| KN67024 |
| KEY NOTE Debt Management (commercial and consumer) : October 2004 |
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This report covers: Debt Management (commercial and consumer)
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| Consumer Credit |
| Consumer Credit Services |
| Commercial Credit Services |
| MARKET SECTORS |
| Lending to Individuals |
| Loans Secured on Dwellings |
| Consumer Credit |
| Corporate Lending |
| To Other Financial Corporations |
| To Private Non-Financial Corporations |
| To Unincorporated Businesses and Non-Profitmaking Organisations |
| Finance Company Lending |
| Alternative Credit Providers |
| Debt Management and Collection |
| Debt Purchasing |
| Factoring |
| Securitisation |
| Debt Consolidation |
| MARKET TRENDS |
| Rising Consumer Credit |
| Consumer Vulnerability |
| Bank and Building Society Lending Continues to Rise |
| The Corporate Sector |
| Business Failure Increase |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex |
| (000), Mid-Years 1998-2002 |
| Inflation |
| Table 2: UK Rate of Inflation (%), 1998-2002 |
| Unemployment |
| Table 3: Actual Number of Unemployed |
| Persons (million), 1998-2002 |
| Gross Domestic Product |
| Table 4: UK Gross Domestic Product at Current |
| and Constant 1995 Prices (£m), 1998-2002 |
| Household Disposable Income |
| Table 5: Average UK Household Disposable Income |
| (£), 1998-2002 |
| MARKET POSITION |
| The UK |
| Overseas |
| 2. Market Size |
| INTRODUCTION |
| THE TOTAL MARKET |
| Table 6: The Total Amounts of Lending Outstanding by Type |
| of Borrower at Year End (£bn), 1999-2003 |
| BY MARKET SECTOR |
| Lending to Individuals |
| Loans Secured on Dwellings |
| Table 7: Amount of Lending Outstanding to Individuals |
| Secured on Dwellings at Year End (£bn), 1999-2003 |
| Consumer Credit |
| Table 8: Amounts of Consumer Credit Outstanding |
| at Year End (£bn), 1999-2003 |
| Corporate Lending |
| Loans to Other Financial Corporations |
| Table 9: Amount of Lending Outstanding to Other Financial |
| Corporations at Year End (£bn), 1999-2003 |
| Loans to Private Non-Financial Corporations |
| Table 10: Amount of Lending Outstanding to Private |
| Non-Financial Corporations at Year End (£bn), 1999-2003 |
| Loans to Unincorporated Businesses and Non-Profitmaking Organisations Serving Households |
| Table 11: Amount of Lending Outstanding to Unincorporated |
| Businesses and Non-Profitmaking Organisations Serving |
| Households at Year End (£bn), 1999-2003 |
| 3. Industry Background |
| RECENT HISTORY |
| Retail Store Credit |
| Consumer Credit |
| Competition |
| Debt Collection |
| Payment Periods |
| Housing |
| NUMBER OF COMPANIES |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| Mortgage Arrears |
| Business Failures |
| Table 12: Change in Business Failures by Region |
| (%), Second Quarter 2003 |
| Business Confidence |
| Industry Concentration |
| Table 13: UK Members of the Credit Services Association |
| by Region (number of companies), January 2004 |
| DISTRIBUTION |
| Internet Credit Sales |
| HOW ROBUST IS THE MARKET? |
| Unsustainable Rates of Credit |
| Industry Flexibility |
| LEGISLATION |
| Consumer Credit Act 1974 |
| European Late Payment Legislation |
| Financial Services and Markets Act 2000 |
| NON-STATUTORY CODES AND REGULATIONS |
| Stop Now Orders |
| Finance & Leasing Association Code |
| The Banking Code |
| KEY TRADE ASSOCIATIONS |
| Finance & Leasing Association |
| Consumer Credit Trade Association |
| Credit Services Association |
| Federation of European National Collection Associations |
| The Credit Card Research Group |
| Factors & Discounters Association |
| International Primary Market Association |
| Council of Mortgage Lenders |
| Chartered Institute of Public Finance and Accountancy |
| Other Organisations |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Cattles PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Intrum Justitia Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Legal & Trade Financial Services Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| London Scottish Bank PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Provident Financial PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| OTHER COMPANIES |
| Allied International Credit (UK) Ltd |
| Apex Credit Management Ltd |
| BCW Group PLC |
| Cash Flow Services Ltd |
| Controlaccount PLC |
| Credit Limits Ltd |
| Inter-Credit International Ltd |
| JB Debt Recovery Ltd |
| Moreton Smith International Ltd |
| Philips Collection Services Ltd |
| The Status Enquiry Bureau Ltd |
| OUTSIDE SUPPLIERS |
| Drakes Group Ltd |
| Equifax PLC |
| Euler Hermes UK PLC |
| ICC Information Ltd |
| Kenyon Investigation Services Ltd |
| Regal Credit Consultants Ltd |
| MARKETING ACTIVITY |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| USE OF CREDIT |
| Table 14: Use of Different Forms of Credit |
| (% of adults), 1999 and 2003 |
| USE OF HOME-COLLECTED CREDIT |
| Table 15: Use of Home-Collected Credit |
| (% of adults), 2000 and 2003 |
| PENETRATION OF MORTGAGES |
| Table 16: Penetration of Mortgages by Type and Source |
| (% of adults), 2000 and 2003 |
| 7. Current Issues |
| THE POLITICAL SCENE |
| Consumer Credit Act 1974 Review |
