Actor Brian Cox says the impact of childhood debt is impossible to underestimate.
Millions of British families don't have enough savings to cover one month's rent or mortgage
A man who says his life was ruined by an illegal loan shark has issued a stark warning to others who may be struggling with Christmas debt.
The Children's Society has warned of the dangers of ignoring the emotional impact family debt has on children.
Chief executive Matthew Reed said:
Families are increasingly relying on debt as a way to make ends meet - but we're in danger of ignoring the impact this is having on children now and in the future.
We cannot allow children to pay the price of debt.
Poor families facing financial difficulties need "somewhere to turn" other than to unethical and predatory lenders, a leading figure in the Church of England has said.
The Archbishop of York, Dr John Sentamu, gave his backing to a report into UK household debt and the distress it causes children:
– Dr John Sentamu
When the monthly struggle to pay the bills becomes too much, often families think they have no option but to borrow money to provide the basics for their children,.
We need to make sure families living in poverty have somewhere to turn other than to usury-lenders.
One in five (18%) of UK households with children are faced with "problem" debt, according to a survey from two leading charities.
The Children's Society and StepChange debt charity also found:
- On average these households owe £3,437, or an estimated £4.8 billion to creditors and the Government.
- An estimated 2.4m children are living under "problem" debt.
- A further 2.9 million households with dependent children are struggling to keep up with payments on household bills or credit over the past year.
- Almost 18% of 10 to 17-year-olds who took part in the survey had been bullied because of the financial troubles their family faced.
- Over half of the children researchers spoke to said they were embarrassed by their lack of money.
At least 1.4 million families are living with "problem" debt with a further three million households on the verge of sliding into financial difficulty and leaving their children in distress, according to a new report.
The Children's Society and StepChange debt charity have warned about the emotional toll an "extremely precarious" financial position puts on the children of the family.
The stress of keeping up with repayments leads to rows, emotional distress to children and cut backs on essentials, the charities warned.
Research conducted by the Financial Conduct Authority (FCA) suggests outstanding UK consumer debt is estimated at £12.8-15.2 billion, and fees for debt management plans are estimated to be £25 million a year.
Christopher Woolard, director of policy, risk and research at the FCA, said:
Debt management firms must start putting consumers first.
It's frankly unacceptable that those people who are struggling to make ends meet are being talked into unsuitable plans.
The Financial Conduct Authority (FCA) has said it is unacceptable that people struggling to make ends meet are being encouraged to sign up to "unsuitable" and expensive debt management plans.
The regulator, which is set to start regulating consumer credit, said debt management firms must provide consumers with information on where they can get free debt advice as part of the new rules which come into force on April 1.
Firms will also have to pass on significant repayments to creditors from day one of a debt management plan.
The FCA is concerned that too many firms are encouraging consumers into costly fee-paying debt management plans that are not tailored to their needs or to what they can afford when the focus should be on agreeing a sustainable plan or the right solution.
Politicians are ignoring a looming crisis in household debt which could see two million families driven to "the edge of their means", a leading think tank has warned.
The Resolution Foundation said the number of British households spending more than half their disposable income on debt repayments could triple by 2018 if interest rates rise faster than predicted.
It urged banks to start checking on debtors now, in case they are caught off-guard when the cost of borrowing goes up.
There are free services available if you are worried about your debt levels.
- Money Advice Service is a free and impartial service set up by the government
- Citizens Advice Bureau offers free, independent, confidential and impartial advice
– Caroline Rookes, CEO of the Money Advice Service
Millions of people could escape their spiral of debt by accessing free advice.
However, this study presents us with a fundamental challenge: the majority of people with debt difficulties do not seek advice.
This is the first time we've had such a detailed understanding of the complexity of their lives. So now, armed with greater insights, we will work with advice agencies, creditors and public bodies to help as many people as possible access free, high-quality, debt advice.