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- [00:01]
A
The second most common reason for people reaching out for help is just the sheer cost of living.
- [00:06]
B
That's really scary, isn't it? What about energy then? Do you think enough's been done by the government to help support people on energy?
- [00:14]
A
The reality is that the energies are not affordable for many people.
- [00:17]
B
Is the banking system part of the problem? And we've obviously had the lifting of the two child limit. Do you think that's going to make a difference?
- [00:26]
A
We're not far off saturation point. So if the demand continues, it's going to be challenging for us and the sector as a whole actually to fulfill.
- [00:46]
B
Hello, and welcome to the Rest Is Money with me, Steph McGovern. Now, we love throwing big stats at you on this show, and recently one of them that we gave you was about household debt. So as things stand, household debt as a percentage of GDP is at its lowest since 2002. In other words, people are not in as much personal debt, which on the face of it, and you know, we spent an episode talking to Karen Ward about this, that sounds like good news, but it's not the whole story because what those figures don't tell you is what's really going on with people who are in arrears and the problem, debt that is masked. So with me on the show today, we have Vic Vicki Brownridge, who is the CEO of Step Change. This is a charity which helps people to get out of debt. Essentially, she spent over two decades in this area, not just helping people sort their own debt out. She's also done a lot around lobbying the government on what they're doing for people who are struggling with money. So I wanted to get her take on what's really going on. Vicki, lovely to to see you. So I wanted to get you on the show because the last time I saw you, we were at an spent trying to help people with getting debt advice because there's a huge problem around the stigma of it, which we'll come to. But one of the things that struck me that you said was about the household debt figures, and you know, we've talked about it on this podcast, that household debt as a percentage of GDP is at its lowest since 2002. And when I said that to you, you were like, that isn't what's really happening here. That is masking a lot of problems. So tell me how you see it.
- [02:35]
A
Yes, I think it's fair to say that the levels of unsecured debt that people have has reduced quite significantly over recent years, particularly since the pandemic where a lot of unsecured debt was paid down over that time frame and obviously people weren't able to spend as much but yet incomes were held up. But what has actually happened is since then with the cost of living crisis is people are really struggling with household bills. Careers levels on utilities, council tax, you know, rent etc have really increased which is really putting the squeeze on people. So when I joined Step change back in 2005 the average unsecured debt level was around 30, 35 thousand pounds. It's now just over 17 and a half which is up on last year actually.
- [03:20]
B
Yeah.
- [03:21]
A
But when I joined the charity there were barely any like priority areas. Now on average people are in arrears by about £6,000. Those people that are really struggling on a comb of, you know, council tax, energy and water bills. So the debt mix has really shifted for people. There's a real problem dealing with day to day living costs. Obviously it's more challenging to get credit now. Credit has been, if you like the, you know, the regulations has tightened up your ability to get credit. So people are just robbing Peter to pay Paul from lots of different places.
- [03:55]
B
So just to summarize that then, this is about less money being held on credit cards and people just not pay bills and getting into arrears and that's the issue here.
- [04:07]
A
Absolutely. Yeah. It's harder for people to use credit to pay for priorities than it used to be. So people are going further into arrears also we've seen costs increase quite significantly in those areas as well. So it's just more difficult for them to make their budgets balance on a day to day basis. Then we see maybe an increase in high cost credit as opposed to standard credit cards. We've seen loan shark debt increase for example because people are going wherever they can to make ends meet.
- [04:34]
B
Yeah. And is this do you think because of one off pressures, is it one off shocks of people or is this a long term issue? Is it structural rather than temporary?
- [04:45]
A
So I think it's a buildup of a number of things. So we, we saw quite a sharp increase of in the challenges people are experiencing post the crisis that started in Ukraine, you know, the war in Ukraine, because we instantly saw energy prices hike and that started to build a kind of spiral of arrears in energy debt. But then we have seen other cost. So council taxes increased quite significantly as well. Rent, private rent particularly has increased quite significantly. So you've got this buildup effect of increasing bills which. And now of course we've also seen really high Inflation now, albeit, you know, inflation has come down, you know, it doesn't come back to where it was, does it? You know, so people are still struggling with all of that. Where we are now, however, is we are obviously facing the current crisis in the Middle east and we're potentially going to see the energy cap increase again, which is just going to put pressure on people and.
