Debt in the United Kingdom is not simply one of the numerous financial concerns that arose as a result of the epidemic; it is a severe problem that has existed for decades. Prior to the FCA’s intervention, money lenders had gone beyond all logic with their absurdly high- rates on short-term loans, which were made feasible by the ever-increasing demand for short-term loans. They might charge 1,200% or more interest on the loan amount and still have people lined up for payday loans.
Caps on how much payday lenders might charge loanees were imposed in 2015, along with various other regulatory measures, to help moderate a situation that was rapidly spiraling out of control.
As should be obvious, if there was ever a moment to impart financial wisdom in order to keep people out of debt, now is it. If you are the type of employer that cares about his or her employees and strives to keep them out of debt as much as possible, you must act immediately. Taking a hint from some of the greatest financial gurus in the UK, here’s a short list of subjects and recommendations for counseling an employee who is in debt, either recently or permanently.
First, establish a communication channel.
People are highly protective of their financial information, and there are rules in place to prevent employees from being tested for financial ability. As a result, proceed with care and only bring up the subject after first establishing a dependable line of contact with the employee. While it is unlikely that your employee would sue you for advising them on debt troubles, it is nevertheless prudent to establish how you learned about their financial difficulties. You don’t want them to become defensive, or the counsel may not be detailed enough to be valuable to them.
Inquire about the steps they have already taken.
Once a channel of contact has been established, inquire as to what steps they have done to address their financial concerns, if any. If they are seeking loans, first explain the hazards of reckless borrowing from untrustworthy lenders, as well as the exorbitant interest rates they offer. They should recognize that these are not the kinds of loans that may be used to solve long-term financial problems.
However, if they are in a brief financial bind due to an urgent and unforeseen expenditure, FCA-regulated short-term loans are unquestionably a trustworthy answer.
In addition to being registered with the FCA, New Horizons only works with FCA-registered and regulated money lenders. Not only can the credit brokerage assist your employee in obtaining the necessary short-term loan, but New Horizons will also endeavor to obtain the lowest feasible interest rate. As a reputable brokerage in the UK, they will not charge any fees for the services offered to your employee, but will instead get commissions from the lending partner.
If someone needs a loan, they should always compare all of their possibilities before choosing the first firm that approves their application. Only a credit broker can provide the option to compare multiple lenders and their quotes from a unified platform.
Inquire as to the source of the problem.
There are several distinctions between someone who requires a thousand pounds to cover an unexpected but necessary auto repair expenditure and someone who has developed debt as a result of gambling. The major distinction between the two is that the former was inescapable and required, whilst the latter was preventable and needless. There is another more concerning distinction, which you should be especially careful of as an employer counseling his or her employee.
