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Debt Collection News Roundup – August, 2017

Here at Access Credit Management we like to make sure we bring our readers interesting and relevant news about our industry so once a month we’ll be publishing a News Roundup.  This should keep you up to speed with all the important goings on within the sector so that you have a resource that keeps you fully informed of all the latest news.  It would be interesting to know what you, the readers, think of the stories that feature here. 

 

If you have any stories you think we should be covering or if you’d like to comment on this or any of our other articles, please do so on our Facebook page or tweet to us on Twitter.

Our first item concerns the fact that business owners fear that recovering unpaid debts is about to become more difficult when the new Pre-action Protocol for debt claims comes into force on 1st October, 2017.  We’ll be bringing you more detailed news on this next week so that you can keep up to date with changes that could affect your business.

Meanwhile, research carried out by the Citizens’ Advice organisation claims that credit card lenders are targeting people struggling with already unaffordable levels of debt and have called on the Financial Conduct Authority (FCA) to intervene.  Unsecured lending is returning to levels unseen since the 2008 financial crisis which is raising alarm bells at the Bank of England amid fears that consumers may struggle to repay loans in another economic downturn.  According to Citizens’ Advice Chief Executive, Gillian Guy, “irresponsible behaviour by some lenders is making people’s debt situation worse” and lenders should direct people struggling with debt towards free, independent advice and support rather than offering them more credit.

Another worrying development comes in the field of finance in education.  The interest rate on student loans rose last week from 4.6% to 6.1%.  By comparison, the Bank of England held the base rate at 0.25% last month while the highest level of interest you can get on a standard easy-access cash ISA is 1.03%.  Moreover, you can take out 10-year fixed rate mortgage at a rate of 2.49% and the consumer price index (CPI) measured inflation in July at 2.6%.   This has occurred because interest rates on student loans are not linked to the CPI, but set at three percentage points above the more volatile retail price index (RPI) which hit 3.1% in March of this year.  Furthermore, the interest is charge from the moment the loan is taken out, rather than at the end of the course which means that students starting this October will have accrued around £6.000 in interest before they even graduate.  It’s not all doom and gloom, though as graduates are not liable to start paying back their loans until they are earning more than £21,000 per year and the repayments are capped at 9% of anything earned above this amount.  Any remaining debt will be cancelled after 30 years.