'Ignorance and shame' lead to financial mistakes
Published On 29 March 2007
People increasingly believe that they can borrow their way out of financial difficulty, by using homeowner loans and debt relief services, a leading charity has warned.The insolvency director at Debt Free Direct, Derek Oakley, said that there was a growing problem in the UK with people's "poor decisioning: thinking you can borrow your way out of a problem".
Mr Oakley said that television advertising, which encouraged people to believe that they could continue to borrow money after previously getting into financial problems, was not helping the UK's debt problem.
"If behind [easy access to more debt] there is a robust system of looking at those individuals' circumstances and making sure that actually if you do lend them more money and reschedule it, that they're actually able to repay their borrowings, then fine. I have to say, I'm not convinced that that exists."
Mr Oakley added that the general state of ignorance about financial issues in the UK was not helping people work out what to do if they found themselves in debt.
"There's a lot of ignorance about money matters and a lot of shame," he explained.
A recent report from Birmingham Midshires suggested that 80 per cent of people thought they would struggle financially if they were made redundant. As these people had few saving to support them if they experienced financial difficulties, they could have to take out home owner loans to survive in the short-term.
