The Public Management of Private Debt? The UK Government's Regulatory Regime

According to the Money Charity, the average household debt, including mortgages, stood at just over £64,000 at the end of March 2024. The combination of inflationary pressures, fiscal shock brought about by the short-lived Truss government and persistent, historically high levels of taxation and a growing rental sector have combined to exacerbate personal debt stress. However, successive governments have failed to regard personal debt as a public policy problem. Instead, the strain has been taken by debt charities, who in turn refer those in need of debt relief, to providers private providers such as PayPlan. All personal debt management is regulated by the Financial Conduct Authority (FCA), established in 2013 with the promise of fairer regulation. Typically working in tandem with the Prudential Regulation Authority (part of the Bank of England); their mandate is socially facing but ultimately challenged by financialisation and demands of the finance industry (Chiu et al, 2022). The aim of the paper is to account for the inadequacies of the current system of regulation in relation to personal debt. The paradox of the current (post pandemic) situation is the growth of high levels of personal taxation against a fiscal background shaped by financialisation and market economics that place the onus on personal responsibility and choice. The paper examines current provision for the management of personal debt and thus considers the efficacy of the regulatory regime. Kirwan (2019) calls this the ‘debt advice process’, which in effects enforces the legal contract between debtor and lender. In addition, Kirwan (2019) also notes that much personal debt is ‘public’ in the form of council tax arrears etc. The paper makes the case for a recasting of debt management away from light-touch regulatory approaches normally ascribed to UK governance towards a more unified approach to personal debt.