Baines & Ernst Warns Chancellor Of Credit 'Time Bomb'

Britain could be facing a credit-fuelled economic crisis and people saddled with mounting debts want the Chancellor to crack down on credit before it is too late - that's the message from the UK's leading debt management firm, Baines & Ernst.

The warning follows publication of a MORI survey of Baines & Ernst customers which shows 9 out of 10 people (95%) believe credit is too easy to get and 8 out of 10 (83%) believe the Government should legislate to make credit more difficult to obtain.

Baines & Ernst Spokesman Chris De Souza said:

"There has been an explosion of debt in this country. In the last four years, our average customer's debt has doubled. Debt has spread from low income groups to so-called 'middle England'. We are now facing a credit-fuelled economic time bomb. Our customers are telling us that the Government has to act now to make credit harder to get."

"We have written to the Chancellor urging him on behalf of our customers to legislate before it is too late, and make it harder to obtain credit. We have included our MORI survey findings and stand ready to discuss with the Government any help we can offer. This Government has an excellent record on managing the economy and it would be wrong to throw that away by continuing to ignore this ticking time bomb of debt."

Baines & Ernst has the largest database of people in debt in the UK. It has over 50,000 customers, with a total of over 1631 billion of managed debt, who have sought help from Baines & Ernst because they are having problems making credit card and other loans repayments.

Over the past four years there has been a striking change in the social profile of people in debt and a steep increase in the levels of debt.

• In 1997, when Baines & Ernst's records began, the average customer had a debt of under 16310,000. This has now risen to 16319,238.
• In 1997 the majority of customers were in their late 20s. Today the average customer is 35 and the average income has risen from 16316,800 to 16320,400.

Mr De Souza said:

"The problem of overindebtedness is on the increase and more and more people are getting heavily into debt. What is particularly striking is that the social background of those in debt has changed. Our average customer, with a debt of 16319,238, now tends to come from middle England."

"Christmas and the New Year sales are the time when families are under most pressure to spend, spend, spend. They are tempted into credit deals and can quickly overstretch themselves. We are trying to educate our customers on handling their finances and staying out of debt, but they are not helped by being bombarded by the endless stream of easy credit offered them on an almost daily basis."

The MORI research also found extremely high levels of satisfaction and advocacy among Baines & Ernst customers.

Commenting on the findings Sir Robert Worcester, Chairman of MORI said:

"These figures are quite striking. 18 out of 20 customers are satisfied with Baines & Ernst and 18 out of 20 said that they would recommend Baines & Ernst's service to friends and family. These results place Baines & Ernst in the top 10% for satisfaction ratings among all the financial services companies we have ever surveyed, and Baines & Ernst is one of the top performing financial services companies for customer advocacy."

The survey revealed that customers dissatisfied with the free services such as the Citizens Advice Bureau (CAB) and the Consumer Credit Counselling Service have turned to Baines & Ernst.

• 9% sought advice from the free advice services before approaching Baines & Ernst.
• Of these people, 71% felt that the advice that they received from the free sector would not have solved their debt problems. The other 29% still decided to use Baines & Ernst.

One worrying finding was that 57% of Baines & Ernst customers who approached their creditors for assistance, did not get the help they needed. This is in contrast to the 97% of customers, who when they applied to Baines & Ernst, found the service they received to be professional.

• 88% said that the fees they paid represented good value for money;
• 94% said that Baines & Ernst had a positive impact on their lives;
• 94% said Baines & Ernst were open and honest and 97% thought they were fair in their dealings with them;
• 91% also said that Baines & Ernst helped educate them in managing their financial affairs, a key aim of the Government's Debt Task Force.

Technical details

MFS (MORI Financial Services) interviewed 1,000 adults throughout Britain between February 5th and 11th. For technical information, please call John Reid on 020-7347 3000