Secured loan lender Equifinance has outlined its concern at the sudden rise in consumer debt judgements which reached a post-crisis peak in 2015, according to latest figures from the Registry Trust.
The data show there were 734,205 County Court Judgements (CCJs) against consumers in England and Wales during 2015, 4% 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% to £2,030, which is a real terms decrease of 55% on 2008.
Equifinance, which is now lending under MCD regulation and processes, says there is a need to take a realistic view of customer circumstances and look at the real reasons behind the adverse information, not just the information itself. It says it is “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, said: “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 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.”