Credit Management July and August 2021

NEWS ROUNDUP
Employees made bad debt
decisions during the pandemic
NEARLY a quarter (24
percent) of employees
admit they made a bad
decision about debt during
the pandemic, according
to a new study from Aviva
that looked at the experiences of personal,
workplace and financial wellbeing since
early 2020.
Worryingly, this figure rises to more
than half (51 percent) of those aged 18-to-
24, dubbed ‘Gen-Z’. Amid the turmoil of the
pandemic, young people have emerged
as one of the most vulnerable groups in
society and have been some of the hardest
hit. More than a third (36 percent) of
‘Gen-Y’ aged 25-to-39 also feel they made a
bad debt decision since COVID-19 struck.
Aviva’s report – Thriving in the Age
of Ambiguity: building resilience for the
new realities of work – shows how our
relationship with finances, work and our
hopes for the future have evolved as we
adapt to the ambiguity from the last 12 to
18 months. Conducted in collaboration
with Business Wellbeing Specialists,
Robertson Cooper, the research reveals
that personality plays a key role in
determining our preferences, behaviours,
and outcomes – at home and work.
More than a quarter (29 percent) of
respondents disclosed they have had to
borrow to replace lost income, while 30
percent stated they are concerned their
money will run out. The research also
shows a concerning number of employees
(39 percent) agree their current financial
situation negatively impacts their mental
health, while 60 percent feel their finances
control their lives.
However, the report also reveals those
who suffer from poor financial wellbeing
do not necessarily think of themselves
as bad with money – challenging the
stereotype that money worries arise from
disorganisation or knowledge gaps.
More than two thirds (68 percent) of
employees with poor financial wellbeing
think they are organised with their money,
and 64 percent always try to minimise
debt. The research shows financial factors
only account for half (51 percent) of
someone’s sense of financial wellbeing; the
rest is driven by other factors, including
personality type.
Aviva’s report – Thriving in the Age of Ambiguity
Aviva’s study shows personality type
has a huge influence on individual
behaviour, mindset, and personal
outcomes. Employees who are thriving
in adversity tend to be naturally more
emotionally resilient and optimistic. Those
with less natural emotional resilience
regularly experience negative emotions,
low financial and mental wellbeing, along
with feelings of anxiety and struggle with
debt.
Laura Stewart-Smith, Head of
Workplace Savings and Retirement at
Aviva says the COVID-19 experience has
fundamentally altered our relationship
with money, work and health: “While some
employees have been able to boost their
financial wellbeing by saving more, others
have found their income reduced and are
facing larger debts or having to provide
support for dependent family members.
“Our report shows many trends which
have been gathering pace in recent years
have now reached an inflection point,
as new preferences emerge to shape the
way we work, feel, think and plan ahead.
Financial education in the workplace is
nothing new, but now more than ever,
there is a fundamental need for employers
to provide tailored support for employees
to ensure they can genuinely thrive in the
‘Age of Ambiguity’.
“Financial confidence can have a
tremendous impact on mental health and
personality type has a huge influence
on behaviour and mindset too. Greater
support is vital for employees to thrive
in an increasingly ambiguous financial
environment. We believe there is a crucial
role that employers can play in facilitating
this. One which introduces a new
dimension of personality type.”
Iona Bain, personal finance expert,
believes the last 18 months have had a
seismic impact on the way we live, work,
and manage our finances: “The pandemic
has accelerated existing trends and
magnified our attention on developments
that have been bubbling away for years,”
he told Credit Management.
“As we gradually move out of lockdowns
and restrictions, employers and employees
alike will need time, support, and expert
insight to skilfully navigate this brave
new world. Sadly, there appears to be a
mismatch between good intentions and
reality.”
Ethical appointment
KM2 Ethical Finance (KM2) has appointed Amir Ali FCICM
to its board to act as an independent advisor to the team.
The company recognises the invaluable contribution a fully
independent board advisor can bring as it grows, seeks
regulatory authorisation and develops client relationships with
major international finance houses. The company says that
Amir’s experience working with Government departments and
organisations in the third sector will also be of tremendous
value as it develops and unfurls its social inclusion activity.
Amir is a former Chair of the Civil Court Users Association
(CCUA) and Fellow of the Chartered Institute of Credit
Management.
Scottish woes
MORE than 31,500 people in Scotland sought help from
StepChange Debt Charity, and over 11,000 went through a
full debt advice process during the year of the pandemic,
according to the charity’s latest Scotland in the Red update.
Average client rent arrears rose by a dramatic 43 percent in
2020, one of the most worrying impacts of the pandemic and
a very clear warning that continuing support will be needed
for many households if recovery from post-COVID debt is to be
achievable. Polling shows thousands of Scots are struggling
with debt and are behind on essential bills like Council Tax
and rent, with more than a fifth using credit to make ends
meet (see notes to editors) and cover essential costs.
Advancing the credit profession / www.cicm.com / July & August 2021 / PAGE 6