Competition & Markets Authority
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CMA concludes review of problem debt

The CMA has published its report into problem debt, which examines how it affects consumers’ decisions and choices in the goods and services that they purchase. 

Debt is one of the most significant problems for consumers in the UK today. The Competition and Markets Authority’s (CMA) review was launched in April 2014 and carried out on behalf of the Consumer Protection Partnership (CPP). The report analyses research and projects carried out by over 150 organisations working in this area, highlighting 4 key areas of work that are central to tackling problem debt effectively. These are:

  • supporting financial capability: consumers need the skills to manage their finances and make sound financial decisions
  • providing early debt advice: consumers who seek debt advice at an early stage are more likely to resolve their problems
  • undertaking further consumer behaviour research: understanding consumer behaviours and decision-making may help regulators and debt advisors further to identify and assist consumers who are at particular risk of falling into financial difficulty
  • pursuing enforcement and compliance: effective enforcement and supervision helps to drive compliance

The report shows that there are many organisations committing considerable resources to activities in these 4 areas, both within and outside the CPP. Although the CMA’s report did not identify any significant consumer protection issues which the CPP needs to address immediately as a collective group, the CPP is committed to keep matters related to problem debt under review. In addition, the CMA intends to look further at practices or markets that may generate particular problems for consumers with low incomes. In doing this it is keen to speak to, and learn from, organisations with an interest in the area. This work will relate closely to 2 of the CMA’s strategic objectives, refocusing consumer protection and extending competition frontiers, which were set out in the CMA’s Annual Plan 2014/15.

Alex Chisholm, CMA Chief Executive, said:

Given the human cost of problem debt and that this is an issue for very many consumers in the UK, the CMA took forward this project on behalf of the CPP to bring together much of the recent research on problem debt in one place. The report shows that debt problems can arise for numerous reasons and affect a wide range of people, resulting in health and social problems and affecting consumers’ abilities to make effective choices and access or engage in markets.

Following this report the CMA will continue to focus closely on the day to day problems encountered by consumers by discussing with other organisations some of the specific issues facing people on low incomes. We will take that work forward over the next few months.

Gillian Guy, Citizens Advice Chief Executive, said:

Difficulties in making ends meet means some households are driven deep into debt. Citizens Advice helps with up to 2 million debt problems each year as people struggle to cover the costs of daily essentials.

It’s really important that people are able to access free, independent and impartial advice to help sort out their financial problems or avoid them in the first place. The earlier people can get help, the better. As well as advising people about their debts we’re also sharing our evidence about problem debt with regulators. By highlighting the reality for consumers and how protections can be improved, Citizens Advice is helping to stop more people experiencing problem debt.

This work by the CMA demonstrates the regulator’s commitment to fully understanding people’s experiences of debt and how they engage with markets. It is good the CMA has recognised there needs to be a strong network of support to help tackle problem debt and that Citizens Advice is playing a valuable role delivering this.

Notes for editors

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading (OFT), as amended by the Enterprise and Regulatory Reform Act 2013.
  2. Following government changes in April 2013, local authority Trading Standards Services have a greater role in the enforcement of consumer protection law at a national level. The OFT consumer enforcement powers were inherited by the CMA when it came into existence on 1 April 2014. These changes mean that the CMA will now tend to use those powers where breaches of consumer protection law point to systemic failures in a market. This means cases will more often be taken against a number of firms in a market, rather than cases against individual firms, unless changing the behaviour of 1 firm would set a precedent or have other market-wide implications.
  3. The CPP was formed in April 2012 as part of a suite of changes to the consumer landscape. The current members of the CPP are: Citizens Advice, Citizens Advice Scotland, CMA, Consumer Council for Northern Ireland, Convention of Scottish Local Authorities, Department for Enterprise, Trade and Investment Northern Ireland, Financial Conduct Authority, National Trading Standards Board and the Trading Standards Institute. The CPP’s objective is to bring together these key consumer partners within the reformed consumer landscape to better identify, prioritise and coordinate collective action to tackle the issues causing greatest harm to consumers. In essence, the CPP’s role is to ensure that CPP partners work together to tackle detriment more effectively than they could through working in isolation.
  4. Debt affects millions of people and is one of the most significant problems for consumers in the UK today. Household debt stands at over £1.4 trillion and the debt-to-income ratio is forecast to increase significantly in the coming years, nearing pre-financial crisis levels by 2019.
  5. The CMA is committed to putting consumers at the heart of all of its work.
  6. You can read the CMA Annual Plan 2014/15.
  7. Enquiries should be directed to or by ringing 020 3738 6798 or 020 3738 6460.
  8. For information on the CMA see our homepage, or follow us on Twitter@CMAgovukFlickr and LinkedIn. For CMA case updates sign up to our daily email alerts.
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