One in six bankrupts declaring assets have over £50,000 – R3

One-in-six (15%) people who declared their assets when entering bankruptcy in 2016-17 had assets worth over £50,000, serving as a stark reminder that you can’t be ‘too wealthy’ to be bankrupt, says insolvency trade body R3.
According to the data, provided by the Insolvency Service, 60 people entering bankruptcy in 2016-17 declared assets between £500,000 and £999,000; 26 had assets over £1m.

Bankruptcy is a personal insolvency procedure where the insolvent person’s assets may be sold by a trustee to raise money to repay creditors. Bankrupts face restrictions on borrowing money or acting as a director, typically for a year. After a year, the bankrupt is discharged with their remaining debts written off. People can apply to enter bankruptcy, or, if they owe more than £5,000 to one creditor, their creditors can ask a court to impose a bankruptcy order.

R3 says that misconceptions about bankruptcy and the stigma still attached to it can put people off seeking advice about the process, even if it might help them with their financial situation.

Mark Sands, R3’s personal insolvency committee chair, says: “Perception and stigma can be effective barriers to seeking help about financial difficulties. You can often encounter a belief that bankruptcy is something that ‘doesn’t happen’ to people who others might typically see as financially comfortable, or even wealthy. This stops people from getting advice when it would be helpful, or it means they don’t take steps to address their financial problems before it’s too late.

“Anyone, no matter how wealthy they may appear, can have serious financial issues. Someone with a lot of assets could have bigger still debts – it’s all relative. Anyone can be vulnerable to financial shocks, too: common causes of bankruptcy are the failure of a person’s own business, ill health or a relationship breakdown. Unexpected tax demands can also lead to bankruptcy for higher earners, particularly those on the receiving end of Accelerated Payment Notices linked to tax schemes.

“The sooner people seek advice about their financial situation, the more options they have and the easier it will be to resolve their problems.”

R3 says that the true number of ‘wealthy’ people becoming bankrupt could be even higher.

Mark Sands says: “Some people will have exhausted all or nearly all of their assets trying to avoid bankruptcy. Others, meanwhile, will go to every effort to try and hide assets which would otherwise be available to creditors – by moving funds to offshore accounts, hiding high-value items, or signing over property to family members. In these latter cases, the trustee in bankruptcy has the power to investigate and retrieve those assets for creditors.”

Over a third (38%) of individuals entering bankruptcy do not declare their level of assets.

Bankruptcy is one of three types of statutory insolvency procedure, alongside Individual Voluntary Arrangements (where an individual usually retains their assets and agrees to pay back a proportion of debts to creditors over a set period of time) and Debt Relief Orders (a low-debt, low-asset version of bankruptcy where the individual retains their assets and no repayments are made to creditors). Bankruptcy is the least common form of personal insolvency procedure.

Of 99,196 insolvencies in 2017, 15,082 were bankruptcies. Bankruptcy numbers most recently peaked in 2009 when there were 74,671 bankruptcies out of 134,143 insolvencies. An improving economy and the introduction of DROs have since put downward pressure on bankruptcies.

According to the Insolvency Service, in 2015 (the latest year for which such statistics are available), of those bankruptcies due to reasons unrelated to the bankrupt person’s business, the greatest proportion were listed as “living beyond means”, at 2,105 cases. The next most common reasons were “relationship breakdown” (1,715) and “significant reduction of bankrupt’s income” (1,515). For individual bankruptcies which were related to business performance (3,800 altogether), the most commonly-given reason was “management failure” (1,150), followed closely by “loss of market” (1,140).

Mark Sands adds: “Whatever your current level of income and wealth, financial planning is a must. If you are facing financial difficulties, talking to a trained and qualified adviser can be a vital step, and finding a form of insolvency that is right for you can be the first step on a road to financial recovery.”

Fintech pioneer Centtrip launches bespoke fee structure

Fintech pioneer Centtrip has introduced a bespoke fee structure available to all its corporate clients, enabling them to decide when and how they are charged from the outset.

Having initially introduced the maximum 0.5 per cent fixed fee structure to allow clients to benefit from free foreign exchange and international payments when it launched in 2015, Centtrip has extended its offering by introducing personalised and very competitive fee plans to corporate clients. From depositing funds to their account and converting currencies to making local or international payments and transferring funds to a Centtrip multi-currency Mastercard, clients can define their own fee structure based on their unique business needs and goals, once again benefitting from having complete control over their finances with Centtrip.

