an important role in helping find long-term solutions for low-income families struggling with financial difficulties by dealing with their underlying debts.
“They will provide support to some of the hardest to reach families in Scotland who are most at risk of facing complex financial problems. We appreciate the financial support from the Scottish Government for this programme of grants.”
The face of Scotland’s high streets changed markedly during the recent recession – as household names like Woolworth’s, Jessop’s and HMV disappeared units often lay empty for months. Some were replaced by pound shops or charity shops but the other notable feature was the growing presence of the payday lenders on our shopping streets – and the Scottish Government is now making moves to limit their numbers.
Tighter regulations and stricter planning procedures will help limit the numbers of new payday lenders on Scotland’s high streets, Local Government Minister Derek Mackay announced on Friday.
The measures which are designed to minimise the presence of payday lenders in communities are set out in a new 12 point Scottish Government action plan.
The plan is a result of Scotland’s first Payday Lending Summit earlier this year and based on feedback from local authorities, advice services, welfare organisations and credit unions who attended.
The preventative measures also include the introduction of a new Financial Health Service which will serve as a one-stop-shop for money advice services, and there is an emphasis on promoting credit unions.
Launching the plan on a visit to the Glasgow Central Citizens Advice Bureau, Mr Mackay said:
“This action plan reinforces our commitment to addressing the problems associated with payday lending and sets out a number of actions that we will undertake across a range of policy areas.
“Payday loan companies are not only blighting our high streets but they are exposing people to financial credit they just cannot afford.
“Bringing the industry together at the Payday Lending Summit was a real opportunity to share ideas and discuss ways of reducing the problem of payday lenders in town centres.
“I won’t pretend that this action plan will solve the problem overnight but it’s a step in the right direction. Through legislation we will remove some of the exemptions from planning control on premises that sell pay day loans. This will allow planning authorities to implement policies addressing future clustering and over-provision of such activities. The planning proposals also include similar changes regarding controls on betting shops.
“We’re making conditions tougher for payday lenders by excluding them from small business bonus schemes and working with the Financial Conduct Authority to tighten up regulations.”
Mr Mackay continued: “We’re taking steps to tackle the issue of problem debt through legislation such as the Bankruptcy and Debt Advice (Scotland) Act, but raising awareness of alternative ways of accessing credit is key. By showing people payday lenders are not the only option we can lessen the demand for the service.
“Our new Financial Health Service website will bring together different strands and sources of information and advice, so that anybody with a concern or an issue to do with debt or borrowing can find, in one place, the help and assistance that they need.
“With our limited powers we are doing what we can, but with independence we could do so much more to act quickly to offer protection to consumers.
“Whilst we welcome the tougher FCA regulatory regime and the consultation on a cap, the UK Government have been slow to act. We have been calling for a cap on the cost of pay day loans since 2012. In an independent Scotland we can act more quickly to protect Scottish consumers, and introduce policies and measures that reflect the needs of people living in Scotland.
“Tackling the increasing numbers of payday lending businesses will not only stop more people being driven into poverty, but will help give our town centres a sense of identity and be more attractive places for people to live, work and visit.”
There are an estimated 180 to 200 payday lenders on Scotland’s high streets.
Case Study
Stewart*, 46, owed £18,000 in unsecured debts, and tried various fee-charging debt management companies before contacting StepChange Debt Charity.
Stewart said: “Although I was working full-time, I found myself relying on credit cards to pay for things like bills and food shopping.
“When my cards were maxed out, I was refused more credit by my bank and offered no help.
“I felt like I had nowhere else to go, which is when I turned to payday loans and I ended up relying on them to get me through.”
Stewart was able to take out three payday loans despite already having significant debts.
He also noticed a dramatic rise in nuisance calls, texts and emails offering further loans and debt management services.
Owing £18,000 in unsecured debts, Stewart tried various fee-charging debt management companies – who he says charged administrative fees and kept important information hidden – before contacting StepChange Debt Charity.
He is now repaying his debts through a Debt Management Plan, and says he would never be tempted to take out another loan following his bad experiences.
Stewart continued: “I can remember waking up in the mornings and thinking this is going to be a struggle. I’m really happy now, and going back to that is not something I could even think about.”
* Case study name changed to protect identity.
Susan McPhee, Head of Policy and Public Affairs at Citizens Advice Scotland gave a presentation on the problems CAB clients have at the summit in April. She said:
“There has been a proliferation of payday loan shops throughout our communities so we welcome moves to restrict them though the planning process. Accessing loans through a payday lender seems easy when so many shops are on our high streets and lenders bombard us with adverts for credit. But paying back such loans is not always easy and it is often the poor practices of payday lenders that cause problems to occur for people who can easily get into difficulty making their repayments.
