Levels of debt being collected by members of the Credit Services Association (CSA) have returned to pre-Christmas levels, according to the latest Quarterly figures, as consumers look to regain control of their finances.
The gross monthly total of consumer debts collected for the final month in Q1 2012 (March) stands at £172.088 million – a return to a level last seen in November 2011 (£172.862mn) following a dramatic fall in December (£147.476mn).
CSA President Sara de Tute attributes this to an increase in recoveries in November contrasting starkly with the consumers hanging on to their money in December to spend on Christmas saying:
“It is quite usual for the monies collected to decline over Christmas and the New Year as agencies show forbearance with the consumer’s position.”
At the end of Q1 2012, the total value of unpaid consumer debt held by CSA members for collection stood at £58 billion (£58.316bn), comprising £31 billion (£31.264bn) placed by creditors with Debt Collection Agencies to collect, and a further £27 billion (£27.052bn) of purchased debt owned by Debt Buyers. This represents a slight increase in the total for Q4 2011 (£58.179bn – a difference of £137 million).
The total volume (i.e. number) of consumer debts awaiting collection by CSA members remains at a staggering 32 million (31,781mn) as at the end of March 2012, a slight fall on the previous Quarter (32,130mn). Debts are being outsourced for collection by ‘new’ creditors within the private sector and parts of national government – including the Department for Work and Pensions (DWP) and the HMRC – who no longer see an issue with recovering monies vital to the public purse.
The total value and volume of unpaid debts are high, Sara says, partly as new types of consumers fall into debt for the first time saying:
“Our members are noting a trend of ‘new’ consumers falling into debt for the first time, and are working with them to agree a repayment schedule or reach a settlement wherever possible, and this is reflected in these latest figures.”
Yvonne MacDermid, Chief Executive of Money Advice Scotland, is not surprised that the CSA is seeing many different types of people in society affected by debt arrears saying:
“The recession is affecting everyone in one way or another.”
“Many consumers have nothing left to cushion them from any emergencies which arise, and as a consequence they find themselves perhaps for the first time in arrears. The key to getting back on the road to recovery is to seek help from the money advice agencies, many of which offer advice for free, and, of course, not to ignore the problem but to make contact with creditors or their agents.”
David Hawkes, National Money Advice Co-ordinator for AdviceUK, said:
“Most clients seen by AdviceUK members are from the poorest, most financially excluded communities in the UK.”
“However, some of our members have reported that this double-dip recession has seen an increase in the number of clients from more affluent households seeking advice, including homeowners and people who have lost their jobs as a result of public spending cuts. As 80% of the cuts are yet to come, the indications are that the demand for free debt advice is going to increase over the next few years, a trend that is likely to be exacerbated by the introduction of Universal Credit.”
The CSA has used the publication of these results to once again call upon the Government to make changes to current legislation that would dramatically reduce the incidences of what are sometimes called ‘mis-traces’, for which the industry is often criticised with Sara de Tute saying:
“It cannot be in anyone’s interest for the wrong person to be contacted for a debt they do not owe and yet it is in the Government’s power to do something about it.”
“By allowing us access to the Full Electoral Register – the same register that the Banks and other institutions use when lending money – we can much more easily verify the accuracy of the data we are given and eliminate many of the problems of ‘mis-tracing’.”
The money recovered by Members of the CSA has a direct impact both on the amount of future credit available and the interest rates that everyone else has to pay.
The CSA represents 90% of the debt collection industry and all of the major players.