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UK Consumer Debt Collection and Debt Purchase Market Insight Report 2021

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  • 64 Pages
  • October 2021
  • Region: United Kingdom
  • Apex Insight
  • ID: 5457604
This report covers the UK consumer debt purchase and debt collection markets:
  • Debt collection involves the collection of debts on behalf of the original debtor as an outsourced business process
  • Debt purchase involves buying the actual debts and the right to collect them.
The report quantifies the sizes of each segment (as measured by total collections) and their respective historical and forecast growth rates while reviewing key factors behind these figures and exploring drivers of growth and profitability.

The publisher also reports on and analyse the drivers of growth - in particular relevant economic indicators such as total consumer debt, unemployment levels, debt write-off rates, levels of personal insolvencies - and more specific factors including recovery rates, commission levels, the attitudes of consumer creditors to the concept of debt sale and the discount to face value typically paid for debt.

The leading debt purchasers and debt collections agencies are profiled and their performance is compared.

What does it contain?

  • Quantification of market size and historical growth rates since 2013 (or earlier)
  • Summary of market trends
  • Analysis and profiles of leading debt collection agencies and debt purchasers
  • Our forecasts for market and driver growth (2021-25)
  • Insights from interviews with a range of industry experts

Market context

  • The debts relate mainly to consumer credit, but also include other consumer debt.
  • The market definition excludes residential first-charge mortgages and student loans.
  • Debt collection services are increasingly being used in other areas where there are significant consumer debts, such as telecoms and utilities, as well as in areas of the public sector such as council tax. Debt purchase remains primarily focused on consumer credit although it is also used to some extent for other areas.
  • Lenders or other creditors have a choice whether to us a collection agency to work on debts on their own balance sheets, or to sell the debt to a firm that will then collect on its own behalf.
  • Since the FCA assumed responsibility for consumer credit in 2014, regulation has had a significant impact on the market, leading to substantial changes to the industry structure.
  • Debt collection procedures for consumer credit are now tightly regulated requiring significant investment in systems and training.
  • Many firms have left the market and others have consolidated.
  • This has imposed costs on the industry but has been helpful for the larger debt purchase groups in particular, as they have the scale to invest in developing and implementing compliant processes and can therefore expect to benefit from the increased barriers to entry created by new regulation.
  • Alongside these direct impacts on debt collection, FCA regulation has led to a decline in high cost short term lending (including payday lending) where debt collection services and debt sales have been regularly used.
  • The market was boosted by the increase in consumer borrowing over the last decade. The publisher believes that total collections reached £2.1bn in 2019. However, COVID lockdowns had a significant impact with much collection activity, as well as spot sales, being scaled back or put on hold. This led to a reduction in overall collections in 2020 of over 25%.

Competitive landscape

  • Following consolidation, seven large groups account for a very large share of the overall market. These include Cabot, PRA, Lowell and Hoist.
  • Leading players continue to make better use of data to improve their collection success and to enable them to offer higher prices to improve their success in purchasing portfolios.
  • Most are now part of European-wide groups, looking for higher growth outside the relatively mature UK market
  • A key focus for all is investment in technology to reduce operating costs, improve service levels and demonstrate compliance with regulations.
  • Moorcroft is the largest of the pure debt collection agencies which do not purchase debts remaining independent. Several others have been acquired by debt purchase groups with a long tail of smaller collectors, many focusing on specific niches, still operating.

Table of Contents

  • UK Consumer Debt Collection and Debt Purchase: Market Insight Report
  • About this report
  • Summary
  • About the Publisher
  • Contents
  • List of figures
  • About the market
  • Market definitions
  • Market background
  • Adjacent markets
  • Market attractiveness and barriers to entry
  • Value drivers
  • Debt collection processes
  • Regulation
  • How is debt purchase and collection reported?
  • Market size and growth
  • Methodology
  • Debt purchase & debt collection market size
  • The market for the sale of consumer debt
  • Book value of purchased debt
  • Appetite of investors and availability of capital
  • Market drivers
  • Economic performance
  • Consumer borrowing
  • Attitude of creditors
  • Improvements in systems and data usage
  • Growth in outsourcing and debt sale by the public sector
  • Increased interest from utilities and telecoms providers
  • Competitive landscape
  • Profiles of leading debt purchasers:
  • Arrow Global
  • Cabot Credit Management
  • Hoist Finance UK
  • Intrum UK
  • Lantern
  • Link Financial
  • Lowell
  • Moorcroft Debt Recovery
  • Paragon (Idem Capital)
  • PRA Group UK
  • Other UK debt purchase and collection companies (1)
  • Other UK debt purchase and collection companies (2)
  • Other UK debt purchase and collection companies (3)
  • Forecasts
  • Approach
  • Key driver forecasts
  • Debt sale market forecasts
  • Collections environment
  • Market forecast
  • Risks to the forecast

List of Exhibits
  • UK Debt Purchase and Collection market structure
  • Alternative measures of debt purchase activity
  • UK consumer debt purchase and collection market size/£m
  • UK gross lending and repayments by month/£bn
  • Face value of debt sold/£bn
  • Average price paid for debt purchased/pence per £ face value
  • Total amount spent on debt/£m
  • UK real GDP/% annual changes
  • UK outstanding unsecured consumer credit/£bn
  • HCSTC new lending value (£ billion)
  • Historical number of unemployed and underemployed/m
  • UK average earnings and inflation/% annual change
  • UK household debt to income ratio
  • Historical number of new personal insolvencies per year/'000
  • UK bank & building society unsecured consumer debt written off/£bn, % of total unsecured consumer debt
  • Rates of unemployment and bank & building society unsecured consumer debt write-off/%
  • Book value of purchased debts held by leading UK groups at end 2020/£m, % of total
  • Debt collectors used by consumer credit lenders
  • Debt collectors used by type of credit
  • UK real GDP/annual changes
  • UK historical & forecast unsecured household debt/£bn
  • Historical & forecast rates of unemployment and bank & building society unsecured consumer debt write-off/%
  • Historical & forecast UK bank & building society unsecured consumer debt written off/£bn (LHS), % of total unsecured consumer debt (RHS)
  • Historical & forecast average price paid for debt purchased/pence per £ face value
  • Historical & forecast total amount spent on debt/£m
  • Unemployment and underemployment/m
  • Number of people in employment/m
  • UK consumer debt purchase and collection historical & forecast market size/£m

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • Arrow Global
  • Cabot Credit Management
  • Hoist Finance UK
  • Intrum UK
  • Lantern
  • Link Financial
  • Lowell
  • Moorcroft Debt Recovery
  • Paragon (Idem Capital)
  • PRA Group UK