Debt insights still needed on the street
Last week’s Panorama programme maintains a good tradition over the last 8 years or so of Panorama reporting on Britain’s problems with an over-efficient debt sales machine. But the programme pointed up only frustration with the industry and no insights by the people affected that they have often been their own worst enemy. This has to end if we are to enjoy sustainable financial wellbeing in our households. These are the symptoms of a society that wants it now but also of a society in which the simple maths of debt have gone missing. Without the maths there is no realisation that bringing forward gratification massively reduces the lifetime sum of satisfaction available from consumption, as debt service permanently reduces possible spending. I deliberately make no distinction here between home ownership and consumption goods as I believe both end up having the same effects where affordability is the issue.
In the days when regulated lenders were forced to run liquid and well-capitalised balance sheets, ignorant customers were in some sense protected, as affordability then mattered much more to lenders. But this nanny state is not the same as leading your life knowingly and making choices deliberately in ways that are likely to maximise rather than destroy what you believe to be your own financial welfare. Panorama was great at dumbing down the subject and staying close to the border of hype. It would be good to see it apply these same skills to debt education, as damage prevention.