“Citizens Advice Bureaux in Scotland are dealing with over 100 cases involving payday loans every week and our research shows that a fifth of people access such loans through high street shops.
“It is often poor practices by payday lenders that cause problems which is why CAS has campaigned for several years now to tackle to the unfair practices of payday lenders and make sure the people of Scotland know that their local CAB can give them advice and help if they do get into difficulty.”
Anyone who needs debt advice can get free, confidential help from their local CAB or from our helpline on 0808 800 9060.
Sharon Bell of StepChange also presented at the Payday Lending Summit. She said:
“This Scottish Government action plan is welcome – anything that better protects consumers from these loans and their potentially damaging repercussions is good news.
“We see too many people falling back on such high cost credit in order to either cope with existing debt problems, or just to make ends meet, often to damaging effect. Taking on this type of borrowing is not a solution to financial difficulty, and instead these people need better protection from the pressures of debt.
“StepChange is calling on policymakers to consider the idea of ‘breathing space’ – a break from interest, charges and enforcement, where debts can be repaid over an agreed period – so debtors in difficulty don’t have to keep borrowing to service borrowing.
“We also need a better short term credit market, where banks, credit unions and employers play a role in providing more responsible sources of loans and we hope the UK Government will do more to promote such schemes.”
StepChange Debt Charity Scotland offers free and impartial debt advice and solutions through its freephone helpline (0800 138 1111) and online (www.stepchange.org).
Local free, independent debt advice is available at Granton Information Centre on West Granton Road, telephone 551 2459 or 552 0458.
Struggling with debt? Seek advice!
Recovery, what recovery? A new study compiled by the Money Advice Service highlights how 8.8 million people in the UK live with serious debt problems, but only one in five of this group is currently accessing advice to help with it.
The report, ‘Indebted Lives: The Complexities of Life in Debt’, brings insights from a survey of over 5,000 UK adults, and provides a much clearer picture of the lives of those struggling with debt.
It reveals that over four million people have been struggling to pay their bills for more than a year and admit their debt prevents them buying the basics – with families affected even more. The report sets out eight distinct groups of people who are in serious debt – families account for half.
Unsurprisingly, the majority of people who are struggling with debt said it has a negative impact on their life and three out of four admitted they are unhappy. But repaying debts is very important to four in five of the 8.8 million who said they would like to pay off their debt as soon as possible.
The Service is concerned to find only one in six of all adults experiencing debt difficulties is currently seeking advice to help them deal with their debt, and over two in five said they don’t feel able to talk to their creditors about their debt problem. Furthermore, one in five of over-indebted people does not actually recognise they are in debt.
“Millions of people could escape their spiral of debt by accessing free advice. We know it transforms lives and the sooner people access it the better – to take steps to improve their life for good,” said Caroline Rookes, CEO of the Money Advice Service.
“However, this study presents us with a fundamental challenge: the majority of people with debt difficulties do not seek advice. This is the first time we’ve had such a detailed understanding of the complexity of their lives.”
She added, “So now, armed with greater insights, we will work with advice agencies, creditors, and public bodies to help as many people as possible access free, high-quality, debt advice.”
Free and confidential advice is available locally at
Granton Information Centre (telephone 552 0458)
and Pilton CAB at Drylaw Shopping Centre (332 9434)
The Westminster government is to introduce legislation to cap the cost of payday loans. In a move that’s likely to be welcomed by campaigners, the Treasury says there is “growing evidence” in support of the move.
The cap will be included in the Banking Reform Bill, which is currently going through Parliament, and the level of the cap will be decided by the new regulator the Financial Conduct Authority (FCA).
Chancellor George Osborne told the BBC there will be controls on charges – things like arrangement and penalty fees – as well as on interest rates. “It will not just be an interest rate cap, you’ve got to cap the overall cost of credit,” he said.
Although the level of the cap is yet to be determined, the announcement will be welcomed by opposition and campaign groups who have been urging the government to take action against some pay-day lenders’ practices: eye-watering interest rates and hidden charges which hit the poorest hardest and drive desperate people deeper into debt.
Just last week, Citizens Advice Scotland claimed that many payday lenders in Scotland are breaking the promises they made last year to clean up their act. According to CAS research, lenders continued to break ‘most of the pledges in their own code.’
The main points were:
CAS Chief Executive Margaret Lynch said: “When the payday lenders published this voluntary code last year we made clear we would be watching them like a hawk to make sure they kept to their word. Because there’s no point making promises if you don’t live up to them.
“Our survey results – together with the experience of other clients we see every day in the CAB – show very clearly that this Code of Conduct Is being ignored repeatedly.
“Across Scotland, CAB advisers are currently seeing over 100 cases every week of people who are in crisis debt to a payday lender. That’s a third higher than this time last year. Our evidence is that many lenders are operating in ways that result in people getting into debts they can’t handle.