All the fees are agreed, transparent and fixed from the start. Companies can adjust their fee structure as their requirements evolve by simply picking up the phone and discussing a change in strategy with one of Centtrip’s experts. Once agreed, changes are effective immediately.

Centtrip’s new approach is a result of constant interaction and consultation with its clients. It helps ensure businesses only pay for the services and products they need and use, saving them from wasting money or being locked into long-term inflexible contracts.

Brian Jamieson, co-founder and CEO of Centtrip, said: “SMEs are the lifeblood of the economy, so it is crucial they have the tools and support to operate efficiently. Instead of adopting a one-size-fits-all approach and charging companies premium rates, we have shaken up the status quo. All businesses have different needs, so a fee structure that meets those needs now and provides the flexibility to accommodate evolving requirements and future growth is vital. We provide our customers with assurance and confidence to exercise far greater control when managing their finances, knowing we are there to support them throughout. With our innovative technology and dedicated specialists, we give clients the best of both worlds and are committed to serving the SME market to help companies realise their full potential.”

British businesses have £680bn in hidden cash

British businesses have around £680 billion tied up in working capital, according to new research on more than 5,400 businesses from Lloyds Bank Commercial Banking.

Working capital is the amount of money that a company ties up in the day-to-day costs of doing business, and tends to increase as businesses grow or as efficiency falls.

Lloyds Bank’s Working Capital Index found that businesses’ annual revenues have increased, on average, causing the amount of cash tied up in inventory or unpaid invoices to increase by 6 per cent in the last year.

This puts pressure on firms’ cash flow and could leave many firms ill-prepared to quickly access the funds they might need to take on any unforeseen opportunities or challenges.

While partly caused by the fact businesses were growing, the report also found that firms – and particularly smaller ones – were becoming less efficient at collecting cash from their customers, making the problem worse.

Ed Thurman, managing director, head of Global Transaction Banking at Lloyds Bank, said: “Revenue growth is good news for British business, but to improve efficiency is going to take investment and that requires cash flow.

“Small firms in particular are taking even longer to free up cash from inventory and unpaid invoices. The longer that money remains unavailable, the less firms can invest in growth, new machinery or pay down debts.

“Companies that manage their working capital well can generate healthy cash flow and will be best placed to invest in their businesses and take advantage of new trading opportunities

“Those who don’t may find it difficult to deal with a potential rise in interest rates later this year, or to take on the opportunities and challenges created by Brexit.”

The report found that annual revenue growth nearly quadrupled during 2017 to 8.3 per cent, from 2.1 per cent in 2016.

At the same time, firms’ inventory levels increased 10.6 per cent during 2017, while outstanding invoices increased 10.3 per cent

Firms responded by lengthening the time, in days, that they took to pay suppliers. But this primarily benefited larger firms, 13 per cent of whom said they were now taking longer to pay suppliers, compared with just four per cent of small firms.

Looking ahead, almost a third of businesses (31 per cent) said demand uncertainty was their biggest concern affecting their management of working capital and cash flow in the year ahead. This was followed by changes to payment terms (16 per cent) and rising costs (13 per cent).
Lloyds Bank has recently partnered with Be the Business, a new free to join and use business movement set up to unlock practical and pragmatic practices that help productivity and share them across the UK.

Tony Danker, chief executive of Be the Business, said “Productive companies get more out of what they’ve got, enabling them to increase their profits, pay higher wages and invest in their future. This Lloyds Bank research shows the importance of closely managing working capital and how even small improvements can yield dramatic results for a business.

“Through our partnership with Lloyds Bank we hope to support as many UK firms as we can to put in place the simple management and business practices used by the best to be successful.”

Teleperformance Receives European Union Binding Corporate Rules ( BCRs ) Approval

