CSA CCR LIVING BY NUMBERS
Should new statistics released by the Money Charity give the credit industry cause for alarm? By John Ricketts
IT is difficult to imagine what £1,434tr looks like. An easier amount, perhaps is £28,403. So how are these two figures linked? The former is the estimated amount owed by people in the UK at the end of April 2015; the latter, the average debt for every adult. The figures regarding outstanding
consumer credit lending are also interesting: at the end of April 2015, the total stood at £170.9bn, an increase of £208 for every adult in the UK. Per household, that is said to equate to an average consumer credit debt of £6,400. The Money Charity, which publishes
this data every month, uses other fascinating facts and figures to reflect the personal financial environment. Did you know, for example, that on average UK households spend almost £3 per day on water, electricity and gas, and that it costs an average of almost £30 per day to raise a child from birth to the age of 21? (Personally I thought it was more!) There are sobering figures: one
property is repossessed, on average, every 30 minutes, and Citizens Advice report that they deal with 6,323 new debt problems every working day. One person is declared insolvent every six minutes. Then there are also more encouraging
figures: the number of mortgages with arrears of over 2.5% of the remaining balance fell by 67 a day; the number of people unemployed also fell (over 12 months) by 625 per day. Our own figures for the final quarter
of 2014 are also worthy of note. They showed that the total amount of consumer debt held by CSA members grew by 1% from the third quarter, to close the year at £67.37bn. Debt held for collection by debt
collection agencies (DCA) continued its quarter-on-quarter decline during 2014 and ended the year at £27.13bn, a further 3% decline on the third
July 2015
quarter (£27.95bn). Year-on-year, values have declined by 14%. In contrast, debt held by debt buyers
continued to grow, rising to £55.26bn in the final quarter, an increase of more than £1bn from the previous quarter (£54.23bn). A like-for-like comparison with the fourth quarter of 2013 (£49.95bn) reveals a significant 11% year-on-year growth. Debt outsourced by buyers to DCAs
stalled in the fourth quarter at £15.02bn, slightly down on the third quarter
industry prepared itself for Financial Conduct Authority regulation. One reason for this is undoubtedly a
reflection of industry consolidation – consolidation that clearly continues. The other is how the collections industry is making greater use of new technology and analytical tools to achieve a better result with fewer people. The challenge, of course, is in striking the right balance. Automating processes and systems may enhance efficiency and improve the customer experience but the roles of
The collections industry is making greater use of new technology and analytical tools to achieve a better result with fewer people
(£15.5bn) and perhaps reflecting the trend by debt purchasers to rationalise their DCA panels. To balance this out, however,
quarterly collections have started to rise, reaching an impressive £431.8m from £411.2m with declining stock, compared to buyers’ collections at £235.4m against £233.5m with a growing stock. When all CSA consumer members (including debt purchasers with in-house resources) are taken into account, our members returned an impressive £2.641bn to UK plc. The Data Gathering Initiative
conducted by the CSA every quarter not only looks at the volumes and values, but also such issues as employment and customer complaints. The number of call-centre collection
agents in the industry declined by a further 3% (165 people) in the fourth quarter, continuing an annual trend. Indeed since the fourth quarter of 2013, the number of call centre collection agents has dropped by 672, a 10% decline from 6,614 to 5,942. Non-collections staff numbers have remained relatively static throughout the year, however, following a substantial increase at the start of 2014 as the
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individuals in Treating Customers Fairly will never be lost. The Financial Ombudsman Service
recently published a document detailing the number of complaints relating to all aspects of the consumer credit industry, of which we are but one. Numbers of complaints have risen, but the numbers are still (encouragingly) small. Indeed there were far more complaints levelled at providers of pet insurance, than the whole of the collections industry put together. That is not to be complacent; it is purely a statement of fact. Statistics can suggest many things,
but never in isolation do they give us the complete picture. It will be interesting to see to what extent the landscape changes in the months ahead, as we compare our own specific first quarter of 2015 data with the figures from the Money Charity. CCR
John Ricketts is vice president of the Credit Services Association E-mail:
john.ricketts@csa-uk.com
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