We hope you enjoyed the first edition of viewpoint, the Harris Interactive financial services newsletter. In this edition we examine the serious issue of consumer debt, exploring: • The state of consumer borrowing • The impact on consumer Britain • Financial capability • How the industry can help We hope you find it an informative read. Please give us your feedback via financial@harrisinteractive.net. If you would like to suggest topics for future editions or if you would like the background data or verbatim comments simply get in touch.

1. ISSUE 2 - MAY 2010
The state of Impact on Financial How the industry
consumer consumers capability can help
borrowing
viewpoint
Keeping you connected to today’s UK financial services market
Welcome to the second edition Consumer Debt and Financial Capability
of viewpoint, Harris Interactive’s
UK financial services newsletter.
In a 1999 pre-budget statement, how can we instill greater financial
In this edition we take a look at the Gordon Brown famously quoted discipline for tomorrow?
serious issue of consumer debt and "Under this Government, Britain
how financial institutions can help Consumer Debt
will not return to the boom and
consumers with financial planning. bust of the past.” The latest figures for consumer
We hope you find this newsletter borrowing do not make a pleasant
Since May 1997, consumer
informative and useful. If you wish to read. Consumer Britain currently
borrowing has risen by more than
find out more about the work we do owes almost £9,000 per household
290% to £1,460bn. As fast as
within the financial services industry (excluding mortgages) and
please get in touch. lenders could offer cheap credit,
including mortgages the average
we all consumed.
debt per adult is over £30,000
Frances Green: Financial Services As we now emerge from the (131% of average earnings).
Director deepest recession since the war,
From our Harris Poll survey around
what is the state of consumer
Peter Shreeve: Senior Consultant a third of the UK population is
borrowing currently? What has the
Financial Services either ‘extremely or very
Research impact been for consumers? How
concerned’ about the levels of
can we help consumers today and
consumer debt in the UK.
STRIKING NUMBERS 1,600 Source: Bank of England
9,500 Consumer Borrowing
number of new debt problems dealt with 1,400
May 1997-March 2010
by CAB each day 1,200
£58,083 1,000
average household debt Total Consumer Debt
£Billions
800 Total Secured on
£187m Dwellings
personal interest paid in the UK daily 600 Total Unsecured
Lending
every 11.4 minutes Credit Cards
400
a property is repossessed Other Unsecured
Lending
1,841 people 200
made redundant every day 0
01 May 98
01 May 99
01 May 00
01 May 01
01 May 03
01 May 04
01 May 05
01 May 06
01 May 08
01 May 09
01 May 02
01 May 97
01 May 07
every 3.69 minutes
01 Nov 98
01 Nov 99
01 Nov 00
01 Nov 01
01 Nov 03
01 Nov 04
01 Nov 05
01 Nov 06
01 Nov 08
01 Nov 09
01 Nov 02
01 Nov 97
01 Nov 07
someone will be declared insolvent or
bankrupt
£397,500,000
daily increase in Government national
STOP PRESS... Syndicated Research
debt (PSDN)
Contact us if you would be interested in potential IFA and Consumer research around the
Retail Distribution Review (RDR). The regular studies will focus on awareness, reactions,
likelihood to seek financial advice and how IFAs are responding.
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 1

2. Issue 2 | May 2010
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Consumer Debt and Financial Capability
Sadly, over the past few years, we
Individual insolvencies in England and Wales have also seen a significant rise in
the number of individual voluntary
Bankcruptcy Orders Individual Voluntary Arrangements Debt Relief Orders arrangements and bankruptcies
140,000 but just looking at the figures does
120,000
not describe the severity or the
Number of Individuals
heartache behind each statistic.
100,000
Stress, depression, repossessed
80,000 homes and one-parent families are
60,000 just some of the consequences of
40,000 debt. The challenge is to get
20,000 consumers to think of these
0 possible outcomes before taking
97 98 99 00 001 002 003 004 005 006 007 008 09*
out their next loan or credit card.
19 19 19 20 2 2 2 2 2 2 2 2 20
Date
Financial Capability
Source: Insolvency Service We cannot place the blame for the
crisis solely at the door of the
As we lived through the boom seeking help online via Debt lenders. The government and
years, consumers shopped on Remedy. From our Harris Poll consumers themselves also have to
cheap credit, trading in on their survey, over a quarter of the public share responsibility and the public
rising property valuations. Looking are either finding keeping up with agrees.
back it was clear this could not their financial commitments a Over the past few years, the figures
continue, but where has that left constant struggle or have now show that many people have taken
us now? fallen behind and are experiencing financial risks they could not
financial difficulties. afford, and have also not been
Impact on Customers saving for their retirement.
Unsurprisingly, the rise in Who do you think is most responsible for the increased levels
consumer debt corresponds to a of personal debt in the UK?
rise in individuals struggling with 2%
their credit arrangements and 17% Everybody has part
seeking help. During 2009, The responsibility
Citizens Advice Bureau (CAB) in 32%
Lenders
England and Wales saw a 24%
increase in debt enquires and is The Government
currently dealing with 9,500 new
debt problems every day. The CCCS 20% Individuals themselves
(Consumer Credit Counselling
Service) is another organisation None
that helps individuals who are
struggling with their credit 29%
arrangements. In 2009, the CCCS Source:
Harris Poll Omnibus April 2010. All
received around 335,000 calls, a respondents 2080
26% increase with a further 150,000 Continued on page 3...
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 2