| Drivers Behind the Review |
| Objectives |
| Current Issues |
| Conservative Party Credit Card |
| EUROPEAN/INTERNATIONAL MARKETS |
| Companies' Liability for Overseas Purchases |
| European Market Finance Agency |
| PRODUCT DEVELOPMENT |
| Technological Change |
| EXTORTIONATE CREDIT |
| CONSUMER TRENDS |
| Consumer Checks |
| 8. The Global Market |
| THE EUROPEAN MARKET |
| Outstanding Volumes of Credit Per Inhabitant |
| Table 17: Average Outstanding Loans Per Inhabitant |
| in Selected European Countries (E), 2001-2002 |
| The UK |
| Germany |
| France |
| Spain |
| Belgium |
| Greece |
| Italy |
| Portugal |
| Household Debt in Italy |
| European Internet Credit Users |
| The Impact of the Euro on Consumer Credit Patterns |
| THE GLOBAL PICTURE |
| The US |
| Table 18: Average US Credit Card Debt Per Household |
| ($), 1993-2002 |
| Consumer Bankruptcies |
| Causes of Consumer Debt |
| Late Payments |
| Global Companies |
| Marginalen |
| MCS Financial Intermediaries & Account Management |
| Specific & General Services Ltd |
| Svea Okonomi |
| Coface UK Services Ltd |
| Intrum Justitia Ltd |
| Tessa Group PLC |
| International Debt Management-Related Organisations |
| European Association of Consumer Credit Information Suppliers |
| European Collectors Association |
| Federation of European National Collection Associations |
| League International for Creditors |
| TCM Group International |
| THE FUTURE |
| Globalisation |
| A European Credit Market? |
| 9. Forecasts |
| FORECAST ECONOMIC TRENDS |
| Population |
| Table 19: Forecast UK Resident Population by Sex |
| (000), 2003-2007 |
| Inflation |
| Table 20: Forecast UK Rate of Inflation (%), 2003-2007 |
| Unemployment |
| Table 21: Forecast Actual Number of Unemployed |
| Persons (million), 2003-2007 |
| Gross Domestic Product |
| Table 22: Forecast UK Gross Domestic Product |
| in Real Terms (%), 2003-2007 |
| FORECASTS 2004 TO 2008 |
| Table 23: The Forecast Total Amount of Lending Outstanding |
| at Year End (£bn), 2004-2008 |
| FUTURE TRENDS |
| Market Segmentation |
| Europeanisation/Globalisation |
| Product Development |
| Technological Changes |
| Legislation |
| 10. Company Profiles |
| Cattles Plc |
| Intrum Justitia Ltd |
| Legal & Trade Financial Services Ltd |
| London Scottish Bank PLC |
| Provident Financial Plc |
| 11. Further Sources |
| Associations |
| Publications |
| General Sources |
| Government Publications |
| Other Sources |
| Bonnier Information Sources |
| The subject of debt — consumer indebtedness, in particular — currently prompts a great deal of debate. Bank of England figures show that the amount of lending outstanding at year end rose by 8.5% in 2003, to £1,368.47bn, which represents an increase of 40.5% across the 1999 to 2003 period under review. |
| The report covers lending to both individuals (including loans secured on dwellings and consumer credit) and corporate bodies (including other financial corporations, non-financial corporations, unincorporated businesses and non-profitmaking organisations). As well as analysing outstanding volumes of debt and general trends within these sectors, it examines the specific functions of debt management companies, such as debt collection and factoring. |
| Factors impacting on the market for debt management include consumer confidence in the economy, consumers' willingness to take on debt and the cost of credit, all of which are directly related to wider economic trends, such as levels of unemployment and interest rates. A recent history of low interest rates and consequent cheap credit have led to record levels of consumer debt, which has raised concerns among economic commentators that a rise in interest rates or a more general economic downturn could make this debt burden unmanageable for many people. |
| Important in the field of consumer debt is the ever-increasing number of credit providers (for example store cards) that often charge very high rates of interest) and the intense competition between these providers. Many providers, particularly in the credit card sector, offer introductory rates of 0%, which are designed to encourage customers to migrate from other providers and which have the effect of encouraging consumers to take on large amounts of debt. |
| In the corporate sector, the rate of business failures has increased, thereby creating demand for debt management services and corporate borrowing, whether in the form of bank/building society loans or other forms of factoring and securitisation. |
| It is argued that the future development of the market will be influenced by moves towards the Europeanisation, or even globalisation, of the market for debt, among other things. The market will also witness the entrance of new players, some of which will cross over from other industry sectors, just as the supermarkets have moved into loan provision (sometimes aimed at consumers with poor credit history). It appears likely that the impact of |
| ever-cheaper credit, and easier access to it for consumers on lower incomes, will be to increase demand for debt management services. |
Text © 2004 Key Note
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Last updated by Amanda Porteous 2004
