#DebtActionNI

Welcome Bob Stronge Advice NI

Overview of Advice NI Money & Debt Advice Services Sinead Campbell Advice NI

Launch of Debt Action 2013/14 Report Minister Arlene Foster DETI

Project Overview & Presentation of Report Gemma Willis Advice NI

Projects Partners

Access Points

Headline Figures #DebtActionNI

Reason for Debt The main reasons for debt are –31% Low/reduced income –23% Over commitment –11% Relationship breakdown and –11% Redundancy 43% of our clients had been experiencing financial difficulty for over 2 years

Top 10 Debts by Amount & by Agreement

Average Debt per Council Area Council AreaTotal Debt (£)Average debt per client Antrim1,883,14225,448 Ards1,141,39813,120 Armagh2,306,14016,472 Ballymena2,005,71615,429 Belfast14,696,70515,702 Coleraine1,673,85813,609 Cookstown1,120,92312,884 Craigavon2,724,13213,419 Down593,50013,189 Dungannon213,0892,841 Fermanagh3,760,53818,434 Limavady2,855,79522,487 Lisburn4,085,53914,965 L/Derry4,449,21215,890 Magherafelt1,247,2016,174 Newry7,981,63627,334 Newtownabbey1,157,30621,836 Omagh1,337,7916,463 Strabane3,055,83317,462

Client Profile

Resolution for clients Outcomes recorded in over 5,600 cases

Quality of Service Excellent/Very Happy Very Good/Fairly Happy Fair/Unhappy Poor/Very Unhappy Location Waiting time Quality of Advice Effect on situation Importance of Service Overall Experience

Clients’ Testimonials

Audio Clips Clients’ Stories

Paul Lewis Money Box Radio 4 Guest Speaker

@paullewismoney © 2014

© 2014 PROBLEMS OF DEBT “Look if you have somebody in the desert, and you offer him dirty water and he’s very thirsty he will drink it. So the question is why do we do deserts and dirty water and then ask the people what do you want. If you have no choice, you take what you get and that’s the problem.” Professor Hugo Reifner, The Price of Poverty, Radio 4, 20 April 2004

@paullewismoney © 2014 PAYDAY LENDING MARKET million payday loans 1.6 million people 6 loans each Total borrowing £2.5 billion Firms take £1.1 billion in interest, fees and charges So borrow £250 and on average pay £110 in charges. Source: Financial Conduct Authority July 2014 Proposals for a price cap on high ‑ cost short ‑ term credit Chapter 3

@paullewismoney © 2014 Annual Percentage Rate APR Borrow £100 over a year and pay £25. Over a year 25% APR Over three months 144.1% Over a month % Over four weeks 1719% Over two weeks 32,987% Over one week 109,475,544.3% APR

@paullewismoney © 2014 Annual Percentage Rate APR Borrow £20 A week later pay it back and buy friend a pint £3.10 APR = 179,482.2% If the mathematics says one thing but your brain says another, trust the maths.

@paullewismoney © 2014 FINANCIAL CONDUCT AUTHORITY Changes from 1 July Rollovers limit of two information on getting help and advice Continuous Payment Authority limit of two 1 April 2014 Risk warnings on adverts

@paullewismoney © 2014 FINANCIAL CONDUCT AUTHORITY CAP ON COSTS From 2 January 2015 Charges cap = 0.8% of loan per day  Wonga  Borrow £200 for 28 days  WAS £63.04  WILL BE £44.80  29%CUT Default charges no more than £15 Overall cap of 100% of loan – so £200 on £200 loan

@paullewismoney © 2014 FINANCIAL CONDUCT AUTHORITY CAP ON COSTS From 2 January 2015  Borrow £200 for 28 days  Daily charge £1.60 = 28* £1.60 = £44.80  APR %  Owe £  Add £15 = £  APR = %  Daily interest 0.8% on that total sum  After 95 days = £399  APR around 1300%

