The Centre for Social Justice’s Financial Education Initiative has launched a call for evidence to understand what needs to happen to improve financial literacy in England. This is in response to figures showing that 24 million people in the UK do not feel comfortable managing their own money day to day, and nine out of ten UK consumers feel that they are uneducated in terms of personal finance.
Registry Trust, the not-for-profit organisation which maintains the Register of Judgements, Orders and Fines has been campaigning for several years to increase public awareness and understanding of the county court judgment (CCJ) process to try and reduce the number of consumers being unnecessarily disadvantaged because of this gap in financial education. The ‘public data for public good’ we hold and share with other organisations (including credit reference agencies, firms, and think tanks), provides important insights into levels of indebtedness across different areas and demographics and is analysed against other datasets to identify key trends.
Read our CEO Lex Jones’ responses to the questions below:
Do people living in areas of high deprivation face particular challenges regarding financial literacy? How might financial education services for people on low incomes be improved?
Registry Trust live data on levels of indebtedness at a national and regional level and have carried out analyses showing links between areas/indicators of deprivation and high rates of outstanding consumer county court judgment (CCJ) debt (examples include: this analysis of the positive correlation between child poverty and CCJs and this analysis of the impact of the Universal Credit uplift reversal on areas of financial vulnerability.) Results suggest that deprivation results in greater likelihood of receiving a CCJ (which is often only used as a last resort by creditors who've failed to reach a resolution by other means or been unable to make contact/communicate with the defendant), and greater likelihood of being unable to or unaware of how to remove the outstanding CCJ from the Register/their credit files by getting it cancelled, 'set aside', or 'satisfied'. The complexity of the process, the legal language, and lack of financial education around this is exacerbating the problem and creating further inequality.
Do you have suggestions for how government policy can improve financial education in school and/or at home to ensure young people enter adulthood financially capable?
Financial education initiatives tend to focus on budgeting and managing money to avoid having to access credit or get into debt. Realistically, accessing credit and incurring debt are things that will inevitably happen at some point and consumers need to be aware of how to deal with issues when they do arise. For example, only 16% of records on our Register of Judgments, Orders and Fines are formally marked as 'satisfied' and the rate is declining for under 25s (https://registry-trust.org.uk/blog/ccj-debt-amongst-under-25s-declining-satisfaction-rate-shows-need-better-financial-education-and-support/). This is down to a combination of inability to pay, lack of awareness of the impact of having an outstanding judgment on the Register on overall financial health, and lack of understanding of the process for gaining satisfaction (which currently relies on the defendant providing proof of payment to the courts). This means that there may be many outstanding judgments on the Register which are impacting people's credit rating/access to credit and making them more financially vulnerable/less financially resilient even if they have or are able to pay them off.
Since Registry Trust started campaigning to increase public awareness and education on this, the total number and total value of satisfied judgments has increased from £255,261,265 in 2019, to £260,828,080 in 2020, to £294,526,572 in 2021. However, more needs to be done by organisations active in financial education at a broader level to proactively teach people understand what a CCJ is, how it impacts your credit file/why that's important, how to check whether you have one, and how to effectively deal with and satisfy them –before they get one.
Do you have suggestions for how government policy can develop and maintain financial capability for adults across the lifespan (young adults, mid-life, elderly) to ensure lifelong financial capability? (Please address each adult age group if necessary).
It is important that people are proactive in checking credit scores and thinking about their financial health. Dealing with any issues early to avoid getting CCJs (which then hamper access to credit and create further financial vulnerability) is a vital part of any financial education initiative. Our Chair Mick McAteer and I have both written blogs in the past to raise awareness of these issues: https://www.registry-trust.org.uk/blog/couch-to-financial-fitness-why-financial-health-checks-are-important/ and https://www.registry-trust.org.uk/blog/talk-money-week-2021-why-we-must-start-talking-about-and-dealing-ccjs/.
Anyone can get a CCJ issued against them, whether they are in financial difficulty or not, and getting one can have a serious knock-on effect on financial health, yet there is widespread lack of awareness and understanding of what they are and how to deal with them.
We urge government to make financial education a policy priority, for all age groups. Our analysis of the financial diligence of different age groups shows that all ages can benefit from increased knowledge and understanding in this area: https://www.registry-trust.org.uk/blog/financial-diligence-different-age-groups-does-checking-credit-scores-more-often-reduce-outstanding-ccjs/
Beyond better financial education, we are also campaigning for legislative change to make the process fairer for consumers and put more onus on creditors/claimants to be transparent about their practices and take responsibility for informing the courts of settlement (see https://www.registry-trust.org.uk/blog/covid-19-economic-recovery-3-ways-make-ccjs-fairer-citizens/ and https://www.registry-trust.org.uk/blog/what-does-2022-hold-financially-vulnerable-households-uk-ireland/).
What role should the government play in ensuring consumers are educated about and protected against the risks of new financial products?
When it comes to new financial products such as ‘Buy Now Pay Later’, it is important to use the data emerging (e.g. what we’ve seen in terms of the rise of BNPL correlating with an increase in low value CCJs) to quickly understand the impact it is having. This insight can then assist in targeting interventions such as debt advice on particular subjects in particular areas. See also https://www.registry-trust.org.uk/blog/high-judgment-rates-and-inadequate-debt-advice/.