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Verity&#39s view

Not so long ago, if you read the personal finance sections of national newspapers and the consumer press, a naive member of the public could be forgiven for coming up with a valid and damning accusation against its writers. Are you really pro-posing to tell me all about personal finance or just about products that the personal finance industry wants to sell?

Ask the majority of the public when they think about when they think about money and they most certainly will not tell you their foremost preoccupation is Isas, bonds, unit trusts and private pension plans.

For most people, the level of debt they are in – and not the interest rate they pay on it – is the biggest short-term financial concern. But until recently, how many articles would have given useful advice on the level of debt you can safely afford?

For too long, the contents of personal finance pages – and consequently the whole public debate about personal finance – was dictated not by readers&#39 most heartfelt concerns but by those of the journalist&#39s sources (who all too often were also the big advertisers).

If the hacks only talked to the personal finance industry, they would find a wealth of people dedicated to selling products willing to talk about Isas but if they wanted to talk about debts, who in the industry could help?.

The personal finance industry, in other words – and by that I mean life insurers, IFAs, mortgage lenders, banks, insurers and brokers of all stripes – was ill-equipped to give the public financial advice where it really needed it. Only if there was money to be made in pushing a product, would the talk flow and the press corps which talked to that industry all the time was little better.

That is changing. Relentless statistics from the Bank of England, the Citizens Advice Bureaux and debt management agencies have gradually persuaded the PF press corps that the one area where financial advice is most in demand is in exactly the area where the industry&#39s least able to supply it – debt.

The CAB constantly points to record personal debts fuelled by an irresponsible credit industry which is all too willing to make it easy for people to extend themselves beyond their means.

Now I suspect, for many readers, the reaction will be: That is all very worthy but what&#39s it got to do with me?

But think about it. You are simply reinforcing my point. The financial advice industry would like to think of itself as providing an important public service. For those who need to know whether to buy a policy, a bond or a unit trust perhaps it does but this is a small minority of the population.

If the financial advice industry thinks that the key element of financial advice that most people need – debt advice – is not its responsibility, then it does not deserve the name.

If the financial advice industry wants to be more than just a sales operation and think of itself as providing some public good, then it must cover debt advice and if you object that you cannot make any money out of it, there is a reply.

Even in these prosperous times, there are rapidly growing numbers of people whose debts are so out of control that they simply freeze, rabbit-like, repay nothing and try to ignore the summonses as they roll in. Collecting debts via solicitors and bailiffs costs lenders a big portion of whatever they are likely to recover. In many cases, it is uneconomic.

Many of them are quite willing to give a debt management agency a proportion of whatever repayments they can re-establish. In other words, there is money in it. Voluntary services such as the Consumer Credit Counselling Service are funded by the banks on that basis.

Yet demand totally outstrips supply. Businesspeople have started to wake up to this – witness the proliferation of ads in the financial press and the classified sections of the tabloids. But it is an unregulated and largely disreputable sector.

Now, many people who get into trouble with their debts do not stay that way all their lives. Think how powerful the bond of customer loyalty would be if a financial adviser had helped them out of a financial crisis. How much more willing would they be to trust you with the rest of their investments for life? If there are modest profits to be made in debt counselling, the potential for building a business must be huge.

Andrew Verity is a personal finance correspondent at the BBC


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