- [05:40]
B
And is it energy bills you think that is the biggest pressure? Because we often hear politicians talk about that is the key thing they want to bring down. Particularly the labor government have said, you know, we want to bring energy bills down. And we've had various announcements and things connected to that. Caps. Looking at how, you know, companies are charged for the energy they provide and things like that, windfall taxes and everything else. Is that the biggest pressure for households? Is it energy?
- [06:05]
A
So energy seems to be materializing as a really strong, you know, a really strong pressure for seeing nearly half of people that coming to us are in energy areas and quite significant. And we're seeing that the amount of arrears they are in increasing regularly. But when you couple that with other pressures such as cost of food, such as cost of council tax etc, then that compound effect is having a significant impact on people.
- [06:32]
B
Vicky, we're only just getting started. Loads more to ask you, but let's go to a quick break. We're delighted to say that this year the rest is money is being powered by octopus energy. So Greg is back with us. Greg, I've got another question for you. So in terms of energy companies, are we just back to the big six? You know what, we've only got like six or so major supermarket chains. No one worries about that because they invest ferociously in competition. You've got differentiation. You know, we thought the market was stable, then Aldi and Lidl turned up. Competition is not about reinventing the souk with dozens of identikit companies. It's about companies having different approaches to looking after customers and competing ferociously on that. Energy could well be going that direction. Well, cheers Greg and thank you for powering this episode of the Rest is Money. You mentioned about how long you've been at step change. 20 years or something, isn't it? Has the type of person who's in debt changed then and has this become more of a problem? Because we often talk now about the working poor. This isn't people who are necessarily on any benefits or anything. This is people who are, you know, at work and cannot afford to. To pay their bills.
- [07:53]
A
Yeah, so we've certainly seen so 60% of the people that come to us at the moment are in employment with nearly half of them in full time employment. In 2021 that was more like just over a third. So we have seen more people coming to us who are employed, who are not necessarily on benefits. But it is fair to see. We see the whole demographic of people who are struggling at the moment. But yes, we've definitely seen more employed people struggling.
- [08:20]
B
And, and tell us about, I know you're saying it's a diverse mix, but just tell us about the types of people we're talking about because I think, you know, what people might not realize is it's people they know who are coming to you for help, isn't it?
- [08:35]
A
Yeah, absolutely. So it's working people, you know, it's people who are just trying to make ends meet. We certainly see a lot of people with children, so people with children struggling more than people who are single just because of the increased cost obviously from managing their families etc. And just having more people in the household means you'll use more of the essentials, you know, generally. But yeah, it is, it's everyone from every walk of life that struggle. What we tend to see is a life event or a life shock just make, just tips people over the edge. You know, whether that's kind of of like a separation or bereavement or, or mental health issues really send people over the edge. But at the moment the second most common reason for people reaching out for help is just the sheer cost of living, which is quite a shift from where we used to be.
- [09:28]
B
That's really scary, isn't it?
- [09:30]
A
Absolutely, yeah, absolutely. People are, you know, people who are working are going to food banks for example, to keep themselves, keep themselves going. So it is very, it's really, really quite scary.
- [09:43]
B
And, and seen in terms of the geography of this, are there parts of the country that are much worse than others? Is the, the north south divide. I'm always banging on about that, but what's your reality of it?
- [09:56]
A
Yeah, I mean there's quite a, I wouldn't necessarily say north south divide because we see quite a significant amount of deprived areas in the London area for example. But yes, there are in some of the more urban deprived areas we do see higher levels of debt, we see more deprivation from that perspective. But actually some of the rural areas are really strugg as well, particularly you know, the increased cost of oil recently as well that, you know, there's a lot of pressure across the whole of the uk, without a doubt. And as I say, it can happen to any, any demographic as well, because people live to their means. That's just human nature to a degree. And it's when something tips you over the edge that it becomes a challenge. We always say that debt can happen to anyone. The most important thing is get support.
