Archive for January, 2016

DRO figures increase following insolvency changes

The first set of 2016 figures from the Insolvency Service, since changes in DRO and Bankruptcy thresholds, have been released.

The key points are:

  • Numbers of DROs increased by 15.5% from Q3 of 2015
  • Bankruptcy orders fell by 4.4% from Q3 of 2015

In addition the number of IVAs remained roughly the same against Q3 of 2015.

The overall number of individual insolvencies increased 3.6% compared to the previous quarter – largely driven by the DRO increase. Against the same Q4 period last year total individual insolvencies fell by 10% and were at their lowest annual level since 2005. This was attributed to a 23% decrease in IVAs.

Given that the new Bankruptcy threshold has increased, by 566%, a seasoned view would prognosticate a drop in insolvency levels as a result.

“With potential effects of Christmas likely to be reflected in 2016 Q1 stats it may be prudent to look beyond Q2 and three of 2016 to see how the new thresholds influence the insolvency landscape.”

Michael Bellingham, Insolvency Practitioner, Harrington Brooks

As the BoE flirts with the possibility of a rate rise the UK economy will see a number of mortgage holders experience an increase in monthly payments – something which the narrative of their term has previously been unfamiliar with.

A report in the Telegraph last year mentioned that 1.8 million homeowners have yet to experience a rate rise. It also suggested that over half of all borrowers believed they would be likely to struggle or fall behind with repayments when the BoE votes to put interest rates up. Should these risks crystallise then it could see 2018 being a crucial year for these households and the economy.

 

Andrew Bailey to become FCA Chief Exec

Andrew Bailey has been appointed as the new Chief Executive of the FCA.

Mr Bailey will take over the role once a successor is appointed for his incumbent role – as head of the Prudential Regulation Authority.

Mr Bailey, who is deputy governor at the Bank of England, has been appointed for a five year term.

“Andrew Bailey is the outstanding candidate to be the next Chief Executive of the Financial Conduct Authority, and I am delighted that he has agreed to lead it. We have cast the net far and wide for this crucial appointment and, having led the Bank of England’s response to the financial crisis, Andrew is simply the most respected, most experienced and most qualified person in the world to do the job.”

George Osborne

He succeeds Tracey McDermott who has acted as interim CEO since Martin Wheatley stepped down.

FCA grant Wonga full license

Reports in several media outlets are reporting that Wonga have been granted a full license from the FCA. Though neither Wonga nor the FCA have directly confirmed this with the payday firm’s website still showing ‘Interim Permission’ details a day after the news broke.

Arguably the UK’s leading and most prominent name in payday loans has suffered a turbulent time going through redress schemes and client debt write downs since 2014. A new approach and rebranding exercise has taken effect along with work to secure full authorisation from the FCA.

“FCA authorisation is an important milestone for Wonga as we continue to build a responsible business with a long-term future, putting customers and good governance at the heart of everything we do.”

Andy Haste, Chairman, Wonga Group (Source: Sky News)

As of July last year around 45% of the Harrington Brooks customer base had a payday loan on plan. This was against a backdrop of decreasing instances of such loans given the intervention of the FCA in the payday sector.

#debtday

Today is one of the busiest days of the year for debt charity StepChange. A campaign to inform people that free debt advice is available, through #DebtDay, will feature on social media with the aim to raise awareness of where to get help.

“You may not be struggling with debt, but it’s almost certain that some of your family, friends, neighbours or work colleagues will be. It only takes 30 seconds to change their life: that’s how long it takes to spread the word about debt advice.”

Stepchange.org

As of 4pm today the total amount of debt reported to the charity stood at over £37 million.

A common trend we’re faced with each year is from customers experiencing financial difficulty as a result of their Christmas spending. Often this is because they use their unsecured credit which may also have accumulated and/or increased during the year. It could also be following an unexpected bill, such as a car or boiler repair; this can tip personal finances over the edge.

Our advice to anyone who is facing financial uncertainty or worry is to get advice before it gets too late. Even if that advice is not from Harrington Brooks, we would recommend that you seek financial advice.

If you’re currently worried about your finances, have unsecured debts from personal borrowing and would like to speak confidentially to an advisor who can talk to you about the benefits and considerations of a range of debt  and personal insolvency solutions, then please get in touch by calling 0800 048 1764.

You can also visit www.harringtonbrooks.co.uk to request a call back at a time to suit you. By requesting a call, you are under no obligation to use our services. Harrington Brooks provide solutions to customers living in England, Scotland and Wales.

Should you opt for a solution offered by Harrington Brooks, there may be consequences to consider including restrictions on future lending and on your ability to obtain further or future credit. Fees and terms and conditions apply. For further information and advice please visit www.harringtonbrooks.co.uk.

The services that we provide may be available at no cost from other government and charity based providers. Further information can be obtained from the Money Advice Service at https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice

TUC concerns over levels of rising debt

Analysis by the TUC has shown levels of household debt at a new high.

Based on ONS figures the level of debt per household was £11,812 for Q3 of last year – noted as a record high. Based on the same period in 2014 this is a £600 increase. Against 2013 it is even more at £1000.

“Rising household debt signals that too many people are still struggling to make ends meet. With pay growth slowing, and households facing a lost decade on wages, it’s no surprise that more families are relying on borrowing to meet the costs of day-to-day essentials. Although employment has risen, wages are still worth less today than eight years ago. This has left families struggling to meet the rising cost of living. We need a recovery where families can afford to pay their bills and raise their children without relying on credit cards and payday loans.”

Frances O’Grady, TUC General Secretary

As a debt-to-income ratio the 2015 Q3 figure stands at 26.5%. This is still lower than the equivalent period in 2008 where it reached 30.3%.

Earlier this week the Bank of England revealed that borrowing in Q3 of November last year rose at its highest rate since the recession with 1.5bn of credit cards, overdraft and loan spending. This in part has been attributed to Black Friday, Cyber Monday and festive expenditure.