Experian reveals new data about credit conditions in its Q3 2014 report

Keeping up to date with the latest data on credit conditions is something which most financial organisations do – including Wescot, a credit services company, whom you can read more about here. Whilst finance experts like Wescot are well aware of developments in the credit arena, most consumers remain uninformed about such matters. This can often lead to confusion when they apply for loans or credit cards, and find that their applications have been turned down. But, as Experian’s Q3 2014 report revealed, many factors contribute to lending decisions, and these factors vary from one quarter to the next. Let’s take a closer look at this document now.

The report showed that whilst unsecured credit continued on its upward path, there was – for the first time in eight consecutive quarters – a weakening in secured lending to households. The information regarding the latter was taken from the quarterly CCS (Credit Conditions Survey) from the Bank of England, who conducted their survey between August 13th and September 8th of 2014.

The results of the Bank of England’s research were based on the responses made by lenders, and were calculated by assigning each lender a score, based on their selected response. The lenders who stated that conditions had changed slightly were given half the score of those who stated that conditions had changed significantly. The scores were then weighted, according to the market shares of each lender.

The availability of unsecured credit rose once again during this period of time, as did the demand for credit card loans. However, there was no notable increase in the demand for other forms of unsecured loans. The report predicted that both unsecured and secured lending to consumers would rise during the subsequent quarter, and that this trend would continue on into the following year.

In its report, Experian noted that the CCS showed a drop in the demand for mortgages; it has been said that this reduction was the result of the public taking a less favourable view of high-risk financial decisions. This drop in mortgage applications also coincided with a decline in the availability of mortgage credit; this was due in large part to the implementation of the MMR (Mortgage Market Review), which led to a number of operational issues for several lenders. In the survey, some lending firms also noted that their expectations regarding property prices were also a factor which had contributed to the reduction in availability.

A number of lenders added that they had chosen to restrict availability due to the FPC’s (Financial Policy Committee) recommendations that lenders should attempt to lessen the risks associated with the property market. They also stated that they were less eager to lend at LTV (loan to value) ratios of over 90%, and that the credit scoring criteria for mortgage applicants had become slightly stricter during this quarter. Lastly, many lenders said that they expected secured net lending to increase by 1.7% during the final quarter of the year, and by 2.2% in 2015.

The report indicated that lenders had a positive outlook for the final quarter, due to the fact that the third quarter saw the economy doing well, unemployment rates falling, and consumer confidence remaining high. However, their outlook for credit conditions beyond the next few months were slightly more pessimistic, with some citing political and economic uncertainty as reasons for a possible drop in the demand for credit in 2015. Although, as mentioned earlier, the economy has been strong, its growth is beginning to slow. Another issue which could result in consumers taking out fewer loans, is the lack of wage growth; this particular issue typically leads to little or no improvements in productivity, and could potentially pose a threat to the economy in the future.

There was an overall increase of £3 billion on unsecured lending between the months of July and September; this is a considerable amount, particularly when compared with the average of £2.3 billion over the previous two quarters. The annual growth rate for unsecured lending rose to 6.1%, a figure which hasn’t been seen in more than 8 years; however, this percentage still pales in comparison to the rates of 2005, which stood in the double digits.

Credit card lending was also shown to have risen, with its annual growth rate coming in at 4.7%, due to a £0.6 billion increase. According to the CCS, this rise in demand for credit card loans was the result of improvements in the economy, and the marketing campaigns implemented by lenders.

There were no changes seen in spreads on credit cards for the third quarter. The credit scoring criteria for consumers applying for unsecured loans also became slightly more lax, and default rates were the same as those reported in previous quarters. Credit card interest rates rose somewhat, although the increase was not significant, when compared with the second quarter, and the rates were in fact lower than those from the same period in 2013. Much like in the previous 12 months, personal loan interest rates remained unchanged.

Experian’s report explained that the CCS expected an expansion in overall net lending during the last three months of 2014, with the demand for both credit cards and other types of unsecured lending services likely to rise quite a bit; however, it also forecasted a rise in the rate of defaults on credit cards during the final quarter. The criteria used to score lending applications was expected to become quite lenient.

Wescot Credit Services – Ongoing investment

In the year to February 2013, Wescot Credit Services Ltd returned over £240 million to the balance sheets of its clients. At any one time, they find themselves managing over £4.5 billion worth of performing assets on behalf of their clients, and this just goes to show why they are the UK’s top provider of receivables management services.

wescotTheir debt free status means they have sufficient capital on hand to best service their clients and exceed their expectations. In the year ending February 2012, Wescot realised a turnover of £32 million and so are in a strong trading position, which allows them to invest heavily in expanding and improving their services. For example, Wescot Credit Services Ltd have spent over £4 million in the last two years upgrading their IT infrastructure. This includes a new telephony environment, up scaled networks and an upgraded collections platform. Investment such as this shows the seriousness that Wescot Credit Services Ltd gives to improving the already exceptional service it gives to its clients.

Ongoing investment is also prevalent in its employees, who each have a bespoke development plan with clear and measurable objectives. Plans such as this form part of Wescot’s overall learning and development strategy. Individuals are able to enhance their knowledge and develop new skills to help them in their roles. The knock-on effect is that the business’s clients receive an improved service from motivated and skilled staff.

