debt advisory services Household over-indebtedness in the EU in the context of the crisis - the state of play - debt advisory services Seminar on “Household over-indebtedness in the EU in the context of the crisis, the way forward” 6 December 2011, Brussels European Parliament Hans Dubois Eurofound Living Conditions & Quality of Life Unit

Source: Eurobarometer 74.1 Feeling in control → well-being

Arrears in the EU (%) Overall - Utility - Mortgage & rent - Hire purchase ‘N’MS ‘N’MS Source: Eurostat website, SILC data

Groups at risk & causes, see Eurofound (2010)*, but large groups:  Unexpected unemployed in combination with long-term financial commitments (e.g. high mortgage);  poor & excluded: expensive loans (& informal loans ). Social and economic cost beyond the individual  Health, unemployment, social housing, lower tax revenue (Hollerweger and Leuthner 2006; van Geuns et al. 2011). Solution: holistic approach  Ideal to prevent (school curriculum, consumer credit directive), but unrealistic to rely fully on preventive measures;  rehabilitation important, but often does not solve the cause;  an immediate, integrated alleviative response: debt advice Causes, consequences & solutions * Working paper (2010) can be downloaded on:

Stimulate timely signaling  Early-warning systems, e.g. referral by other social service providers (e.g. “Vroeg Eropaf” [Approaching Early], Amsterdam)  Social partners  Also: outreach posts, multiple language & media channels, anonymous first-contact options Translate into actual access. Problem: waiting lists, exclusion criteria & non-existence of services.  Understandable: limited funds & help those most in need with highest chance of success  Effective referral systems, ‘minimum service systems’, inter- municipal cooperation 1) Provide timely access Research report (2011/2) can be downloaded by early 2011 from: If before: ask for an advance draft copy, Quality debt advice

2) A customised, consistent process, relying on trust between the advisor & client...  Necessary to understand the full context  Credible and well-communicated confidentiality assurance... and cooperation between the advisor & other stakeholders (creditors, welfare offices, health services)  Long-term: mutual benefit 3) Provide support while leaving the household in control and having it actively contribute to the solution  Key tool: building a reliable payment record, also to guarantee access to cheaper future credit & as early-warning system  Sometimes minimal control necessary: e.g. anonymous food vouchers, utility payments directly to provider

Quality assurance: providing organisations & advisors Increase integration legal, health, welfare and financial help Housing policies  react swiftly and consistently to emergency situations, for example smoothening the transfer of households to smaller dwelling Some service provision overlap is not always bad  e.g. state-backed organisations have more legal discretion, and non- state providers can appeal to excluded groups Consumer bankruptcy and legal debt settlement  not be too short (inviting for abuse), not too long and inaccessible incentives to maximise earnings 4) Sound institutions

Thank you! Dublin