Founder of the Consumer Credit Counselling Service (CCCS), social entrepreneur Malcom Hurlston has gained great acclaim for his pioneering initiatives in helping people mired in debt. Through its free specialist advisory service, the CCCS has helped thousands of people in the UK manage their debt problems.
Malcolm Hurlston also founded the Registry Trust in 1985 and the Employee Share Ownership Centre in 1987 to bring leveraged employee share ownership to Europe. Educated at Cambridge, where he was a major scholar, he was trained as a Russian interrogator during national service. He then worked as a journalist, television trainer and lobbyist advising mainly multinational companies. He talks to Blue Chipabout restoring consumer confidence in the current economic climate.
With the UK economic forecast being dismal for the next two years, what effect will this have on consumer debt?
Malcom Hurlston: “The main problem will be that consumers don’t have enough appetite for debt. It is very important to getting the economy started again that people are able to borrow and spend. At the moment people are reluctant to spend and reluctant to borrow even when they have the ability to do so. So this will hold back economic recovery. The consumer needs to be encouraged to start again.”
How can consumer confidence be restored?
MH: “The banks have to make borrowing look both attractive and safe. That again is not going to be easy because the banks have also in the past made money on things like PPI and other ways that have disguised the real cost of borrowing. What they are beginning to do under the new rules is treat customers fairly and I don’t think customers have yet fully understood that with the new rules they will be treated more fairly than they used to be so that if they do get into difficulties there will be a way out for them. Banks have to go back to the old days whether people really trusted their bank.”
But since the financial crisis, the reputation of the banking sector has suffered.
MH: “In a way the reputation of banks started to fall when they became more remote from their customers, when they introduced technology that didn’t work fully, when they were too quick to get rid of the personal contact and I think that many banks have seen that they have to go back to more personal contact. But it’s not easy to restart a relationship when it has finished suddenly. Customers still feel hurt that the banks haven’t been the kind of partner in life that they expected them to be. The banks have to find a new way of building a relationship of trust with their customers. With telephone banking, you never speak to the same person twice and when different banking tasks are divided, you no longer know somebody who knows everything except if you have very high-level private banking. What needs to be done is some way of bringing the benefits of private banking to the masses so people once again feel they have a personal relationship with their lender.”
What are your views on the current consumer protection framework in the UK?
MH: “Any kind of consumer framework will always have to catch up with the reality of new ways of dealing with people and new ideas. Some of the new developments are behavioral so that lenders are using behavioral techniques to decide how to lend to people. individuals like to be complicit in their own deception so if you ask somebody if they paid their credit card off every month they will perhaps say yes even if it is not true because they wish they did. The future protection of customers will need to include ways in which consumers can get hold of their information more easily and automatically having to interpret it for them so that they understand their own financial behaviour. At the moment lenders gather information about customers and purchases so the amount of knowledge about everyone is increasing, whatever you might say about consumer protection this is still very much an open game in Britain at the moment. Its always going to be a bit backwards looking: stopping the last set of problems. Customers need to know that they can have access to information.”
You founded the leading debt advice charity CCCS, what motivated you to help those facing debt?
MH: “I don’t like a vacuum and I saw that there was a lot of unnecessary antagonism between lenders and the people who were representing the consumers which in the end wasn’t helping consumers. Up until about 25 years ago people would borrow mainly from one bank. But with the advent of the credit card, for the first time people began to be promiscuous in their borrowing. Typically now, the people who come for help are borrowing from nine different lenders so it had become an entirely different situation. This is why I went to America in 1991 to visit the consumer credit counseling service there and to see what they were doing. What they were able to do was to create for the consumer an asymmetry of information advantage because they were able collect all the consumer’s information whereas only one of the nine lenders had a limited picture and therefore they could say to the lender: ‘this is the best way of helping the consumer’. I think there has to be an answer for everybody, nothing should be forever, there is no guilt in all this, people borrow for a mixture of reasons: self-discovery, it may be psychological reasons or sometimes illness. So without being judgmental, it’s good to have a way of helping people out so that they can start again. After all its only money.”
CCCS expanded rapidly, did the response surpass your expectations?
MH: “Yes, since I started CCCS until the end of last year, the amount of money which people have paid back to their banks through us has been £2.5 billion. It’s a phenomenal amount which the banks would not have got back had it not been for CCCS. We have helped over one million people. It staggers me when I think about it.”
What impact has debt on mental health and depression?
MH: “I think possibly the single most important element, one of the things I was most pleased about starting in December of last year is that everybody who comes to CCCS online – and that’s over 1,000 people a week – is automatically assessed for anxiety or depression because we embedded tow questions into the normal questionnaire. So if anyone scores on those two questions, when they receive their debt advice at the same time, they are offered a full online test for anxiety or depression and if they turn out to have a degree of anxiety, we immediately offer them free and online cognitive behavioural therapy which we have arranged with the Australian National University of Canberra.”
In the past you had suggested that certain marketing materials should not be sent to people with mental health problems
MH: “This is something we are looking into at the Registry Trust at the moment: whether we can have a register for people who shouldn’t be lent to or don’t want to be lent to starting with people with bipolar problems. Problems of privacy arise but I think when people want to be taken off the list, they should be removed immediately.”
The fact that CCCS has recovered over £2 billion, does that not indicate that people by and large want to meet their debt obligations and are not necessarily irresponsible borrowers?
MH: “Exactly. My theory is that life just gets a bit complicated sometimes and it’s bad enough paying one or two bills and perhaps when you are under stress, paying nine or 10 different bills each month gets complicated. The great thing about the CCCS system is that you make one payment a month and the CCCS then spreads it among the nine or so people you owe money to. So to start with you just have to make one simple payment. That also teaches you monthly budgeting which is at the heart of all financial prudence. I think that’s the best education for anybody.”