The CCR-Interactive and Credit Excellence Awards are a prestigious industry event held annually. This year’s ceremony will see Wescot Credit Services Ltd as the main sponsor, which is a decision that the event’s organisers believe will bring much kudos to the day. It is also an example of Wescot’s drive to promote their brand and further cement their position at the top of the industry.

Anyone who deals with Wescot Credit Services can rest assured that they endeavour to treat all customers fairly and adhere to the very strict regulatory guidelines that are in place within their industry. Adhering to these guidelines has been made a much more straightforward task by the partnership formed two years ago between Wescot and Experian. Global information services company Experian provide Wescot with accurate and complete data, which has allowed them to improve their collections performance. It also means that they are able to better understand a customer’s characteristics and provide the most suitable service possible.

Wescot Credit Services – Working closely with Swift Advance

Promoting learning and development within their company is something that Wescot Credit Services Ltd look to do at every opportunity. Every employee gets an agreed upon individual development plan, which contains a clear and concise set of objectives. Wescot Wescotlook to encourage career progression wherever possible and by obtaining new skills and knowledge, employees are able to shape their own futures. The firm have even implemented a policy whereby staff are able to request time off from work to undertake study activities. Policies such as this show that Wescot are actively investing in their employees’ futures and looking to improve the services they offer. It also ensures that their customers get dealt with by highly skilled and motivated individuals, which undoubtedly makes for a better experience.

As the UK’s leading provider of receivables management services, Wescot always ensure they are in the best possible situation to assist their clients. A partnership they created two years ago with Experian sees them benefiting from the provision of clear and accurate data. This is a vital aspect of their business and allows them to adhere to the strict compliance standards in their sector. Furthermore, it means that every customer Wescot deals with gets treated fairly because of the firm’s increased access to information concerning individuals and their unique situations. Solutions can be tailor made for customers so that their personal circumstances are taken into consideration.

Some of the country’s largest and most successful firms use Wescot for the management and recovery of their collections. Household names like Sky, British Gas, NPower, RBS and HSBC are just some of their clients and represent a wide range of sectors. In the year ending February 2013, they had managed over 300 million customer accounts and brought returns of more than £240 million to their clients’ balance sheets. Their unique debt free situation allows Wescot to invest significant capital to improve the services they offer and deal with even more customer accounts through increased capacity.

Debt recovery isn’t the only solution that Wescot provide for their clients and another important offering is their range of ‘locate’ products and services. A recent example of how this can be utilised can be seen in the exercise undertaken by Swift Advance in conjunction with Wescot. Swift needed to trace some 2,000 previous customers so that they could be issued with small refunds. They employed the services of Wescot Credit Services Ltd who were able to successfully find almost 80% of the required individuals. This is an outcome that swift had not envisaged and was way above their expectations.

Wescot Credit Services and Experian in Negotiations to Extend 2012 Data Contract

Wescot Credit Services, one of the UK’s leading debt collection agencies, have confirmed that they are in negotiations with Experian to extend the two year data services contract that was sealed in February 2012. The contract has facilitated the provision of more accurate data on customers for Wescot Credit Services, enhancing the sophistication with which they are able to assess customer profiles, leading to better collections performance, and a greater focus on TCF, or Treating Customers Fairly.

Wescot Credit ServicesExperian’s dynamic platform ExPin targets customer data lists by matching each individual with a unique PIN identifier. Separating the data in this way dramatically reduces the risk of duplication in the system, delivering improved data quality and higher overall match rates. The complex functionality of ExPin also increases the level of accuracy in data retrieval, ensuring that Wescot Credit Services have the most up-to-date and complete customer profile available. Wescot Credit Services were quick to recognise the potential of the ExPin platform, and were one of the first companies to be migrated to it.

The contract with Experian has given Wescot Credit Services a strong platform from which to strengthen their competitive edge in the UK collections market. If successfully negotiated, an extension to the contract will facilitate the smooth continuation of the provision of exemplary service from Wescot Credit Services to both its customers and clients, within a wider framework of high standards of industry compliance and a dedication to the principles of TCF.

About Wescot Credit Services

Wescot Credit Services has over 40 years of experience in the UK collections market. A totally UK-based operation, Wescot Credit Services have 650 employees working from 3 separate sites, all linked by a virtual network which enables instant sharing of, and access to, data across the organisation. Owned by Venture Capitalists Alchemy Partners since 2005, the company manages over £8bn of customer assets. Wescot Credit Services provides recovery and reconnect services and a focus on early stage retention and sales activity for its clients. Serving an impressive list of clients, Wescot Credit Services pride themselves on establishing long term partnership relationships, and have become leading name to trust for debt collection in the media, telecoms and utility sectors. They also have a 25% of the UK Banks market. Such rich credentials demand a high profile of compliance, and Wescot Credit Services deliver in this respect as a market leader; pioneering an approach to generate an FCA framework that is fit for purpose – elements such as operational risk, systems, controls and Treating Customers Fairly, or TCF.