@paullewismoney © 2014 PAYDAY LENDING MARKET million payday loans 1.6 million people 6 loans each Average loan £260 over 30 days Cost £62.40 Those six loans cost £ in charges alone – even if paid back on time. Source: Financial Conduct Authority July 2014 Proposals for a price cap on high ‑ cost short ‑ term credit Chapter 3

@paullewismoney © 2014 PAYDAY LENDING MARKET 2013 Borrowers income £18,000 vs average of £26,500 65% have no savings 64% have other outstanding debts 55% said they used money for everyday spending Before the loan Credit scores already getting worse Debt had increased in previous year  overdraft breaches 23%  missed payments 40% After the loan Debt continued to increase –  overdraft breaches 33%  missed payments 60%  30% of their outstanding balances in default Source: Financial Conduct Authority July 2014 Proposals for a price cap on high ‑ cost short ‑ term credit Chapter 3

@paullewismoney © 2014 FINANCIAL CONDUCT AUTHORITY CAP ON COSTS “Our model estimates complete market closure at 0.4% and we consider that at levels below 0.8%, given that our models are estimates and have some uncertainty, there is a risk that fewer than three firms would remain. This risk is greater at lower levels of cap. At an initial cost cap level of 0.8%, we can be more confident that the three largest firms will continue to offer HCSTC, particularly as we would expect all firms to respond to the cap to limit the impact on them, and reduce the risk of exit.” And it fixed it at 0.8% because “We do not think it is desirable to leave consumers entirely without the option of using HCSTC.”

@paullewismoney © 2014 PROBLEMS OF DEBT “Look if you have somebody in the desert, and you offer him dirty water and he’s very thirsty he will drink it. So the question is why do we do deserts and dirty water and then ask the people what do you want. If you have no choice, you take what you get and that’s the problem.” Professor Hugo Reifner, The Price of Poverty, Radio 4, 20 April 2004

@paullewismoney © 2014 Source: The impact of life events on financial capability, Consumer research paper 79, FSA, September 2009, foreword p iii-iv FINANCIAL CAPABILITY Life eventFinancial problemsFinancial capability Have a baby+19%DOWN Become unemployed+63%DOWN * On Jobseeker’s Allowance+88%DOWN Divorce or separate+17%DOWN especially women Retire+31% Enter work-27%UP Have employed partner-15%UP Get marriedDOUBLES

@paullewismoney © 2014 Unimplemented in Northern Ireland 1.Universal credit, 2.PIP to replace DLA 3.Bedroom tax 4.Contribution based ESA limited to 12 months for those in work related activity group 5.Benefit cap £26,000 – to be cut to £23,000 6.Appeal rights weakened 7.Social Fund to be replaced with local discretionary support. 8.Council Tax Benefit replaced by local council tax support WELFARE REFORMS

@paullewismoney © 2014 Changes planned from 2015 £25bn to be cut in first two years of next Parliament £13bn from departmental savings – perhaps including pay freeze £12bn from welfare cuts  £3.2bn of that from freezing rates of working age benefits for two years 2016/17 and 2017/18  JSA, most of ESA, Carer’s Allowance, Income Support, working tax credit, child tax credit, housing benefit, and child benefit. Pensioner benefits and pensions excluded from cuts WELFARE REFORMS

@paullewismoney ©

@paullewismoney © 2014

@paullewismoney © 2014 APRs Borrow £200 Pay back £ Over a year APR is £63.04/£200 = 31.5% APR Over 28 days the APR is % Over two weeks the APR is 12,036.4% Over one week APR is 54,612.3% Borrow £20 One week later give me back £20 and buy me a half a pint of beer at £1.50 APR = % Source: DualCalc

@paullewismoney © 2014

@paullewismoney © 2014

Paul Lewis - Money Box Radio 4 Kevin Higgins – Advice NI Ursula Toner – Housing Rights Service Michele Loughran – Omagh Independent Advice Services Susanne Downey – Trussell Trust Q&A Panel