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Debt management weekly round-up

29/01/2010

In the week that the UK finally came out of recession, there were a number of debt stories that caught our eye on Money News. Here's a round-up of our highlights from the last five days.

On Monday we heard that energy debts had soared by 20 per cent in the last year.

Energy regulator Ofgem revealed that the number of people entering debt repayment arrangements had increased dramatically – up 13 per cent for electricity customers and 21 per cent for those on gas.

However, there was reason for a little more cheer the following day, as the Financial Services Authority (FSA) announced new plans to protect homeowners with mortgage debts.

The proposals included plans to protect borrowers from unfair fees and to make sure that repossession was very much a last resort.

This, the FSAs review found, would ensure that struggling homeowners were treated more fairly by lenders than they are at present.

We then learned the news everyone had been waiting for – or at least so we thought. Official figures released on Wednesday showed that the UK crept out of recession in the final quarter of 2009, though by far less than had been predicted.

The findings showed that the economy grew at a sluggish 0.1 per cent – further supporting claims that any recovery will be protracted.

Indeed, Kevin Still, director of Atlantic, felt that the figures were little to cheer – noting that a "debt backlash" should still be expected in the coming months and years, with a continued rise in personal insolvencies and people starting debt solutions.

Indeed, a leading official at the Bank of England seemed to agree. In a speech made this week, the Bank's executive director for financial stability, Andrew Haldane, warned that many Brits are experiencing a "debt hangover".

He noted that a sharp rise in interest rates – expected by some analysts in the coming year – would have the effect of pushing a number of households over the edge and needing help.

Finally, we found that many debt sufferers were claiming to have been left without heating over the winter despite being covered under a government-funded scheme.

The BBC claims to have seen a number of complaints from people who rely on the Warm Front scheme. Several, they say, have been without a working boiler over one of the coldest winters on record.

As a result of the complaints, the Commons Energy and Climate Change Committee will now launch an investigation.
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