You asked us

"The Council of Mortgage Lenders have released figures showing that the number of repossessions has fallen. Nice to see some positive news!" 

Indeed, as recently reported by The BBC, the number of homes being repossessed has fallen to a five year low. The CML reported that there were 8,200 repossessions during the third quarter of 2012 which is the lowest quarterly figure since 2007. 

There are, though, some underlying concerns. Whilst the number of borrowers in arrears is stable at 159,100 and the number of repossessions is falling, this is reflective of record low interest rates and lenders showing restraint with those borrowers in difficulty. Lenders have been under pressure not to repossess properties unless it is genuinely a last resort; they also have to jump through many hoops to successfully obtain Court permission to seize a borrower's home.  

Long term arrears have risen but Banks won't be able to go on absorbing arrears into their balance sheets indefinitely, and they also have a duty of care to ensure borrowers don't build up too much debt by allowing them to stay in a property if this is unsustainable.

You asked us.........

"I believe that your work is typically debt related, are all of your clients in the finance sector?"

Most of our work is indeed from the finance sector (and the associated legal providers to that industry) but we have a broad range of clients both in finance and outside of it. Because we offer a range of investigative services we are used by a number of clients across a range of industries. Without being specific, examples of our client base would be:

• Banks, Building Societies, Finance Houses
• Solicitors - Litigation, Debt Recovery, Family, Employment
• Insolvency Practitioners, Accountants
• Local Authorities
• Fee paying schools, Universities
• Housing Associations 
• Government Agencies
• Insurance Companies
• SME's as well as Large Corporates
• Breweries
• Credit Unions

To name but a few! 

You asked us

"The latest UK Debt figures have been released this month. They don't make for pleasant reading. Any thoughts?"

The figures do indeed give reason for concern with a number of startling statistics. There is obviously nothing we at London House can do to influence them, but the information can help when it comes to considering the way ahead. The industry can use them when lobbying or for just raising awareness. I am a firm believer that personal finance should be taught at school, in depth, and the younger generations made aware of the consequences of poor financial control. Alas, the current parlous financial state of many individuals means that there will always be plenty of work for London House and its clients.

If you have not seen the figures, here are some highlights:

Total UK personal debt at the end of July 2011 stood at £1,451bn. Individuals currently owe nearly as much as the entire country produced between Q2 2010 and Q1 2011.

UK banks and building societies wrote off £8.0bn of loans to individuals in the 4 quarters to end Q2 2011. In Q2 2011 they wrote off £2.06bn (£1.15bn of that was credit card debt). This amounts to a write-off of £22.54m a day.

Average household debt in the UK is ~ £8,055 (excluding mortgages). This figure increases to £15,491 if the average is based on the number of households who actually have some form of unsecured loan.

Average household debt in the UK is ~ £55,814 (including mortgages).

Today in the UK

• 334 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 59 seconds during a working day.  
• 1,391 Consumer County Court Judgments (CCJs) were issued every day during Q2 2011 and the average judgment amount was £3,345.
• Citizen Advice Bureaux dealt with 9,072 new debt problems every working day in England and Wales during the year ending March 2011.
• The average cost of raising a child from birth to the age of 21 is £27.50 a day.
• 99 properties were repossessed every day during Q2 2011.
• 112 new people became unemployed for more than 12 months every day during the 12 months to end June 2011.
• 1,688 people reported they had become redundant every day during 3 months to end June 2011

197 mortgage possession claims will be issued and 154 mortgage possession orders will be made today.

You asked us........

"We are currently in the banks half yearly reporting period and the City is braced for a big dip in profits, largely due to PPI. Bearing in mind your client base, does this have any effect on London House?".

The Payment Protection Insurance mis-selling scandal will no doubt have a huge bearing on the half yearly results of the UK banks. Already we have seen Lloyds, RBS and Barclays show sliding results. HSBC have bucked the trend with a slight increase in profits but there is no doubt that it has been a gruelling six month period. Massive provisions have been set aside to offset or cover the position but it will have long running effects. Further pressure for the banks comes in the form of lending targets, job losses, branch sales and severe financial pressures among the eurozone fringe countries. It is not a happy picture.

The PPI issue in itself does not have any direct bearing on the work we do here or indeed our relationships with our banking clients. As with any business in the spotlight and under financial constraints, the banks need to be aware of costs and look at how best to reduce losses or maximise profits. It is in this way that we can help them directly. The banks continue to ask us to trace "gone away" debtors, find assets, serve documents, interview debtors and recover assets. The more successful we are, the better the impact on our client's balance sheet. In these pressured times, our work often proves to be a cost effective course of action.