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Debt Collection News Roundup – January, 2019

Here at Access Credit Management we aim to provide our readers with interesting and relevant news about our industry so at the end of each month we be publish a News Roundup.  We hope this keeps you up to speed on all the important developments and news within the sector so that you have a resource that ensure you’re 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 comes some worrying news from Citizens Advice (CA) which has analysed national data from 2018 and revealed that on 31st January last year, CA helped 2,8000 people (one person every ten seconds) seeking advice on debt, either in face to face meetings, via telephone or via webchat.  The last day of January is traditionally the busies day of the year when it comes to seeking help with debts. 

Following on from that issue is a story that is even more cause for concern.  Apparently, it is not overspending that results in the types of debt that devastate the lives of thousands of people across the UK – alarmingly it is regular household bills like energy, water, rent and council tax!  According to Citizens Advice, we collectively owe a massive £19 billion in arrears on these essential services and this is worrying because the risk with such debts is that when people don’t pay them, they face even harsher punishment.  In the wake of the financial crisis of 2008, there was an increase in unsecured credit, such as credit cards and loans which led to so many people borrowing more money than they could afford to repay.  The age group with the most people struggling with debt is the 30 to 50-year olds and the number of families struggling to make ends meet is increasing, thanks in many cases to being employed on zero-hour contracts – contracts which benefit the employers but wreak havoc on the lives of their workers.  More than half of those who are in debt fall into the poorest 10% of households, with some spending a huge 34% (compared with a national average of 8%) of their income on paying back debts.

When it comes to commercial debt, a recent report by the Business Energy and Industrial Strategy Committee (BEISC) recommended that the government introduce a statutory requirement for companies to pay their suppliers’ invoices within 30 days.  Acknowledging that SMEs are crucial to the success of the UK economy, the report states that the key to SME survival is being paid fairly and on time, an issue that we’ve addressed on many occasions in the past and will continue to report on in future.  The Prompt Payment Code has been ineffective in this respect and The Late Payment of Commercial Debts (Interest) Act 1998 allows suppliers to commercial customers to charge interest at a set rate on overdue debts at 8% above the Bank of England base interest rate.  Suppliers can also claim compensation of between £40 and £100 on each qualifying debt which should act as a reasonable deterrent.