Teleperformance the worldwide leader in omnichannel customer experience management, today announced it has received Binding Corporate Rules (BCRs) approval as both a data controller and data processor from the French Data Protection Authority, CNIL, making Teleperformance the first company in the industry to attain this critical data protection compliance status in the European Union.
Attaining BCRs approved status is a long and rigorous process that ensures a company has a comprehensive and effective framework to safely and legally transfer private EU data out of Europe for applications such as customer sales and service, technical support and back-office processing applications.
Teleperformance was assisted during the approval process by Promontory Financial Group, the global leader in data privacy protection.
Alan Winters, Deputy Chief Global Compliance Officer & Chief Privacy Officer, Teleperformance Group, commented: “Teleperformance is intensely focused on data protection and privacy at all times, everywhere in the world. Attaining approved BCRs status is more than a major industry first milestone for data transfer security and governance; BCRs allows us to offer clients total global operational flexibilities to deliver a safer and better customer experience for their EU consumers anywhere and on every interaction.”
Simon McDougall, Managing Director, Promontory Financial Group and Board Member of the International Association of Privacy Professionals, added: “Teleperformance’s existing comprehensive privacy program and robust control framework led to the fastest BCRs approval process that I am aware of to-date in any industry. This is a real differentiator for Teleperformance as it allows their clients to choose service locations anywhere in the world while assuring their customers are protected in international data transfers. Promontory was delighted to assist Teleperformance based on their clear commitment to privacy good practice.”
Daniel Julien, Chairman and Group CEO, Teleperformance Group, stated: “As the global industry leader, we have an absolute responsibility to our clients, their customers, our key stakeholders and the whole market to set the highest standards possible in every aspect of our business including data privacy and security. Attaining BCRs approval in record time is just one more example of our total commitment to provide maximum flexibility and safety to our clients and their customers on each interaction; regardless of delivery location or channel. We are and we will remain totally obsessional on privacy, security and data protection.”

Together helps a mum and son achieve their property ownership dream

A mother and son have bought the council house where they’d lived for more than a decade thanks to a residential home loan from specialist lender Together.

They had been unable to get a mortgage under the Government-backed right to buy scheme because he had just taken up a new job at a garden centre which supports adults with disabilities, and his mum was receiving jobseekers’ allowance while looking for work.

The mother and son had lived together in their rented home for more than 11 years and had always wanted to buy it together. However, they hadn’t realised that their employment status, as well as the fact they were buying under right to buy, meant they would struggle to get a home loan from a high street bank or building society.

The customers discovered Together could help following a search on the internet. An in-house adviser at the specialist mortgage lender spoke to them both and its expert underwriters looked into all aspects of their backgrounds, including his employment contract, previous payslips, and their long history of rental payments.

Richard Tugwell, a director at Together, explained: “The son had started a new job and was, technically, on a zero hour contract at his new employment, meaning it would have been difficult, if not impossible to be able to get a mortgage through mainstream channels.

“Using our common sense philosophy and a personal approach to mortgage advice and underwriting, we looked at the son’s employment history and found that he had been consistently working beforehand and was working full-time hours in a stable job.

“We also found that the mortgage was affordable in their joint names, taking into account their impeccable credit records and the fact that the mother was actively seeking work, so was eligible for Government benefits. We took all these factors into consideration when deciding to provide the finance.”

Together agreed to provide a £24,470 first charge mortgage, secured against their £46,000 council house, while the customers paid a deposit of £2,300

Mr Tugwell added: “We’re delighted that we’ve managed to help them in their dream of home ownership. The capital repayments on the loan are less than they had been paying their local council in rent, so it was a great outcome for them.”

Lowell Q1 2018 Results: a positive start to the year and increased funding flexibility

Lowell, a European leader in credit management services, has delivered another positive set of quarterly results for the period 1 January to 31 March 2018, continuing to deliver on the company’s strategy of sustainable growth and diversification.

Performance Highlights

› Quarter-on-quarter growth delivered against a strong comparative quarter in 2017.
› Continued realisation of portfolio acquisition opportunities in line with the Group’s required returns and growth strategy (£167m in 6 months to March 2018).
› Business mix remains well-diversified across income lines, sectors and segments, with 47% of portfolio acquisitions coming from forward flow arrangements with existing clients.
› Integration of the Carve-out Business as new Nordic region well underway, and trading in line with expectations.
› On a pro forma basis, 120-month ERC stands at £2.8bn, with last 12 months Cash EBITDA of £402m.
› Extension to existing Revolving Credit Facility (RCF) supported by an expanded group of 13 banks.
› RCF increased to €455m on existing terms, this increases funding flexibility and reduces the weighted average cost of debt.

Outlook

In line with the guidance we gave in our 2017 Full Year Results (12th April 2018), we remain positive about the year ahead:
› Good momentum from last year has continued into 2018;
› Strong acquisitions and 3PC placements pipeline in place;
› Enhanced European scale and reach gives further opportunities for future debt management and debt purchase opportunities;
› The business will deploy investment capital in order to achieve overall growth and maximise returns for the benefit of the wider Group;
› Recent record unsecured consumer lending in the UK creates sizeable opportunities for future growth; and
› Underlying business resilience as evidenced by IFRS9 preparatory work.

