Our response to FCA warning of growing debt among young people

_{16 October, 2017}

Responding to the Financial Conduct Authority’s warning of a pronounced build-up of debt among young people, Mike O’Connor, Chief Executive of StepChange Debt Charity said:

"Our most recent statistics chime with warnings that record numbers of people are getting into debt at an earlier age, with young people relying on credit to cover essential costs. The proportion of younger clients seeking our debt advice has grown by 10% in the last five years and now almost two thirds of clients are under 40.

“Young people today are less well off than older generations were at the same age, with a fall in real wages and soaring housing costs, especially in the private rented sector, forcing them into debt to get by day-to-day. As owning a property is unattainable to many young people, we are also seeing an increased number of renters contacting us for support with their problem debt, with four out of five of our clients renting.

“Whilst around half of our clients are in work, the rise of the gig economy and insecure, low paid work mean household incomes are less stable and unable to cover the most basic living expenses. Furthermore, the gender pay gap becomes an important factor to consider as nearly 60% of our clients are women, which is the result of a 5% increase over the last five years.

“These figures should be a wake-up call to the risk of an economic downturn making this situation worse and the need for swift action on appropriate regulation of the credit card and high cost credit markets. The FCA must ensure firms offer credit products that are affordable and right for customers, so they are prevented from inadvertently ending up in persistent problem debt.”