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Debt Collection News Roundup – January, 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.  Please join in by adding your comments on our Facebook page, tweeting on Twitter or email us if you come across anything that you think we should include.

First up is the news that nearly 7,000 HSBC customers are due to receive refunds on debt collection charges that were added to their bills.  It appears that customers who fell into arrears on their credit cards between 2003 and 2009 had their debts referred to solicitors who then added a 16.4% debt collection charge.  In 2010, the Office of Fair Trading told HSBC to stop adding these unreasonable charges and the matter was eventually investigated by the Financial Conduct Authority (FCA) in 2015 when the Complaints Commissioner described the process as “bordering on the farcical”.  Now HSBC will be paying out £4 million to borrowers who were hit with the extra fees.  HSBC will be setting up a customer helpline for the compensation scheme next month.

According to the BBC, consumers’ non-mortgage borrowing slowed down in December from its fastest rate in more than 11 years, a sign that households may be becoming more cautious.  Bank of England figures showed consumer credit recorded a net increase of £1 billion in December, a month when borrowing is expected to increase in the run up to the festive season.  This was in sharp contrast to November’s increase of £1.9 billion, the biggest rise since March 2005, before the beginning of the credit crunch.

Despite this, the Bank of England has issued a warning about “ballooning levels of household debt”!  According to Bank Governor, Mark Carney, household borrowing has “accelerated notably” as borrowing on credit cards, personal loans and other types of consumer credit has risen at around 10% year on year.  Low interest rates that make it cheap to take on a debt have fuelled this boom in borrowing and households now owe a massive £1.5 trillion, mostly in the form of mortgages as sharp rises in house prices have forced prospective buyers to take on bigger home loans.  To compound the problem, the saving rate has fallen towards its pre-crisis lows and campaigners are worrying about how households will cope when interest rates begin to rise. 

The TUC claims that the average UK household now has debts of nearly £13,000 before mortgages are taken into account.  This claim is based on figures from the Office for National Statistics (OHS) for the three months to the end of September, 2016 when total unsecured debt hit an all-time high of £349 billion.