Access to Credit Reports

Consumers can now access their statutory credit report online for a nominal fee of only £2 from all three major UK credit reference agencies: Experian, Equifax and Callcredit.

An agreement between the Department for Business, Innovation and Skills and the industry means consumers will now have easier access to their credit reports.

Continued free access to credit reports for victims of ID fraud and the financially vulnerable has also been secured by the government.

Credit reference agencies and consumer groups have committed to work together to raise awareness of the importance of checking credit records.

Consumer Minister Edward Davey said: “These are highly beneficial changes. All consumers now have easier access to their £2 statutory credit reports, with victims of ID fraud and the financially vulnerable receiving free access to their reports. These significant improvements will help consumers take better control of their finances.”

Postcode Insolvency

R3, the insolvency trade body, has published a ‘bankruptcy map’ revealing the regions and local authorities that have seen the highest proportion of new personal insolvency cases.

The bankruptcy map which looks at the number of new bankruptcies and Individual Voluntary Arrangements (IVAs) that occurred in England and Wales shows that the likelihood of becoming insolvent was almost seventy percent (69.5%) higher in the North East than in London. 

There were almost six thousand (5,923) new personal insolvency cases in the North East which means that for every ten thousand people, 29 of them became insolvent.

The figures indicate that people who live in London are least likely to go into a formal insolvency procedure. The average number of new cases in England is 24.3 per ten thousand - in London there were 17.1 new personal insolvency cases for every ten thousand people.

R3’s President, Steven Law commented: “Prior to the recession, the North East had a higher than average unemployment rate and the region’s construction industry was badly hit during the economic downturn so it is understandable that personal insolvencies are more common there.

Londoners are least likely to become insolvent as there are more employment opportunities in the region. Unfortunately, with the announcement of public sector job cuts, it is likely that the figures will worsen, especially in areas such as the North East where public sector employment is high.”

The top ten insolvency hot spots (new personal insolvency cases per 10,000):

• Torbay, South West (45.8)
• Kingston upon Hull and the Humber (40.7)
• Lincoln, East Midlands (39)
• Plymouth, South West (38.8)
• North Tyneside, North East (37.4)
• Gateshead, North East (37.1)
• Corby, East Midlands (37)
• Hastings, South East (36.9)
• West Devon, South West (36.9)
• Thurrock, East Anglia (36.7)

"Startled rabbits in the headlights of an uncertain future"

I’m not alone. Given the chance, wouldn’t we all like to predict the future. And in the last issue of the Score, it would appear that is exactly what I did. I suggested that the worst all results would be a hung Parliament.

So am I trying so say there’s no political solution to the mire we are all wading through? I suppose I am. Do I think the radical policies of the current administration will achieve the projections? I honestly don’t know.

What I do know is that we’ve been digging this hole for going on 20 years, working on the basis that as long as profit exceeded default and property prices continued their upward spiral, we could sustain lending levels and remain in the comfort zone we’ve built for ourselves in that period.

Due diligence, fiscal proberty, responsible borrowing and lending ... all phrases we associate with the halcyon days of banking before the brakes were taken off in the late eighties and the throttle opened up fully when Gordon Brown’s first act in office was to give the Bank of England self governance, including interest rates.

Unfortunately, gone are the generations that fully understand the meaning of such phrases. They are now being trotted out as soundbites for a public desperate to believe that the solution to all our woes lies with a Government that is full of good intentions and populist policies.

Government can only legislate. In other words, put the brakes back on, which appears to be exactly what the Budget and subsequent announcements presage. Was the FSA the sacrificial lamb, or the author of it’s own demise?

That debate will run and run.What is certain is that the banks are as startled rabbits in the headlights of an uncertain future.

To all intents and purposes they’ve stalled.Despite all the guarantees, they are still nervous. Alistair Darling’s attempt to fuel recovery have by and large come to nought. Loan to Value rates remain fixed, businesses in particular are finding access to credit scant to say the least,and even the banks themselves seem reluctant to instruct collection and investigation agencies to the extent they once did.

Like many of their customer base, they too are adopting the ostrich stance. They don’t want to look into their portfolios because they already know that they will very definitely not like what they’ll see.

Perhaps the most unacceptable outcome of the last two years is that it was greed that engendered the recession, and it will probably be greed that starts any recovery.

However when that will be is anyone’s guess.That fabled double dip is now making its presence felt - the black dog on the end of the bed, as Winston Churchill described his depression.

by Godfrey Lancashire

Personal Debt approaches £1.5 trillion

Personal debt is now standing at £1.46 trillion according to Credit Action, the debt charity.

However, although the amount appears on the surface to be yet another eye-watering statistic, the figure covers £1.23 trillion which is secured against property (this property stock stays fairly steady at about £6 trillion ... over 4 x the indebtedness). Also, the headline figure went up by 1% year on year.

Current figures have kicked out an average debt per capita of just over £8,750 (excluding mortgages). Including mortgages, that figure shoots up to just under £58,000.

Current forecasts hint at a figure in excess of £113,000 by 2015. For the 11 million mortgagees out there, they owe an average £30,000 representing 126% of annual income. Perhaps more worrying, the average household personal debt on credit cards, personal loans - ie unsecured finance stands at £4,500. Extrapolate out households without any unsecured debt and that figure grows exponentially. We can’t be complacent.

Most European countries, even those in crisis, do not have personal debt figures of this order. Bear in mind the already flagged up public sector redundancies and the inevitable knock on into the private sector, and a 1% rise can be seen as a target, but the eventual figure could be considerably higher.

Cheque payments winding down

The Payments Council have set 31st October 2018 as the target date for closure of the UK Cheque Clearing - the use of cheques will stop from this date. The final decision on a closure date will be taken by the Payments Council in 2016 and will be dependent on there being a clear consensus across all interested parties.

This decision was taken against a backdrop of falling cheque volumes and after detailed consultation across the UK among cheque users. However, cheques remain a key means of payment, so the withdrawal of cheques will be a significant change for many businesses and individuals.

The use of guaranteed cheques has seen a particularly sharp decline in recent years and the guarantee service will cease from 30th June 2011.

While businesses will still be able to accept cheques after this date, they will not be supported by the scheme. Any cheques written up to 30 June 2011 will continue to be guaranteed as normal.

Although businesses can still continue to write cheques as normal, they should start to consider what the implications of their withdrawal means for their organisation. Some questions to ask yourself ...

• Do you currently receive cheques as payment? If so, how do you want to be paid in future?

• Will you still accept cheques once they are no longer guaranteed?

• Do you currently pay by cheque? If so, how will you pay in future? Remember, June 30th 2011 is already less than a year away!

Stepping Down, But Not Out

You may be aware that Godfrey Lancashire is stepping down from the Board of the Credit Services Association at the CSA & DBSG Annual General Meeting on 9th September 2010.

Godfrey has served on the Board of the Association for almost 14 years, and his dedication, vision and commitment have undoubtedly helped to shape the industry we see today and paved the way for the future.

Godfrey’s particular passion for the raising of industry standards has been evidenced in his interest in the development of industry training and the shaping of the CSA diploma, of which Godfrey remains a tutor.

With a successful term as President, Godfrey has since taken the CSA Public Affairs lobbying to great heights, and has graced the halls of Westminster on numerous occasions to fly the flag for our industry and create awareness of the challenges we face.

I would like to take this opportunity to thank Godfrey for all of his hard work and dedication to the CSA, and there is no more fitting place to do so than in your own London House publication! Godfrey – your support to the industry has been unwavering and your contribution great. You will be missed.

Dr Roger Lucas

President, Credit Services Association