- [10:40]
B
Yes. And that, that's one of the things I want to talk to you as well about is that fact that, you know, you're seeing people who've come for help, but there's also that hidden part of the population who aren't getting help. And that's what worries you, isn't it?
- [10:53]
A
Yeah. I mean, we've done research over the years that show people wait on average 12 months before they seek help. So they'll juggle their finances, Rob, Peter, to pay Paul, et cetera, to keep things going until that point. The longer you wait, however, the less options there are available to improve your situation and get support. So our view is get help as quickly as you feel like you're struggling. And we can support. The most important thing as well is to talk to people who you owe money to or the services that you have, because actually in the main, they, they will offer support.
- [11:25]
B
There's a lot of, I guess, myths around that, though, aren't there, that if you go and you ring your energy company or your bank or whoever and say, I'm struggling, that they will, that will impact your credit score. That will, you know, put a black mark on you. And that's not necessarily true, is it?
- [11:44]
A
Now, reaching out for help, whether that's direct to one of your organizations or to a debt advice organization, won't affect your credit score. Actions you take beyond that can. So if you end up defaulting, then obviously that will affect your credit score. If you go on a debt solution, that will affect your credit score. But the benefits of getting that support and help and finding a solution out of debt, in my opinion, outweigh the impact on your credit score. That can then rebuild over time as well. So reach out for help first. Weigh up your options. That's not going to affect your credit score. But then you need to understand the actions you're going to take and the impact that, that, that, that can have.
- [12:22]
B
It's interesting when we talk about debt because obviously debt is also a positive in the sense of it can be used to fund things which, you know, if managed well, you can. I don't know, if it's personal debt, it might fund a holiday and you pay it back and then that's all fine. You know, there's. When we talk about it in a business sense. We talk about companies taking on debt to grow and to scale up and everything else. So how do you, you know, what, in your view, is that balance between debt, which is okay, I guess, and the debt, that is a problem.
- [12:57]
A
So you're absolutely right. There's nothing wrong with credit and using credit to fund things like particularly big purchases that you don't necessarily have the money lying around for. The really important thing is that you ensure that or you do as much as you can to make sure that the debt you're taking on is affordable. There's also an education piece. I think that's important. I know, obviously, the financial inclusion strategy looks to bring financial education into the curriculum, which I think is really important, because people don't understand what they're getting themselves into. And I think that's key and important.
- [13:31]
B
I mean, I say that all the time. And this podcast is like, you know, how you can possibly leave school and not understand basic financial stuff is a real travesty. And I know they're trying to change that, but quite frankly, nowhere near enough is being done. Yeah, and there, There is a huge educational problem here in terms of people understanding about finances. But, but is there. Is. Is the, Is the banking system part of the problem or is it. Is it all. All on us to try and just understand things better? Or, you know, do we be. Do we need to be harder on the people who are, you know, lending money?
- [14:08]
A
I think that varies. Even if I'm honest, I don't think you can put the whole of financial services into one bucket.
- [14:13]
B
No, you can't. No, no, no.
