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The Credit Services Association (CSA)
Strength in numbers - DGI data, Q1 2015
John Ricketts, Vice President of the Credit Services Association (CSA), says that the collections performance of agencies working the contingent space is little short of remarkable.
Doing more with less is a mantra that many organisations, government departments, private companies, and even individuals are used to hearing as we strive to achieve greater efficiencies and productivity with the same or often fewer resources.
Against this context, the work of debt collection agencies (DCAs) working in the contingent space is little short of remarkable, if the latest consumer collection statistics from the Credit Services Association are anything to go by, for they have managed to increase collections in the first quarter of 2015 (Q1 2015) against a continuing dwindling stock of debt held.
New consumer collections figures that form part of the CSA’s Data Gathering Initiative (DGI) show that gross contingent collections have increased from £431,871,659 in Q4 2014 to £470,844,681 in Q1 2015, an increase of nearly £39 million (or 9%) and an increase of £19.5 million (or 4%) over the same quarter last year.
This now firmly bucks the trend for the first three quarters of 2014 that saw a reducing DCA contingent collections curve in line with a reducing debt stock, with early indications of the grass roots of recovery showing in Q4 2014 that has continued into Q1 2015 at pace. This remarkable performance is perhaps even more significant in that it returns DCA collections to a level last seen in Q2 2013 and reflects both the resilience of these agencies in responding to any challenge that is thrown their way and the ability of collection businesses to perform in a regulated environment. Its significance may even be deeper: it may prove our view that as DCAs mature their processes and procedures in line with FCA requirements, that treating customers fairly (TCF) is not a new concept and a barrier to collections performance at all but rather a methodology long ago adopted by most in the industry and reflected in relatively low complaints statistics.
Debt Buyer gross collections have also shown a sharp increase in the first quarter, jumping 10% over Q4 2014 from £235.5 million to £260 million. This is no doubt partly due to the withdrawal of paying accounts for ongoing collection in house, as debt buyers continue to consolidate their DCA panels, but it also reflects the ongoing steady growth throughout 2014 in debt buyer collections off the back of the buyers’ growing debt stock. Context is again important: this is a year-on-year increase of almost a quarter (22%) over the £213 million collected in Q1 2014 and looking back to nearly two years ago, an increase of more than a quarter (26%) over the £193 million collected in Q2 2013.
In terms of the ‘bigger’ picture, and the overall industry performance, total debt held for collection by CSA members has once again increased and now stands at £69.2 billion, a rise of 3% on Q4 2014 and an increase of 11% (or £7.4 billion) in two years (ie since Q1 2013).
Overall debt owned by Buyers continued to increase throughout 2014 and shows no signs of slowing; Q1 2015 has started the New Year in similar fashion. Debt owned by Buyers now stands at £56.4 billion as at March 2015, compared to £55.3 billion at the end of 2014, a 10% increase year-on-year. Given that our figures showed that Buyers ‘only’ owned £43 billion when measured in Q1 2013, it is clear how far the industry has come in such a comparatively short space of time.
Debt outsourced by the buyers to DCA's has shown a significant reduction dropping 7% from Q4 2014 to Q1 2015. This no doubt reflects recent acquisition activity in the industry and panel consolidation. This reduction from £15 billion to £14 billion has removed £1 billion in purchased debt from active collection by DCAs since the end of 2014.
Debt held for collection by DCA’s continues to decline and has dropped a further 1% between Q4 2014 and Q1 2015, down £356 million from £27.1 billion to £26.8 billion. Although another quarterly decline, the pace is clearly slowing, and perhaps demonstrates that the trend towards panel consolidation and account withdrawals is drawing to a conclusion. DCA debt holdings have declined 10% year-on-year though, and looking back over the last two years have reduced by 18% from £31.6 billion to the current £26.8 billion.
As well as measuring financial volumes and values, the DGI also monitors industry staffing levels that have remained relatively steady between Q4 2014 and Q1 2015. The industry currently employs in the region of 11,000 staff, 6,000 of which are call centre collectors and 5,000 undertaking back office/compliance roles. Although employment levels may have steadied, they are considerably down on the volumes two years ago when the industry employed 12% more call centre collectors with 6,800 staff on the phones compared to 6,000 today.
As reported in the Q4 2014 DGI update, it provides yet more evidence of the impact of industry consolidation and how companies and individuals are managing to achieve more with less.