Credit Management News – 22nd May 2017

CCJ Numbers rise to the highest level in over a decade

The number of county court judgments (CCJs) against consumers in England and Wales rose to the highest level in over a decade during the first quarter of the year, according to figures released today by Registry Trust.

In Quarter 1 (Q1) 2017, there were 298,901 debt judgments registered against consumers in England and Wales. Rising 35 percent on the same period last year, it is the highest figure for a single quarter in over a decade. For every 1,000 people in England and Wales, 5.16 received a judgment, compared with 3.85 the year before.

The average value of a consumer CCJ fell for the eighth consecutive year, decreasing 17 percent on Q1 2016 to a historic low of £1,495. By comparison, the average value of a judgment in Q1 2008 stood at £3,662.

The number of judgments marked as satisfied during the first three months of 2017 was 11.83 percent. This contrasts with the 13.33 percent satisfied in the first quarter of 2016.

In the High Court, only 35 judgments were registered against consumers in Q1 2017, the lowest total number for a single quarter on record. The average value of a consumer judgment in the High Court fell 44 percent year on year to £446,308.

The total value of debt judgments against consumers in all courts in England and Wales during the first quarter of 2017 was £462.5m.

“People who don’t pay their debts are increasingly likely to be taken to court,” said Registry Trust chairman Malcolm Hurlston CBE. “CCJs can seriously damage credit ratings and good lenders rightly avoid people who have shown they can’t manage debt. This may seem like bad news on the surface but judgments for smaller sums are protective for the people concerned.”

Commenting on the figures Pearse Flynn, Chief Executive Officer of Creditfix said<“Any rise in the number of County Court Judgements (CCJ) being registered against consumers should be cause for concern – but one as large as 35 per cent in the space of a year, and nearly 50 per cent in two years, could point towards a more aggressive shift in the way that creditors are chasing outstanding debt.

“The statistics seem to show that creditors are getting tougher with an increasing number of individuals. It looks like they are working harder to pursue debt to a judgement, and taking action with more people. This is supported by the average size of a CCJ falling 17 per cent in a year, to a historic low of £1,495.  “CCJs can have a detrimental effect on people struggling with their finances, not just on their ability to obtain credit, mortgages or tenancy agreements, but also on their mental health and wellbeing. It can be very stressful for people trying to keep their heads above water, and if lenders are actively ‘toughening up’ and taking a harder line, I would urge them to first ensure they offer all the support they can to help people struggling with their personal finances.”

Statistics

CCJs against consumers Q1 2017 (compared with Q1 2016)

• Total: 298,901 (up 35 percent)
• Value: £447m (up 13 percent)
• Average: £1,495 (down 17 percent)

High Court judgments against consumers Q1 2017

• Total: 35 (down 26 percent)
• Value: £15.6m (down 58 percent)

Average: £446,308 (down 44 percent)

Consumer Finance Grows

New figures released by the Finance & Leasing Association (FLA) show growth of 10% in consumer finance new business in March, compared with the same month last year, and 6% growth in Q1 2017 as a whole.

Credit card and personal loan new business together grew in March by 7%, compared with the same month in the previous year, while retail store and online credit new business increased by 5%. Second charge mortgage new business grew 8% by value and 15% by volume over the same period.

Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said “Consumer finance new business provided by FLA members grew in line with expectations in the first quarter of 2017. We expect modest single-digit growth in new consumer credit in 2017 as a whole.”

Table 1: New consumer credit lending