- [14:14]
A
I think it's fair to say that over, well, my time in the debt advice sector 20 years, things have improved services, particularly in sort of mainstream lending. You know, the lengths organizations do go to to ensure affordability and protect vulnerable customers has come a long way thanks to a lot of the, you know, measures that the FCA have introduced. But what happens is other sectors pop up. So we now, you know, we're now lobbying, obviously, for regulation of Buy Now, Pay later, which is going to come in, but another sector will pop up and try and fill that gap. It is. And that's the challenge, really. It's how do. How do we ensure that we don't have another sector coming up and starting to offer unscrupulous credit again? But you've got to balance that with access to affordable credit as well, because what we need to make sure is that people are not financially excluded and therefore charged horrendous interest rates because they can't access short term affordable credit for emergencies and things like that. And that's then when they end up turning to loan sharks because there's nowhere that they can go. So it's a difficulty, difficult balance to strike there. And again, the financial inclusion strategy does have a stream looking specifically at access to affordable credit. So I think money management beyond dealing with your debt is also a really important part. So we talked about education in schools, but it's like anything really. It needs to be repeat, repeat, repeat. How do we ensure that people have access to good money management tools and advice and support, not just, I mean, you know, deal with the crisis at that moment in time and that's within step changes strategy. This current strategic period is we're looking at how do we help people build long term financial resilience as well as dealing with that initial crisis point, how do we help people save and provision for the future? How do we make sure that they're not underinsured or under pensioned? Because a lot of people that come to us are. So they're thinking about the here and now, which they have to at that point. But how do we get them thinking about, okay, how do you provision to avoid falling into problem to debt again? Because people do repeatedly fall into problem debt as well because they've not quite got on top of that longer term planning.
- [16:32]
B
Yeah. So in terms of looking at some of the causes of it, you know you talked about the cost of living and how that's the biggest kind of pressure at the moment. The government are trying to do things around that. For example, you mentioned children and we've obviously had the lifting of the, the two child limit. Do you think that's going to make a difference?
- [16:52]
A
Lifting of the 2:2 child benefit cap? Absolutely. And that's campaigned for because we do, we do see real difficulties with that, you know, that demographic, particularly single parent households as well. So it is a real challenge. So that should make a difference to that sort of. That demographic.
- [17:11]
B
Yeah. So you think that the, the two child cap limit being lifted has helped or is going to help? You think that also, you know, the benefits need to be more accessible and people who are not getting them should be getting them. What about energy then? Do you think enough's been done the government to help support people on energy?
- [17:31]
A
So there's a couple of things there. So OFGEM have been looking at this debt relief scheme and how they could potentially look to support people with the arrears that have accumulated in the sort of Previous energy crisis, I think we need. That needs to be rolled out and rolled out quickly. So I believe there's a couple of phases that are looking at that. The first phase being those who automatically qualify, and then a second phase being more where you might need to make an application for that. Because if the cap increases again, as highly likely in. Yeah, this isn't like we're not starting from a level playing field. We're already starting from billions of pounds worth of arrears. So we need to look at the two things in conjunction. So what interventions should the government make on the current. On the cap going up this time or with the oil issue? But equally, how do we deal with the historical areas and how do we help people get back to the point where they can afford their consumption on. On an ongoing basis?
- [18:24]
B
Yeah. So more needs to be done on energy.
- [18:26]
A
What.
- [18:26]
B
What do you want to see happen then, in terms of energy bills? You know, you're saying, yeah, we need to look at the problem of arrears historically, but is there anything else?
- [18:35]
A
Yeah, we'd like to see sort of tiered social tariffs brought in, not just on energy, actually, but across other utilities like water etc as well. So that those that can't, you know, that. That require that targeted support can get it not just for the arrears, but for their ongoing consumption as well.
- [18:52]
B
Yeah. And. And council tax, that's been. There's been a lot of beef about that, hasn't there? Just in terms of that being the one that's the most dramatic. If you fall into arrears, then you so suddenly have the whole bill on your door.
- [19:04]
A
Yeah. So, yeah, enforcement of council tax is something. We've been campaigning for some time. We were really pleased to see that it's now gone from not just one, you know, it was that when you. When you missed your first payment, the whole bill was due for the year. They've moved that to third payment now, which is a really good step forward. So it enables people to get some time, get some help, take a bit of a breath and get some help and flag that they're struggling before that full bill is. Is due. So that's kind of. And the government are also looking at, from some recommendations we've made as well, around how can we improve the engagement in that period with individuals and what should that look like before moving to more severe enforcement actions such as bailiffs? So there's quite a rapid escalation if you fall into arrears with your council tax, as opposed to other sectors such as financial services, etc. So we want to see it be a bit more in line with financial services, really. The other piece is that we want to see the bailiff sector to be regulated. So there is the Enforcement Conduct Board, which is a kind of voluntary body that looks to enforce standards across the bailiff industry, but it is voluntary. We want to see them put on a statutory footing so that bad practice can be stamped out. And there's also a level of recourse for consumers if they feel they've been badly treated.
