If debt is to work, we need it to work for everyone
Mark Davies (pictured) is managing director of Link Mortgage Services
I’ve written recently about the importance of doing the right thing – not just in terms of how we perceive ourselves but also in terms of how we are perceived by clients, regulators and policy makers.
Doing the right thing has never been more pressing. In June of this year, a survey of more than 16,000 people during lockdown by the charity Mind revealed the scale of the impact of the pandemic on people.
Of those already suffering with mental health problems, 65% of adults over 25 and 75 per cent of young people aged 13-24 reported worse mental health.
Of those adults with no previous experience of poor mental health 22% reported that their mental health is poor or very poor.
The impact on mental health of unemployment, financial difficulties and housing issues will grow as government-led emergency support measures come to an end.
Of those who were furloughed, changed jobs or lost their job due to coronavirus 73% reported lower than average wellbeing scores compared to 66% of those whose employment didn’t change.
The Institute for Financial Studies more recently found that by May, the number of households making mortgage, rental and council tax payments was, respectively, 14%, 11% and 9% below what we would have predicted based on pre-crisis trends.
This represents a deterioration since April, perhaps suggesting that some households are increasingly struggling to make ends meet as the crisis persists.
Looking at those who paid a given bill in January 2020 but did not pay that bill in May 2020, the average January bill amount was £1,660 for mortgages, £650 for rent, £170 for council tax and £139 for utilities.
All of this is a grim reminder that those of us administering the wheels of debt have an obligation to do so fairly.
For businesses that can be hard to do if those running the show are not regularly at the coal face seeing the issues in person.
Out of sight too often in large organisations can be, if not out of mind, then beyond comprehension. This is counter intuitive to the obligations of the Senior Managers and Certification Regime that seeks to ensure senior managers are personally accountable for the key conduct and prudential risks of their firms.
The problem is that in larger entities it remains a cost driven issue. The scale and depth of the reality is often made abstract by distance or hierarchy.
UK plc and UK public are clearly feeling fragile and it is imperative that lenders treat borrowers fairly and endeavour to the best of their abilities to accommodate requests for help.
Commercially, there is the short-term reason for this but also a secondary longer-term consideration. If we are to build a sustainable future that involves borrowing, we need it to work for everyone.
If debt becomes too onerous it ceases to afford borrowers opportunity and we will all be poorer for that.