Mick McAteer, Chair, Registry Trust
Monday, 17th January 2022
Report: What does 2022 hold for financially vulnerable households in the UK?
The position of financially vulnerable households at the beginning of 2022 looks bad – and the current data does not yet factor in the effects of the looming cost of living crisis, the impact of the Christmas period, or the potential further economic side-effects of Covid-19.
As the not-for-profit organisation which maintains the Register of Judgments, Orders and Fines, Registry Trust data is an important indicator of the state of the economy and household finances in the UK & Ireland. Approximately 1 in 13 UK adults (4.1 million people) have an outstanding County Court Judgment (CCJ) debt. This impacts their credit rating and can make it difficult for them to access credit, insurance, utilities, telecoms, housing, and employment, leaving them financially vulnerable. Currently, just 16% of CCJs are marked as ‘satisfied’ on the Register (settled in full with proof of payment sent to the courts by the defendant) and this proportion has been falling.
From our data and other recent research, we can see that almost no progress has been made in promoting financial inclusion and building financial resilience amongst financially vulnerable households since the last great economic shock in 2008. The disparity in the experiences of different groups of households in different regions is a feature of the Covid-19 crisis. For the most financially vulnerable, it is just the end of the beginning of the financial crisis with many still in the economic survival phase or just starting to repair and rebuild their finances.
Our new report entitled 'What does 2022 hold for financially vulnerable households in the UK?' focuses on their needs. It identifies three separate, interconnected, strategic goals for government, policymakers, regulators, the financial sector, and civil society organisations to collaboratively address:
*Deal with the existing financial crisis facing households and protect them from further financial harm;
*Help affected households repair their finances; and
*Promote financial resilience against future financial shocks.
Access to affordable consumer credit will be an important part of the post-Covid-19 recovery but there a number of challenges currently facing financially vulnerable consumers relating to this:
*Concerns about access to debt advice;
*The lack of a financial safety net;
*’The year of the squeeze’ (cost of living crisis);
*Lack of progress on alternatives to mainstream credit and innovation in the sector;
*Long-term negative impact of short-term forbearance on credit files; and
*Low rates of CCJ debt ‘satisfaction’.
Calls to action
There are some fairly small steps relating to the Register of Judgments, Orders and Fines which Registry Trust maintains that could have a big impact on financially vulnerable households in 2022:
- Require creditors to notify the courts when a CCJ debt has been repaid as part of treating customers fairly obligations
- Make information about partial settlement of CCJ debts available
- Publish claimant data on the Register of Judgments, Orders and Fines to promote corporate accountability as households struggle to rebuild their finances
- Use data more effectively to target interventions for the financially vulnerable
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