Directors and lawyers top debt league

Company directors, legal professionals and senior management are setting new records when it comes to incurring the greatest levels of personal debt, a major new survey published today reveals.

Lower paid groups such as armed forces personnel, bank workers, nurses and teachers also figure prominently in the research conducted by Opus Mortgages among 20 distinct occupational groups. The research emphasises the validity of the concerns – voiced most recently by the Bank of England – about the significant problems posed to UK consumers by escalating personal debt.

Opus analysed the mortgage, re-mortgage and secured loan applications of 6,000 consumers whose borrowings are being serviced but the amounts owed are not actually being reduced. The research reveals that company directors are the most indebted profession with an average unsecured debt of £16,096. The range of indebtedness varies greatly in different areas of Britain. In the north of England, directors owe almost £19,000, whereas in Wales, debts of £16,416 have been incurred (for full details, please refer to our report Britain in Debt).

Lawyers and general legal staff fare only marginally better off, with an average debt of £15,413. Opus has discovered that the most indebted part of the legal community is located in the Midlands, with the average debt standing at £17,950. The least indebted part of the legal world is in Scotland with an average debt of £13,055.

And while senior managers are likely to incur an average debt of £12,222 – armed forces personnel – who take home significantly less in the pay packet – are the fourth most indebted group in the UK, with an average unsecured debt of almost £12,000. Bank workers are fifth in the Opus league table with an average level of debt totalling £11,959. Nurses are eleventh in the table with average debts of £10,779, while retired people (14th) are in the red to the tune of almost £10,500 and a teacher (16th) can expect to be in the red by as much as £9,740.

Meanwhile, the average unsecured debt in the UK stands at £10,947 per person.

Opus believes the findings should be a wake up call for all debt professionals, regardless of what sector they work in.

Commenting on the findings, Lockhart Bruce, sales and marketing director of Opus, said: “It is quite clear that a number of professions and trades are in danger of being consumed by unmanageable levels of debt. Something has to be done sooner rather than later to tackle this growing problem, which threatens the future wellbeing of millions of Britons.

“It’s time for the government, financial services organisations and members of the voluntary debt advice world to get our heads together so that the issues that our research has raised, and that other bodies have highlighted, are not swept under the carpet. A failure to tackle matters now could lead to many UK consumers experiencing serious financial hardship in the not too distant future.”

Yvonne Gallacher, chief executive of Money Advice Scotland and a member of the FSA Consumer Panel, concurs. She said: “The voluntary debt advice world is experiencing a huge increase in demands for help from members of the public who are experiencing serious financial problems. We are finding it difficult to cater for the needs of everyone – yet the floodgates haven’t opened yet. When they do, my fear is that the debt advice world will only have enough resource and manpower to help a fraction of the people who are in trouble. That can’t be a good thing for anyone.”

Lockhart Bruce would like to see more lending organisations – particularly those companies that offer specific debt consolidation products – offer a holistic approach to tackling the problems of people whose finances are in the red.

“Just assessing a re-mortgage, secured loan or credit card application on very basic information is not good enough,” he said. “Today’s debt problems require a rigorous approach from those companies that are purporting to help consumers. That means they have to really understand what the issues are before they start issuing cheques or setting credit limits.

“To do this you have to spend time getting to the bottom of the debt issue. This sometimes slows down the lending process. Our view is that the best interests of the consumer are of paramount importance. Therefore you only offer a product once all of the facts have been collated.

“Companies can make good, ethical money by behaving in an appropriate and professional manner. The trouble is, however, that too many are in a hurry to write large volumes of business. They promise the earth to the consumer. But are they simply encouraging consumers to leap from the frying pan into the fire?”