- [20:31]
B
So as things stand now, there's only a voluntary code of conduct, conduct.
- [20:35]
A
That's right, yeah. So the Enforcement Conduct Board is a voluntary code of conduct that many firms do sign up to and do, but then you've got bad actors in the. In the sector that. That don't. So we want that putting on a regulatory, regulatory footing.
- [20:48]
B
And what type of problems do you get from that then? Those people who aren't following that code of conduct, what. What does it mean in practice?
- [20:54]
A
So in practice you see quite aggressive behaviour from the bailiffs on the doorstep with consumers, quite threatening behavior. Right. From the letters that are sent to the conduct of the actual enforcement agents. So we'd like to see consistency of standards across that sector. And equally, the enforcement sector should be signposting to debt advice and support as well. If somebody's got that multiple debt problem where they require support.
- [21:26]
B
Yeah, because there is a communication issue here as well, isn't there, in terms of when people do fall into arrears, is how quickly it does become aggressive in terms of the letters you get and things.
- [21:37]
A
Yeah. And again, it's so inconsistent, dependent on the sector that you've got debt with. So financial services have worked long and hard with consumer duty coming in as well and looking at how to get better outcomes at their communications. There's a lot of improvements being made. But then you've got, particularly in enforcement of local government debt, you have got quite aggressive tactics. So council tax, as an example, quite early on in the journey, in the sort of stages, people are threatened with potential imprints, imprisonment. Now, in reality, very few people are sent to prison for, you know, for non payment of council tax debt. But quite early in the journey, the threat is there, which obviously scares people, you know, and potentially forces them to not take the right action or not seek help or bury their head in the sun. What we also see is if somebody's got debts with multiple sectors, however, the interaction they first have with whichever person they first reach out to almost, I suppose, sets the scene for them and how they think they're going to be treated by everybody.
- [22:43]
B
Right.
- [22:43]
A
So if the first people they speak to is their counsel or the first letter they get is threatening imprisonment, then they won't reach out to their financial services debts or their energy debts because they're frightened that that's how they're going to be treated across the piece. Because they don't, they don't actually know.
- [22:56]
B
Right. Because that, that's interesting because that is to me seems counterintuitive in that if, if somebody is like sending me a letter and they're fairly casual about it, you might be like, oh well I'll wait until they get ag. I bother looking at it. But what you're saying is actually the aggression puts people off getting it sorted.
- [23:16]
A
Yeah, it does. So what we see is communications where people are encouraged to engage and have I suppose the carrot rather than the stick if you like. So it's, this is how we may be able to help you. And also signposting to debt advice really early on as well because that shows that the organization is signposting to an independent organization that can help them. You see better engagement levels than going straight in with. With a threat. There's people in debt when they recognize themselves that they have problem debt and they're in financial difficulty, they often feel really overwhelmed, really quite emotional, often quite ashamed and really quite scared. So that I suppose aggressive tactic just reinforces how they're feeling and then creates further problems.
- [24:02]
B
Yeah. And on that, you know, obviously we had, it was a while ago now in the news though about when particularly with energy companies, revolution, really aggressive tactics were being used to enter people's homes and put meters in. Do you think things have got better in, in terms of that side of things now as well with energy companies?
- [24:23]
A
Yeah. So of chairman stepped in and took action around the, the enforcement of the meters. So we've definitely seen an improvement since then. We as an organization work with a number of energy organizations, working with them to help them engage with their customers, but equally supporting their customers that have you border debt problem. So I would say again it's not consistent but we are seeing improvements in how customers are treated and the expectations of them in that sector.
- [24:56]
B
So there are improvements but yet debt is still under ears. This is still a huge problem which it sounds like is getting worse.
