Equifinance concerned at highest rise in CCJs since credit crunch
21 April 2016
Equifinance, the specialist secured loan lender, has expressed alarm at the sudden rise in consumer debt judgements which reached a post-crisis peak in 2015 according to figures just published by the Registry Trust.
The statistics show there were 734,205 County Court Judgements (CCJs) against consumers in England and Wales during 2015, four per cent higher than 2014 and the highest for any year since the 830,675 judgments in 2008.
However, there is a silver lining in that the sharp rise in the number of CCJs was accompanied by a fall in the average value: down 12 per cent to £2,030, which is a real terms decrease of 55 per cent on 2008.
The reasons for the sharp rise are likely to be a number of financial, economic and housing factors. Equifinance are seeing clients who regularly have debts as a result of one, a combination or all of these issues and the figures shine a spotlight on an economy that is still struggling to come to terms with the hangover from historic irresponsible lending and people living beyond their means.
Not having the ability to keep up with their payments could highlight issues of consumers not able to meet the rise in their outgoings on items such as rent, energy bills, transport and living costs.
From a lender’s perspective, Equifinance, who are now lending under MCD regulation and processes, express the need for specialist lenders to take a realistic view of customer circumstances and look at the real reasons behind the adverse information, not just the information itself. They believe it’s vitally important that each case is considered on its own merits for affordability and whatever the historical problem it doesn’t necessarily mean the customer’s situation is the same now as it was then.
A key concern to consumers is that the increasing trend of CCJs may lead to more customers potentially being financially excluded from mainstream products such as re-mortgages and prime loan products that, ironically, could help them repair their credit profile in the longer term.
Tony Marshall, Managing Director of Equifinance commented: “The upward trend in CCJs comes as a bit of a surprise when we hear so much news about the general economy performing well. It’s clear from the Registry Trust figures that consumers are still battling to manage their finances with increasing pressures on household budgets. The last few years have seen increases in rent and energy bills which could have put more stress on the cost of living, particularly as salary increases have almost stagnated.
“Despite the decrease in value of the average amount of the debt judgements, it still means consumers need more education on managing their finances, as falling in to debt of this kind can have a severe effect on their long term financial goals. As the number of CCJs increases it will require specialist lenders to have more focused underwriting on an individual basis for customer affordability or else the market for secured first and second charge lending could be impacted.”