Colin Storrar, CFO, said: “We have built on the momentum of the final quarter of last year and started 2018 positively. Focus has been maintained on the delivery of our core strategy while we continued to work through the integration of our new Nordic businesses, where we are already seeing positive performance. Our prudent approach has seen us make significant investment but do it selectively – taking opportunities both to grow and to review.
“That fundamental strategy of prudent investment, focused on sustainable returns, together with effective and mutually beneficial customer and client relationships continues to set us apart.
“The Group’s net debt position remains largely unchanged despite significant portfolio purchasing. This is a positive reflection of our ability to generate free cash flow for further re-investment.
“The increase in commitments for the Revolving Credit Facility to €455m demonstrates the underlying value and strength seen in Lowell, with the key terms of the facility remaining the same. The extended facility enhances the Group’s ability and flexibility to grow the business, whilst reducing the average cost of debt, in-turn providing for greater cash-flow generation.”

Equifax works with HSBC UK on first live open banking credit application solution

HSBC UK has created the first live use case of open banking for credit applications using the InterConnect platform from Equifax, the consumer and business insights expert. The solution will facilitate quick affordability assessments by allowing individuals to submit their bank transaction information electronically, in less than five minutes, during an application for credit.

Each submission is presented directly to HSBC UK Underwriting in real-time, providing the bank with a fast and informed view of a customer’s affordability and facilitating faster lending decisions.

The Equifax InterConnect platform is a flexible cloud-based decision management platform, which consolidates insight on credit applicants and streamlines the risk decision process. The Equifax platform collates consumer current account transaction information from its third party fintech partners, classified according to FCA guideline categories; committed spend, basic quality of living, essential spend, and discretionary spend.

Jake Ranson, Banking and Financial Institution expert and CMO at Equifax Ltd, said: “This work with HSBC reflects our ongoing commitment to the open banking initiative and our drive to deliver to our banking and financial services clients the best solutions for their customers in this new world of open data.

“We’ve produced a next level data service that helps the industry make the most of new data sharing, and empowers customers with more control over their own financial information. Part of the open banking challenge is educating consumers on what it means in a real life context, and a streamlined credit application process that helps them get a faster decision is a great example.”

Landlords grow their buy-to-let portfolio through a seven-day second charge loan

The directors of an investment company, who own nearly 250 properties, are set to grow their portfolio after Together delivered funding secured against part of their buy-to-let empire – in just seven days.

The lender provided a second charge loan over 26 of their rental homes, worth £3.5 million, and owned by the high net worth customers, who run their property portfolio through a limited company structure.

The three investors, two who are self-employed directors of the property business, wanted to keep their favourable interest rate on the current first charge buy-to-let mortgages on the portfolio of properties across the North of England, which they bought before the financial crisis of 2008.

However, the customers wanted to unlock the equity they had built up over the past decade through a second charge loan, and wanted the deal to complete quickly so they could press ahead with adding to their property portfolio.

They approached expert packager Crystal Specialist Finance who brought the case to Together, having previously worked closely with the lender, and knowing its reputation for delivering fast finance tailored to their customers’ borrowing needs.

Marc Goldberg, commercial CEO at Together, said: “Our dedicated team of buy-to-let underwriters was presented with the complete package after Crystal’s clients couldn’t find the finance they needed through mainstream lenders.

“These customers run a multi-million pound property empire, which includes buy-to-let homes, commercial property and car parks, through multiple companies.

“All three of the applicants have spotless credit histories and, between them, have years of financial knowledge, as well as the experience they needed to expand their already-successful business.”

Together liaised closely with trusted experts from legal firm Priority Law and the customers’ solicitors, and provided £879,000 through a second charge loan, agreeing repayments on an interest-only basis.

Jo Breeden, managing director of Crystal Specialist Finance, said: “This case shows that professional and experienced landlords and investors are focusing on growing their portfolios, despite the tax and regulatory challenges of recent years. This limited company didn’t want to lose the interest rates on their first charge mortgages by remortgaging their properties, so, in this case, a second charge was a great option.

“It was fantastic that Together pulled out all the stops to deliver in seven days, allowing the customers to move quickly with their plans to purchase more buy-to-let properties.”

Together, which has been at the forefront of the specialist lending market for 44 years, lowered the rates on its buy-to-let products in March. It has also simplified its process for brokers to make it as easy as possible for them to submit portfolio landlord cases.