- [25:04]
A
The reality is that the energies are not affordable for many people. So we do have a structural income issue coming back to people are not necessarily claiming everything they're entitled to or wages haven't kept up with the cost of living. So there is a structural income problem for one, and then it's really about what measures like social tariffs, for example, that need to be in place to help people manage it on a, on an ongoing basis. So if somebody's already spiraled into quite significant arrears, it's how do we help them deal with that arrears and how do we get them onto an affordable tariff for the longer term so they don't continue to build arrears.
- [25:41]
B
Yeah. And what it sounds like is this, is this isn't mismanagement by people, this is them not being afforded to live. So do you think policymakers are underestimating the problem of the cost of living then?
- [25:55]
A
So I think that there has been a bit of a move music Certainly throughout 2025 that the cost of living crisis has gone away. It doesn't exist anymore. That's not what we see. What we see is that it's still very much alive for a lot of people. And actually we did some polling at the beginning of and around 50% of people were worried about how they were going to pay their energy, you know, later on this year. And that was people that wasn't particularly people in problem debt. That was national polling.
- [26:27]
B
And that was before the, before the around. Yeah, when we, you know, when the cap has obviously come down in that time. But people are still really worried about it.
- [26:36]
A
And actually what we've seen in the charity as well, rather worryingly, is we've started this quarter of this year, year 20% higher volume of people seeking support than this time last year. Now nothing's. And that was prior to the war in Iran as well. So we're anticipating this year to be incredibly busy with people requiring support. And that's not just us, actually. Across the debt advice sector, all organizations are seeing higher demand for help and support.
- [27:06]
B
And is that demand you're able to fulfill, Phil?
- [27:09]
A
So fortunately we, we, we operate a kind of omnichannel digital and advisor service which has enabled us to scale, but we're not far off saturation points. So if the demand continues, it's going to be challenging for us and the sector as a whole actually to fulfill.
- [27:25]
B
Vicky, there's loads more I want to talk to you about, but sit tight for a couple of minutes while we go to a quick break. This episode is sponsored by Starling, the bank that helps you organize your money, build great habits and stay in control of your spending. Now, I talk a lot about financial literacy and its importance in our economy. You know, giving People knowledge but also confidence with money too. And Starling reckons anyone can be good with money and you can start simply by checking your balance daily. It gets easier every day and it takes the mystery out of it and then the real value comes from digging into the details with tools like Starling Spending Intelligence. So this is an AI powered search bar within Starling Current accounts where you can ask a question about your spending habits and get an instant answer in app. It helps deepen your knowledge and make more informed money decisions. It's a little like having a financial co pilot in your your pocket mapping out exactly where your money goes. Search Starling bank to find out more good with money starts here. I know we've mentioned some things that could be done. What, what would be the kind of one key policy change that could really help in this sector then in terms of debt, is there anything where you think, I wish the government would just do this and that would really, really help.
- [28:53]
A
So I think, I don't think there's one golden nugget, if I'm totally honest, because it's a multitude of different issues. I think council tax reform, in terms of enforcement, bailiffs will be a huge help in the sense that I think it would help people engage, if you like, and get their, you know, start to deal with the problem more broadly. So that's definitely one.
- [29:16]
B
It's not going to solve their money problems.
- [29:18]
A
It's not going to solve their money problems. No, but it will, will, I suppose, bring people to the party, if you like, rather than burying the head in the sand, which just makes their problems worse and. But no, it's not going to solve, it's not going to solve their money problems.
- [29:33]
B
How do you like. Do you have any idea of how many people there are out there that don't come to you for help? Because, you know when you're talking about volume increasing for you, is that because you're doing a really good job and you've just got more people who are now aware of you and coming to you, or is it genuine and this is new people getting into debt and I'm just trying to work out like, how big is this problem?
