ANALYSIS: Creditors' language is foxing the consumer

To what extent is financial services marketing to blame for soaring UK consumer debt? Ben Bold investigates.

The UK is a nation in debt. Collectively, consumers owe the financial services industry £930bn - twice the government's annual expenditure.

The UK is well ahead of the European average and it is getting worse.

So why is this country so obsessed with borrowing? Why is credit such an attractive proposition and to what extent is financial services marketing to blame for the problem?

The Citizens Advice Bureau (CAB) is unequivocal. "Financial services marketing contributes to poor borrowing practices, which leads to debt," says a spokesman.

There is an onus on consumers to borrow responsibly, but critics say a proportion of poor borrowing practice stems from a lack of understanding. Egg positions itself as a consumer champion and says the industry has a duty to empower consumers.

"Financial services marketers have a responsibility to educate consumers," says UK marketing director Jerry Toher. "Finance products are complicated and providers sometimes use this complexity for their own gain."

Critics argue that with line after line of copy trumpeting super-low interest rates and periods of interest-free credit, consumers are often lulled into a false sense of security.

One high-profile example of the confusion inherent in financial services marketing verged on farce. Barclays Bank chief executive Matthew Barrett was one of several UK banking chiefs grilled by a Treasury Select Committee on credit in October. He was asked to calculate the interest a consumer would pay on transferring to Barclaycard's '0% forever' card. "Nothing," was Barrett's response. It was the wrong answer. Barclays agreed to withdraw all ads and marketing promoting the card after a claim by the Office of Fair Trading that it was "highly misleading".

Some claim the language used by financial services firms is at the core of the nation's debt problem. The Insolvency Helpline was established in 1997 to look at the need for debt and credit and provide consumer advice. "What we're particularly blaming (high levels of debt on) is direct response advertising," says a spokesman. "A consumer can phone straight away and get a credit card. People can't resist."

The body is currently making a recommendation to the Treasury and Bank of England to limit the amount of credit on the basis of income. It is also trialling a system with high-street banks, whereby anyone applying for credit of more than £10,000 must speak to a Helpline representative, who will let them know their responsibilities.

"Much of the marketing emphasises the ease and speed of borrowing, rather than the commitment and responsibility needed to pay the money back," argues the CAB.

Since rebranding last year, high-street bank Abbey says it is 'turning banking on its head'. This lofty claim refers to a mission to market its products in a 'transparent' way. Customer director Angus Porter says: "It's a principle for us. Financial services ought to be simple and straightforward." Toher agrees: "It is in both parties' interests that products are fully understood."

A nervousness clearly exists in the financial services industry over the role of marketing practices in the nation's debt problems; many companies declined to comment when Marketing approached them.

Privately, many say it is too easy to point the finger solely at financial services marketing. They argue that consumers borrow because they want to and can. But the way credit is marketed is clearly contributing to the problem and the issue is unlikely to just go away.


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now


Ritz returns to UK TV screens after 30-year hiatus
Mars creates chief health and wellbeing officer role
Brands make the most of Germany's dramatic victory over Brazil
Adios Justin King! Watch our video tribute as he leaves Sainsbury's after a decade
Nike calls time on 13-year Manchester United kit deal
Three TV ad banned over misleading 'free' call claims
GNM boss David Pemsel: 'The Guardian has got its mojo back'
M&S has missed a massive opportunity to put digital strategy at its heart
Google partners with the Barbican to show coders are artists
Samaritans encourages men to talk about issues with #DownNotOut campaign
Lego's partnership with Shell 'not awesome', according to Greenpeace viral
Chevrolet launches £350m Manchester United shirt deal with nostalgic video
Warburtons rebrands to 'Warbeartons' in Paddington Bear movie tie-up
M&S blames new website as non-food sales fall again
Top 10 skills for young creative talent: The Mad Men era of on-the-job learning is long gone
Pepsi Max calls on fans to take part in Kelly Rowland video
From mutton chops to manscaping, Gillette takes a trip through 100 years of male grooming
Digital democracy creation: how the marketing industry made its voice heard
Three prints spoof apology letter to hapless holiday-less consumers
Sponsors congratulate Novak Djokovic on Wimbledon win
Cristiano Ronaldo launches CR7 fashion range and website
How eBay drove awareness of The Amazing Spider-Man 2 for Sony Pictures
Lidl plots 'more British' brand in drive for customers
WeChat-owner Tencent on China's impact on international marketing - not vice versa
Imperial War Museum releases film announcing WWI exhibition
Why brand and music collaborations need to work for the fans, not the brands
Viral review: Star Trek's Zachary Quinto has Independence Day fun with Newcastle Brown Ale
Why brands should beware of Facebook's emotional engineering
Beats by Dre turns up the heat ahead of the France v Germany World Cup game
Top 10 ads of the week: Breaking Bad's Aaron Paul helps XBox reach top