A report about consumer debt sends out a warning that unless banks and insurance companies put consumers first, there could be catastrophic consequences for financial providers and consumers.
Datamonitor says the current “spend spend spend culture” is dangerous and urges the financial services industry and the Government to join forces and take a balanced approach to saving and spending.
The reports says consumers are storing up future trouble by racking up debt and not saving enough for the long term.
The banking camp focuses on the effect of growing credit card and personal finance debts while the insurance camp concentrates on consumer attitude and failure to save enough in pensions and long-term savings. Yet, the report says, there is little, if any, communication between the two sides.
Aanalyst and author of the study Liz Hartley says is it time for some joined-up thinking and a more holistic approach to financial services.
Interest rate rises could bring disaster for many people who have overloaded on debt and leave even less cash for savings and pensions.
The report suggests that companies should consider innovative ways to combine the cost of buying a home with contributing to a personal pension.
Hartley says: “There is an increasing view that property is a get out of jail free card and that property will be the new pension. However, this is a high-risk attitude, as the retirement income is dependent on property and rental values.A property crash could leave consumers high and dry.”