- [29:57]
A
Yeah. So I believe MAPS report, money and Pension Service report, there's about 8 million people in the UK not seeking help for debt advice where they believe it's required and it's quite difficult to nail that completely. But that's certainly some research and work that they've done to, to come to that, to come to that figure that actually has been relatively static over the last few years. So it's sort of people are moving in and out of the need but that sort of level of people not gaining support has been. Is there and has been relatively static.
- [30:31]
B
Do you think technology is going to help in any way? You know we, we're always banging on about AI on this show. In fact someone messaged us saying we should be called the rest is AI because we're always talking about it which is a fair point because we, we are it. Could that help? Because you know there are so many apps and things now which help you with you know, budget. They tell, you know, you can look at a graph and see where you. What's going on coffee where you might save and yeah, and obviously that's a very trivial example but there's, there's got to be more help from technology as well. Are you optimistic that there is technology out that's going to come and help and what are you. What might it look like?
- [31:12]
A
Yeah, absolutely. I mean firstly I advocate the kind of money management app. I think they're a great tool for people to keep on top of their day to day money. As we talked about earlier, having that knowledge is really, really important in terms of boosting capacity in services like ourselves. Technology has a huge part to play as a charity we are. One of our strategic outcomes for this strategic period is we want to be digital first, data led and powered by experts. What that really means is that people can access our services digitally and get support from an expert advis at the point that matters to them. That means we can use, make best use of our advisor resource but get to more and more people. We're seeing that already come to fruition. So at the moment 89% of people come to us online and then we'll just interact with advisors as appropriate. Different, different parts of the journey or not at all. So we use algorithms, AI etc to support that journey. Um, so yes and, and of course we're in a position, aren't we now where the digital natives are coming through. They're actually really struggling with problem debt, you know and therefore they don't want to spend an hour on a phone speaking to a debt advisor or walk into an office and, and have a face to face session. So it's really important that we embrace that technology. There needs to be controls around it. It's an emotional period of someone's life so we need to make sure the balance is right between when they can get that human center support if and when they need it.
- [32:44]
B
So they don't just get a chatbot basically.
- [32:46]
A
Yeah, chatbots can be relevant at certain stages but there's all. I still fundamentally believe that there's a place for human support in debt advice for not everyone, but for a significant proportion of the people. What we actually see is people come to us and they're, they're able to do their budget online, they're able to give us all of their information, they go through all of that. But once we give them their recommendation, that's the point at which most who do interact, interact with us for that emotional support, that reassurance that next steps a bit of. You're not the only one with this problem type support that you don't really get from a technology based sort of experience really.
- [33:29]
B
Yeah. So how do you see the tech helping you increase capacity then? Is it by just doing, you know, is it doing administrative tasks or is it more interaction with people being used that way?
- [33:40]
A
Yeah, so it's. So firstly it's to take away administrative tasks, take away those tasks from our advisors so we can free our advisors up for the more complex journeys. It's also there are people. So at the moment of the 16, 17,000 people a month that we're debt advising there is around 5,000 that never interact with a human. They can do the entire journey themselves and are quite happy to do do so that will probably grow as more digital natives come through as well. So that will obviously help us, help us scale. But what I really want our advisors focused on is those that are more vulnerable have more complex circumstances that where it needs a bit more unpicking and that's kind of what we're starting to see more and more actually coming through. So yeah, take away some of the manual tasks enable more accessible self serve for the those for those that want and you know, and need it actually because some people don't want to speak to anybody either. We see that I'm a bit like
- [34:37]
B
that, which is ironic given my job.
- [34:40]
A
But you do, you do see, see people who, who really don't want to talk to someone actually in some ways it can break the stigma down that they can do it without actually talking to someone as well. The other area is actually supporting the advisors themselves. So it's quite complex data advice. So using AI to provide knowledge to the advisor real time without them having to search through some kind of knowledge base is also valuable as well.
- [35:06]
B
Yeah, we've talked about lots of different ways to get into debt. There are so many though, aren't there that people might not even realize to do with families and partners and, you know, money can cause so many problems in relationships and everything, can't it?