Lender representatives at FSE Manchester question FCA is ‘back tracking on MMR’

Following on from its Mortgages Market Study Interim Report, published earlier this month, a number of lender representatives have questioned whether the contents of the report mean the regulator is pulling back from the measures it introduced as part of the Mortgage Market Review (MMR).

Speaking at today’s Financial Services Expo (FSE) Manchester, the premier exhibition for the financial services industry in the North of England, and following the FCA’s own seminar presentation on its report, a panel of lender representatives discussed the Interim Report and a host of mortgage market topics.

Dave Rogers, Intermediary Partnership Director at Barclays, was first to question whether the Report signalled a different approach from the regulator. “In terms of the overall report, I don’t think there’s anything for the industry to worry about,” he said. “But it seems to be a bit of back-tracking on the Mortgage Market Review in terms of its view on price.”

The comments followed a heated session with the FCA when a stream of delegates questioned representatives from the regulator on whether its research on the potential cost-savings for borrowers not on the ‘cheapest rate’ was valid.

Ian Andrews, Managing Director, Intermediary Sales at the Nationwide while welcoming the report, in particular its view that intermediaries are not biased towards products that pay a higher procuration fee, also questioned what the Interim Report meant in terms of the MMR, asking: “Has the FCA softened on the MMR idea that everyone needs advice?”

Richard Tugwell, Group Intermediary Relationship Director at Together, also suggested that the “cheapest [mortgage] isn’t always the best” and “price isn’t necessarily the only driver”, citing the personal circumstances of clients as determining the recommendation provided.

Andrews also said he “couldn’t get his head around” the potential “Trip Advisor for clients” idea the FCA is positing which would allow individuals to compare different brokers/intermediaries. The regulator earlier said that it would like to work with the industry to establish what type of metrics it could use in a broker-comparison tool.

Overall however the lender representatives did welcome the Interim Report. Charles McDowell, Commercial Director at Aldermore, said it was a “fairly strong ringing endorsement” and that it “could have been much, much worse” for the industry. He did however question how the theoretical measures outlined would be put into practice.

Debt collectors act to support customers with mental health issues

The debt collection industry has taken a significant step towards stopping people in debt with mental health problems from having to pay to prove their condition at the very time they are least able to afford to do so.

Coinciding with Mental Health Awareness Week, the Credit Services Association (CSA), the voice of the UK debt collection and debt purchase sectors, has proactively revised its Code of Practice to make it easier for customers to evidence mental health problems that affect their ability to manage their money without having to revert to the Debt and Mental Health Evidence Form (DMHEF) for which GP’s often levy a substantial charge.

John Ricketts, President of the CSA, says that the Association has started from the principle that individuals should not have to pay for medical evidence, where such evidence may be used to help improve their financial, physical and mental well-being: “Those who are most vulnerable should not have to take on more debt to prove it,” he says.

The revised Code advises members not to ask customers to approach health professionals for evidence in the first instance, but rather to engage with the customer to better understand their position, consider what evidence of their health problem is appropriate, and to seek other forms of supporting evidence (e.g a prescription or appointment letter) if necessary.

Only as a last resort, or if the evidence is directly required by the original creditor, should the Debt and Mental Health Evidence Form be requested – and even then, the cost should not be borne by the individual in debt.

The change follows a series of meetings last year, championed by the Prime Minister, Theresa May, the Minister for Mental Health, Jackie Doyle-Price, and the Money & Mental Health Policy Unit, in which various organisations (including the CSA), charities and clinicians (including the BMA), discussed how the (DMHEF) is used and paid for.

Mr Ricketts says it is unacceptable that someone with money and mental health problems should have to pay to evidence their condition: “We’ve therefore taken the proactive step of issuing clear guidance to our members on how they can support the most vulnerable and shifting the focus away from the use of the Debt and Mental Health Evidence Form,” he explains.

“Being in debt can be a stressful experience and we recognise that. We want to encourage other interested groups to follow this lead and work with them to ensure that all creditors, not just CSA members, see this as a positive move and likewise not request evidence that could ultimately add to a customer’s debt burden.”

Jackie Doyle-Price MP, Minister for Mental Health, added: “This is a significant step towards addressing the injustices that people who have mental health problems often face. Around half of those with a debt problem also have mental ill health and many of those with a mental health condition cite concerns about money as a contributing factor.

“Everyone with a mental health condition deserves to be treated compassionately and I encourage other groups to follow the CSA’s lead to ensure their customers’ mental health is both respected and protected.”