Study reveals change in government attitudes towards consumer credit

A Robert Gordon University (RGU) academic has conducted a study into ‘over-indebtedness’ and the effect on consumer freedom – the individual’s ability to buy goods and services.

Donncha Marron large picHe has found that, whereas governing authorities consider the wide availability of consumer credit - such as credit cards, store cards and loans – to be to be a good thing, they have become increasingly concerned about the problem of over-indebtedness and with trying to manage how individuals think about and use credit.

Dr Donncha Marron, sociology lecturer at the School of Applied Social Studies, has explored ‘over-indebtedness’ – a relatively recent concept adopted by governing authorities like the Financial Services Authority (FSA) and Office of Fair Trading (OFT) describing problematic personal debt.

In his study, which has been published in the Journal of Cultural Economy, Dr Marron reviewed the changing perception of debt in recent history, the rise of consumer credit to the point where it is now widely available, and the ways the government is now dealing with over-indebtedness.

Dr Marron said: “Consumer credit provided by high street banks and other major financial institutions has lost much of the moral and cultural suspicion that used to attach to the idea of debt.

“With market liberalisation in the 1980s, authorities really got behind the idea of mainstream consumer credit as being central to the growth of the British economy, just as manufacturing was going into relative decline. The concept of freedom came to be all about consumer freedom - an individual’s ability to choose what they wanted to buy whenever they wanted to buy it. Credit cards, store cards, loans and other kinds of credit allowed people to express this consumer freedom. 

“By the early 2000s, however, the authorities started to look anxiously at this growing pile of personal debt. However, rather than re-regulating the consumer credit market that was helping to drive economic growth, they started to talk about ‘over-indebtedness’ in terms of the excesses and weaknesses of individuals. So, rather than thinking of too much debt as a societal problem, it was cast as a problem of individual consumers.”

As a result, policymakers blamed over-indebtedness on:

  • The individual’s ‘agency’ or capacity to make choices: For example, the individual failing to keep a proper check on their spending to the extent that their accumulated debt exceeds the limits of their income.
  • The individual’s personal or social context:Individual life events like sickness, unemployment, changed family circumstances and marital breakdown putting strains on income and so tipping individuals into too much debt.
  • The market for credit itself: the difficulty for people in understanding complex financial products and therefore making appropriate credit choices. This was also seen to be exacerbated by aggressive marketing and inappropriate lending practices by certain lenders.

In response, over recent years, state authorities and other groups have put into place a number of pre-emptive initiatives which aim to tackle the growing problem of over-indebtedness.

Examples of these include greater availability of financial advice, the encouragement of lenders to lend ‘responsibly’, the creation of organisations such as financial education charities, and the design of education tools such as the NatWest ‘MoneySense for Schools’ online resource which seeks to teach young people how to avoid falling into bad spending practices. Here the hope is good financial education will make today’s children the ‘sensible’ credit consumers of tomorrow.

These initiatives aim to increase a consumer’s understanding of their own financial circumstances, and educate them to plan ahead, find and use information and know when to seek advice.

Dr Marron said: “While such initiatives are designed for the good of consumers, they simultaneously put most of the responsibility onto the shoulders of consumers. It is now up to them to use all this new help and guidance so that they learn how to use credit responsibly and so avoid falling into over-indebtedness.

“This is a very different view from the past when getting into debt was generally frowned upon as a bad thing and lenders were strictly regulated. Now, debt is acceptable while over-indebtedness is over-simplified as a problem merely of greedy, unlucky or stupid individuals.

“However, this tends to obscure the wider social, political and economic factors – not least a British economy that became so dependent upon the free-spending consumer – which has led to so much personal debt being accumulated right across the board.”

Dr Donncha Marron’s study, “Producing over-indebtedness -Risk, prudence and consumer vulnerability” has been published in Journal of Cultural Economy. The abstract can be viewed online at

Andrew Youngson
Communications Officer | Faculty of Health and Social Care
Robert Gordon University

AB10 1FR
Tel: 01224 262389