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UK Debt-Related Legal Services

  • ID: 4328466
  • Report
  • July 2017
  • Region: United Kingdom
  • 86 Pages
  • IRN Research
UK Debt-Related Legal Services: A Market Which is Growing and Presenting New Opportunities

The market for debt-related legal services in the UK is growing and saw major growth in key areas in 2016, especially general recovery and insolvencies. The market is expected to see relatively strong future growth, based on rising consumer debt levels which will impact directly on consumer debt recoveries and indirectly (via consumer spending) on B2B debt recoveries. The future is likely to see opportunities for law firms which can tie up with major debt purchasing companies and which can offer one-stop-shop collection-to-recovery services. Investment in new technologies, such as predictive analytics, is likely to be a growing feature of the market as law firms aim to target their actions on those debtors most likely to pay, thereby reducing costs and improving their cost effectiveness.

The volume of debt recovery work, with the exceptions of mortgage and landlord repossessions, has increased in 2016 compared with 2015. General debt recovery work has been on an upward path since mid-2016, while insolvency work was generally declining until 2016. Repossessions continued to fall in 2016 as they have in recent years but mortgage arrears are starting to grow.
The Debt-related Legal Services 2017 report provides an overview of the legal services related to debt recovery and debt collection.

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1. Executive Summary         

  • Introduction
  • A market which is growing and presenting new opportunities
  • Some key facts about the market
  • Some key facts about the future

2. Introduction          

  • An overview of the debt collection and recovery process
  • Overview of mortgage and rental debt recovery
  • Overview of the insolvency process
  • Insolvency involving property
  • Legal action often results in a second best outcome
  • Debt sales
  • There’s consumer debt and then there’s regulated consumer debt
  • Abbreviations

3. Market Drivers         

  • Consumer debt under control but signs the burden is increasing
  • Did consumers control their debts or were they forced to control their debts?
  • Consumer liabilities almost £2 trillion
  • The burden of debt has fallen but that still leaves many adults facing problems
  • Poorer households the most vulnerable
  • Business debt declines after financial crisis but is now rising again
  • 5% of businesses in the UK could be zombie companies…
  • Although most can comfortably repay their debts
  • Almost half of B2B trade is conducted on credit, making late payments an issue
  • With almost half of payments late or uncollectable.
  • Many SMEs are not sure how to recover debt

4. Market Developments         

  • It’s becoming harder for smaller legal firms to compete
  • The FCA steps up its scrutiny
  • Legal changes make it harder and less attractive to pursue legal redress
  • BREXIT impacts on insolvency rules
  • Changes to the insolvency regime
  • Online court for small claims
  • Enforcement of Judgments and Orders
  • SRA gives up regulatory oversight of insolvency practitioners

5. Market Structure And The Key Players      

  • London and regional markets
  • Over 2000 practices operate in this market
  • Debt-related work often overlaps with other legal work
  • The debt recovery and insolvency work of the top 6 UK Law Firms
  • Examples of other firms offering debt recovery legal services

6. Market Size And Trends        

  • The volume of debt-recovery work on the rise
  • But debt write offs fall for banks and building societies…
  • But that leaves an exposure of £91 billion…
  • And write offs remain significant for businesses
  • Almost 1 million CCJs…
  • With High Court Enforcement Officers clearing over 80,000 writs
  • County Courts now the main venue for debt cases
  • Cases filed in court are the tip of debt collection iceberg
  • Company insolvencies rise in 2016…
  • With more companies wound up in court
  • Big rise in personal insolvencies in 2016
  • Over 18,000 mortgage procession and 140,000 landlord possession claims
  • Mortgage arrears showing signs of rising

7. Market Segmentation         

  • Consumers represent the bulk of CCJs…
  • But businesses are more significant in terms of debt write offs and non-performing debt
  • Credit cards and unsecured loans the areas where most debt recovery work is involved
  • Most company insolvencies are creditors’ voluntary liquidations
  • Bankruptcies becomes less important for personal insolvencies

8. The Future          

  • A future which is hard to predict
  • Debt recovery work set to rise
  • With rapid growth in the value of non-performing loans
  • And debt write-offs for businesses

9. Professional Bodies And Regulatory Authorities     

  • Debt-recovery focused
  • General but covering debt recovery
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