- [35:20]
A
Yeah, absolutely. I think one of the worrying and sort of shocking areas that. That we see actually, is that surprisingly more people affected by what's called coerced debt than people will probably realize. Right. Well, coerced debt is where effectively you have been coerced into taking out debt either on. In. Either for somebody else or, you know, or as part of a partnership. And you have been coerced, and it often happens in a relationship that's potentially a domestic violence relationship. So it's a form of economic abuse, basically. And what we find is that actually we did some surveying in 2024, and 1.6 million people have been affected by coerced debt, which is about 3% of the population. So, as I say, it's a lot more common than people would. Would realize.
- [36:12]
B
So this is people who've been essentially forced into taking on debt that they might not have wanted because a partner or a family member or whoever has done that.
- [36:21]
A
Yeah, absolutely, it is. Yeah. And the problem then is if. So, for example, if it is in a domestic abuse relationship, the victim survivor may be able to escape the perpetrator, but they can't necessarily escape from the debt. So there's still a connection to that perpetrator and they still use that debt as a form of control over those victim survivors. So it's a really challenging and complex area, actually, because. Because legally, the debt is in that person's net, you know, is in the victim survivor's name. So it will potentially be enforced. And if the victim survivor can't afford to pay that debt or what have you, then they end up with, you know, poor credit file history, and it can take years from them to recover from that. So they're still, if you like, trapped. Yeah. And they're still, you know, effectively suffering from what was a challenging situation.
- [37:13]
B
I mean, how do you stop that, though? Because I'm thinking, as you're saying it, you know, know, are there things lenders can look out for, if it's mainstream lending that they should be, you know, looking out for in terms of how these deals are done for loans or, you know, how on earth would you go about stopping that happening?
- [37:32]
A
So the first thing. The first thing is awareness. I think that there are a lot of people who have experienced coerced debt but have never told anybody, you know, who or who didn't recognize it was coerced debt, if that makes sense. So then they've just tried to deal with it themselves and not been supported. So awareness is really, really important. But the second thing is it really needs an entire ecosystem response. We've got to look at all different stages of the journey where this form of abuse can be identified and then the victim can be supported. So it needs, it is a complex situation. So it does need that full ecosystem response. And then finally it's about how we help that individual repair their credit file and get back into kind of normal life and normal financial contracting. It can prevent them from getting a mortgage in future life or getting a rental property in future life and just getting on with their lives, really. So it's a really, really important issue. It is complex and it needs to be considered across multiple government departments, across industry. But awareness of it is really, really important.
- [38:38]
B
Yeah, I mean, I'd never even heard of that phrase before. So it feels like there isn't much awareness.
- [38:44]
A
No, there isn't, there absolutely isn't. But it is something that has been highlighted in the government's financial inclusion strategy as a, as a cross cutting theme. So it is an area that is being explored. We've also been working with UK finance as well who have also been looking at how lenders can respond and how do you ensure that the victim survivor is supported but the perpetrator isn't. Just got away with it to go on and potentially commit that offence. What it effectively is again as well. So, yeah, complex issue, but really important that there's awareness out there.
- [39:19]
B
Yes. Because there must be so many people who are trapped in these situations because of money.
- [39:25]
A
Absolutely, absolutely. And, and I think that the psychological damage of not truly being able to get away from a difficult relationship, whether that's relationship with a partner or relationship in a broader family environment, that's also long lasting from a mental health perspective as well.
- [39:40]
B
Yeah. Well, Vicky, we've covered absolutely loads there, but thank you so much for breaking it down for us because I think it's really important that, you know, we understand what's actually happening out there because behind all these big stats we hear. So thank you.
- [39:52]
A
No, and thank you for inviting me to come on.
- [39:54]
B
Thank you. Lovely. Right, that's it for me on the rest is money. Bye. Bye. Some follow the noise. Bloomberg follows the money.
- [40:08]
A
Whether it's the funds fueling AI or crypto's trillion dollar swings, there's a money side to every story. Get the the money side of the story.
- [40:17]
B
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