A long period of economic growth, regular pay rises and easy access to personal loans and other types of finance has placed many consumers in the situation where they think nothing bad could possibly happen to them and that their financial situation can only get better, due to things like the value of their house continually increasing and always being accepted for another personal loan, or credit card without any in depth checks carried out by their bank to see if they could afford the repayments.

All of a sudden, the credit crunch arrived and many individuals got a very serious wake up call, leaving many previously credit worthy individuals in financial difficulty with loan and mortgage arrears and even facing the possibility of repossession.

Many people blame the banks for this problem, particularly in how they offered loans to people who were always going to face difficulty in paying them off, but consumers themselves must take their own fair share of the responsibility, by not bothering to obtain a reasonable financial education with regard to borrowing money through loans and credit cards, as well as the best forms of savings and how interest rates work, for example.

In light of this, the government is to launch a new financial education agency, which will be designed to offer free advice to consumers on a range of financial matters, such as personal loans, debt advice, home owner loans and mortgages as well as areas such as savings accounts and managing money on a daily basis. The agency is to be introduced along with the new financial services bill, which will place much tighter regulation on banks and other financial institutions and as part of the regulation, banks will be responsible for funding the agency through a levy in their annual fees.