“So the Payday Lenders have had their chance to clean up the industry, and they have failed. It’s time now for the regulators to step in and do it properly.”
People across Scotland are being urged to consider credit unions as an ethical and affordable alternative to payday loans. The Scottish Government’s ‘12 Days of Debtmas’ campaign is aimed at people who may get into financial trouble in the run-up to Christmas by using high interest, short-term credit.
Over 350,000 people across Scotland are members of credit unions; co-operatives that are owned and managed by the people who use them. Members are encouraged to save monthly, even if it is only small sums. They can borrow at competitively priced rates and in some cases, in a short timescale.
First Minister Alex Salmond recently announced plans to protect consumers pledging payday lenders would be subject to tougher regulation in an independent Scotland.
Speaking at Grampian Credit Union, Enterprise Minister Fergus Ewing said:
“The Scottish Government is very concerned about the growth of payday lending and the impact that high interest borrowing, especially in the run up to Christmas, has on people in Scotland.
“This campaign raises awareness of credit unions and also promotes their affordable lending solutions to people in the lead up to Christmas, and after the festive period, when bills start to arrive.
“People across Scotland can join credit unions and not just for hard pressed communities – all sorts of people could use credit unions to save and to take out loans at manageable interest rates.
“You can join a credit union and in some cases, borrow money in a short timescale. It costs significantly less to borrow money from a credit union than taking out a payday loan and you receive much more support in managing your finances.
“I welcome the changes that have been made at UK level but I continue to press for firmer action. To protect consumers, payday lenders would be subject to tougher regulation in an independent Scotland.”
Scotland’s main faith groups, consumer groups and debt charities have all welcomed the campaign.
Margaret Lynch, Chief Executive of Citizens Advice Scotland said: “Payday Loans are one of the main issues that we see today in the CAB service. Across Scotland our advisers are currently seeing over 100 cases every week of people who are having problems with a payday loan. That’s an increase of a third in such cases since this time last year.
“We back the Government’s statement today, and are keen to spread the message to consumers about the dangers of high-interest loans. To people who might be considering taking out a loan we say: Be very careful about what lender you use. Payday loans might seem convenient today, but they can lead you deep into debt.
“Shop around for a better deal. There are other lenders, like Credit Unions, with loans that are easier to repay. In particular, if you are already in debt to a payday lender, avoid roll-over loans with the same lender.”
Frank McKillop, Policy & Relations Manager (Scotland), Association of British Credit Unions Limited said: “People across Scotland from all walks of life join credit unions to take control of their finances – saving for future expenses, borrowing responsibly at affordable rates, and accessing other financial products from ethical local providers.
“We hope this campaign will attract many more people to join a credit union and take a responsible approach to their finances, rather than being drawn to the sort of short term fix which often makes money problems worse.”
John Deighan, Catholic Parliamentary Officer said: “The effects of high interest loans on the poorest in society is devastating. Usury has been condemned throughout the ages for oppressing the poor through unreasonable and irresponsible lending.
“Yet our society is effectively permitting the practise supported by slick television and media commercials. It is right that political action seeks to highlight alternatives and ensure reasonable access to credit without the crippling interest rates that so many are enduring.”
The ‘12 Days of Debtmas’ radio and online campaign begins today.
You can find your nearest Credit Union by checking the ‘credit union finder’ at the following link: www.12daysofdebtmas.com
A Scottish Government campaign will highlight help for people struggling with debt, Enterprise Minister Fergus Ewing announced yesterday.
The campaign raises awareness of the Debt Arrangement Scheme (DAS), an initiative that enables people to pay back debts over any reasonable length of time, based on the amount owed and their income and outgoings.
Administered by government agency Accountant in Bankruptcy (AiB), it also freezes interest, fees and charges to prevent debts mounting up. It stops creditors using debt enforcement action, safeguarding people’s homes so long as they keep up mortgage repayments.
The campaign will help people take the first step in solving their money worries by directing them to information on how to find their nearest approved money adviser online at www.helpoutofthehole.org, which goes live today.
Mr Ewing said: “The Scottish Government continues to take action, where it can, to address these problems and introduce measures to help those people in Scotland who are struggling under the burden of debt.
“The Debt Arrangement Scheme is the only government-backed scheme to help people pay back their debts in a dignified way, protecting them from the threat of action by their creditors.
“Recent changes to the Scheme have allowed for earlier freezing of interest, fees and charges helping to prevent debts increasing further. Our aim with this campaign is to raise awareness of DAS which helps people faced with the difficulties of debt to take control of their finances and get help out of the hole.”![images[1]](https://i0.wp.com/nen.press/wp-content/uploads/2013/08/images1.jpg?ssl=1)
