ARTICLE...
Time to Take a Stand
As levels of debt sale start to recover slowly, it is time for DBSG to step forward and lead the industry's growth.
Like the economy as a whole, UK debt sale continues to show the green shoots of recovery, although we cannot rule out a double dip for some sellers and buyers this year. Recent survey results from the DBSG indicate that total consumer debt sold last year was similar to 2008 levels at around £3.5bn, and this year looks to be getting busier.
Just like any financial market, perhaps the most important influence going forward will be confidence. Following the banking crisis and the recent political fallout at home and abroad, what steps can sellers, buyers and our trade bodies take to inspire the confidence to complete greater levels of debt sale?
In my view, the number one priority is to ensure the continued raising of standards of compliance across the industry. This will help boost the confidence of capital providers investing in debt buyers, while improving our ability to rebut the often inaccurate media coverage we receive.
The CSA and DBSG are working closer than ever before with government and the regulators, and recent engagement on the electoral register, the Consumer Credit Act and standard letters has been particularly productive. But our trade bodies will need greater resources so that members can receive centralised, top quality legal advice and more help with compliance.
Proposals are afoot to provide buyers with a DBSG kite mark of compliance so that sellers can reduce their due diligence checks, and ongoing compliance audits for buyers are also being considered. Major buyers may be prepared to fun this initiative, provided the sellers contribute to the costs of the kite mark project. Watch this space.
Second on my confidence shopping list would be data quality. This will help hugely in closing the current price gaps.
On the accuracy front, the DBSG data-quality working party is already delving into the detail of improving the data passed by creditors to credit reference agencies. As I have said before, I believe the whole industry would benefit from some form of reference agency reconciliation of basic consumer data, and every link in the chain has to take data accuracy seriously at all times.
In terms of data availability, buyers will have more confidence in the quality of portfolios offered for sale if they can gain pre-purchase access to credit data. This could be in the form of an agreed data set provided to bidders by the seller as an addition to the data file already supplied. Discussions are under way with the trade associations.
Third on the list, and following consultation with sellers, funders and buyers within the DBSG membership, is a clear appetite for the CSA and DBSG to provide more services, some of which will be specifically focused on debt sale.
As an example, many members take legal advice independently when new regulations come into force, but if the trade bodies could supply such advice centrally, we would have greater consistency and less duplication of costs.
There is also a need to have a more distinct voice for the DBSG, and the recent doubling of the public relations budget for this year may be supplemented by additional expenditure to ensure our voice is heard by the new government. The CSA and DBSG are also supporting members who have been the victim of illegal and personal threats on certain consumer advice forums.
If we can agree and implement these changes this year and find the funding to do it, then we should be in good shape as the recession eases to return to the levels of debt sold back in 2007, with the added benefits of better data, improved compliance, and a more confident voice with government and the media.
Original article, by Leigh Berkley, courtesy of CCR.
