Archive for January, 2017

2016 total insolvency figures second lowest for 10 years

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Individual insolvencies for 2016 rose 13% on the previous year but were the second lowest annual figure for 10 years.

A total of 90,930 cases were reported with IVAs being the most common path of insolvency. The number of IVA cases in 2016 are the third highest annual figure of IVAs in the last 10 years

Type 2016 Total (provisional) % Change on 2015
Bankruptcy 14,989 -5.4
DRO 26,196 8.4
IVA 49,745 23.2

Even with the introduction of the online adjudicator service, Bankruptcy figures decreased by 5.4%. Orders on the application or petition of the debtor decreased by 2.6%, while those on the petition of the creditor fell 12.6%.

The increase in DROs is attributed to the change in eligibility criteria since October 2015.

The overall uplift on 2015 is the first time that annual insolvency figures have risen since 2010. In this instance, the rise was 6.4% on the previous year.

 Q4 Analysis

Compared to the same period in 2015 total insolvencies have risen by 9.8%. Bankruptcies stayed at a similar level while DROs fell by 4%. IVAs rose by 21.7%. From the previous quarter, total insolvencies were down by 4.3%.

Prior to Q4 in 2016 total individual insolvencies had risen for five consecutive quarters. This was driven by an increase IVAs.

Growth in borrowing

The quarterly figures came a day after figures from the British Bankers’ Association indicated that borrowing (consumer credit) rose at an annual rate of 6.6% against a backdrop of falling retail sales.

Similarly there has been a great deal of debate, both from Bank of England officials and in the media, about consumer indebtedness through unsecured lending. The rate of growth in unsecured lending may be cause for concern if interest rates were to rise during the course of the year. Although annual growth of 6.6% is slower than the rate of growth of around 7% in October, this is still very high and out of line with average real earnings growth and inflationary expectations. There are signs that retail growth is flatter on a 6-month moving average, and December’s retail sales actually showed a substantial drop in retail spending on a month-on-month basis.

Some of this may be because Christmas sales (and therefore expenditure) are pushed increasingly into October and November. However, the fact that retail sales growth was slower in November and negative in December suggests that consumers were holding back slightly and this is reflected in the unsecured lending data.

Rebecca Harding, Chief Economist, BBA

You can read the full article on the BBA website.

The full release for insolvency stats can be found on the Insolvency Service website.

Harrington Brooks ends its DEMSA trade membership

Harrington Brooks ended its membership of DEMSA, the trade body for commercial debt management providers, in December. Susan Yates, who was Harrington Brooks’ representative on the DEMSA board, had stepped down from the trade association board last July.

Any references to DEMSA such as logos and endorsements including the Approved Code are being removed from Harrington Brooks’ consumer facing literature and websites.

Organisations within the commercial debt management sector have been undergoing a lengthy authorisation process from the Financial Conduct Authority (FCA) after the FCA took over responsibility from the Office of Fair Trading in 2014.

“During the past six months we have been reviewing our membership of the trade body DEMSA. We remain committed to gaining understanding and to influencing how the FCA and other regulators react to our industry and to ensuring that we are gaining valuable insight into future developments in the regulatory landscape.

As a result of this we have decided to resign our membership to DEMSA and will be exploring alternatives including other trade associations and partner links”.

We also work within a significant compliance and quality regime which is both internally and externally audited and therefore the benefit of DEMSA’s quality standards were  not adding any additional value to our business.

As a result of this we have decided to resign our membership to DEMSA and will be exploring alternatives including other trade associations and partner links.”

Susan Yates, Director of Operations

Customers should note that the following logos will cease to feature:

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PM Theresa May signals mental health care proposals

The Prime Minister has spoken about new plans to support mental health care in the UK.

This includes:

  • new support for teachers and schools with every secondary school in the country to be offered mental health first aid training and new trials to look at how to strengthen the links between schools and local NHS mental health staff;
  • a new partnership with employers to improve mental health support in the workplace;
  • plans to invest £67.7m to rapidly expand treatment by investing in digital mental health services – meaning a patient can check for symptoms before getting an appointment.

Details of the new approach were revealed at the Charity Commission lecture at which some startling government statistics were also delivered. Including, at any time, one in four people has a mental disorder, with an annual cost of £105bn, with young people being disproportionately affected.

From a debt viewpoint, one of the most relevant announcements from the PM’s speech was a review into the Debt Health Form. This is where patients are charged anything up to £300 by a GP to provide supporting documentation to show that someone suffers from a mental illness.

The new plans mention the following:

“Despite known links between debt and mental health, currently hundreds of mental health patients are charged up to £300 by their GP for a form to prove they have mental health issues. To end this unfair practice the Department for Health will undertake a formal review of the mental health debt form, working with Money and Mental Health.”

At Harrington Brooks, customers who are identified as being the most vulnerable are handled by a Specialist Support Team.

Some of the other key focus areas were also identified as:

  • Transformation of attitudes to mental health
  • Young women being at high risk
  • Youth anxiety with politics and employment opportunities voiced as key concerns

Further research and reading that you may find useful:

Average UK household debt is nearly 13k

New analysis shows that debt in UK households is rising with average debts of £12,887. This is based on Q3 figures in 2016. During the same period in 2015, the average was £11,770.

The analysis by the TUC also highlighted a big change in total UK debt. The total level of unsecured debt has increased to £349bn. This is more than the previous high of £290bn in 2008. The £349bn figure also includes student loan debts. With student debts excluded, the Bank of England last week said that UK unsecured credit stood at £192bn in November 2016.

The level of unsecured debts, as a share of household income, is now 27.4%. This is at its highest level since 2008.

These increases in household debt are a warning that families are struggling to get by on their pay alone. Unless the government does more for working people, they could end the New Year poorer than they start it.

Employment may have risen, but wages are still worth less today than nine years ago. The government is relying on debt-fuelled consumer spending to support the economy, with investment and trade in the doldrums since the financial crisis.

TUC General Secretary, Frances O’Grady

A tax threshold change will also mean that UK taxpayers can earn up to £11,500 per year before they start paying tax. There will also be a 30p increase in the National Living Wage from April 2017. A move that was mentioned in the recent 2016 Autumn Statement.

While workers could be better off from an employment view, the cost of imports in the UK could be set to rise as the value of the pound began to fall last year. There is still uncertainty of what lies ahead for the UK economy with the Brexit process due to start by the end of March.

Colleagues at the One Advice Group Get Fit #OAGgetsfit

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This month, colleagues at the One Advice Group are welcoming in the New Year with a wellbeing initiative aimed at improving physical and mental health through a series of daily activities. There’s something for everyone to get involved in; boot camps, charity work, health checks and more.

To get the ball rolling, we placed a magical selfie mirror in our canteen on our first day back. Our work family were striking poses and writing down their goals to keep on their desks as motivational reminders.

It’s important to us to Value Our People and deliver a wellbeing programme as we believe, and the research shows that a healthy workforce helps us to deliver excellent, professional service to our customers. We know it can be hard to work well when you don’t feel on top form.

We use the phrase “together we’re stronger” in our day-to-day roles so we’ve applied that to our wellbeing strategy, too. The activities are intended to bring colleagues together from around the business to support one another in achieving their goals. Not just for this month, but well into 2017.

Like us on Facebook or follow us on Twitter to find out more about our wonderful wellbeing activities.