3. Issue 2 | May 2010
viewpoint
Aggregator and other financial
websites have certainly helped to More
responsible
make consumers more savvy. They lending 28%
have provided the tools and the
know how to find the best deal i.e.
cheapest credit but they have not Mo get
r ud
pe e flex e , b ation
necessarily helped to instill good op
le ibilit vic duc
ad
financial discipline or judgment. in
de y, he fer ing, e
bt l Of nn 15%
8% p pla
I wholeheartedly agree with the How can financial
government aims of increasing service providers
consumer financial capability and help customers to
some of their tactics are rightfully better plan and
more long term, aiming to change manage their
consumer attitudes and behaviour. finances? Ch
g att ange
From our Harris Poll survey, there is din itu
op de ( ener
g
len
clearly a need to demystify and er s 12% en
ne Hone al
Low arge ss) s
reconnect the public to the indus- ch 13% ty,
try, as almost a quarter feel
intimidated by finance or find Simplify
products
finance complex with a further 13% and product Source:
finding finance boring. literature Harris Poll Omnibus April 2010.
13% Base: Those who responded 1048.
However, with debt levels
increasing consistently for a number inconsistent. On one hand, they are may actually deter those at most
of years, the Government initiatives trying to increase people’s need from seeking professional
are a little bit like shutting the knowledge and understanding advice when they find out the true
stable door once the horse has through these initiatives. On the
cost. Perhaps even pushing them
bolted. other hand, the current Retail
Distribution Review, into self-service channels and
The government’s position also buying products that are not
although having many positives,
appears to be a little suitable for them. We also have
rising student debt. Students
starting university now will leave
Which of the following best describes your general attitude to financial with an average of £23,000 of debt.
planning?
% Relaxed approach to finance, tend to
28 28 do what’s most convenient
Helping Consumers and
30
Confident and interested, I know
Increasing Financial Discipline
25 exactly what I want and how to get it
The key to increasing financial
20 Good intentions, but find finance
15 complex and am unsure what to do discipline has to be to get
15 13
Bored by finance, consider it a consumers more engaged with their
10
8
necessary evil finances, and this is where the
7
5 Feel intimidated and confused by industry can help. The increasing
finance, and usually need help
0 use of technology, especially
Unsure
amongst the iPod generation, will
Source:
Harris Poll Omnibus April 2010. All
undoubtedly help with apps or text
respondents 2080 alerts providing easy access to
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 3

4. Issue 2 | Mayl 2010
viewpoint
Offer technology-based domestic Direct contact from the industry will proliferation of private debt
planning services, incorporating certainly help consumers engage management companies or even
into bank statements ‘committed’ more with their own circumstances.
spend and 'available' spend. Given the current state of the
industry, perhaps there is a need They should try much harder to
now to return to old style banking be honest and ethical. I feel they
Fig: a
with greater levels of personal just look at the numbers and
current balances etc. It is just a contact. Consumers facing
shame that some institutions see forget they are
this as an opportunity to generate dealing with people.
Fig: f
extra income. Send leaflets out to people, as
they do not know where to go. worse door-to-door lenders whilst
Whilst consumer demand for greater
Spend a bit more time with portraying a caring and helpful
and faster access to their accounts
people discuss a plan so they organisation. There are a number of
has increased, providers must not
can understand it better. financial providers that could do
forget the importance and influence
Fig: d with improving their reputation at
the moment.
difficulties would certainly
By tailoring to the individual appreciate financial providers taking
customer's needs, in a simple and the lead and instigating dialogue as By being honest and realistic with
straightforward way putting the long as providers communicate in a them and giving them advice in
customer's needs first. caring and empathetic way, their own interest and not that of
providing consumers with the help their employer.
Fig: b and support they need.
Fig: g
of personal contact. When we asked
the public about how the industry By keeping an eye on the Those financial providers that fail to
can help customers better plan and customer, offering real honest change their corporate image are
manage their finances, apart from help when needed. certainly going to find life much
more responsible lending they asked tougher once new entrants such as
for help (advice) from a more honest Virgin Money, Metro and Tesco
(unbiased), open and caring Fig: e enter the fray promising a more
industry. In this instance, targeting those personal approach and with a
individuals who have a number of reputation for greater customer
credit agreements in place and care.
Present financial planning as a
calling them in for a review.
means for customers to achieve
Providers could then offer advice Figures a,b,c,d,e,f, g: Verbatim Responses
something good or avoid
and help with budget planning and Q: How can financial services providers help
something bad. They should customers to better plan and manage their
present customers with their
provide an overall review. finances?
options.
Article by Philip Brooks
Fig: c Doing so will hopefully help steer Associate Director
customers away from the Financial Services Research
For further information related to this article, such as the background data, or to suggest new topics for
inclusion please email financial@harrisinteractive.net or call +44 (0)161 615 2300
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