Bad debt spiking owing to election and Brexit, report suggests

By Daniel Lanyon on Monday 19 June 2017

Alternative LendingDigital Banking

New research from TDX Group makes the case for rising concern of 'bad' consumer debt levels.

New research from TDX Group makes the case for rising concern of 'bad' consumer debt levels.

More that a quarter (28 per cent) of UK consumers fear they may not be able to keep up with repayments on their personal debt, according to new research.

The findings of the survey of borrowers, by the TDX Group, points to an upward spike in bad debt in the coming years, the firm says,.

The online survey, conducted by YouGov, also found that unsecured debt now tops average monthly earnings, with more than one in four (28 per cent) owing in excess of £2,000. Almost half in debt (49 per cent) owe money to more than one organisation. In addition, one in four (25 per cent) are concerned they could lose their job, while almost one in five (18 per cent) are worried their pay might fall back. 

Presented in ‘TDX Group Consumer Debt Report 2017’, the researchers also found 43 per cent are planning to cope with increasing debt by changing job or taking on a second job. This makes it harder than ever for creditors to gain a comprehensive view of their customers’ financial circumstances in order to responsibly recover money owed.

Richard Haymes, head of financial difficulties at TDX Group, says the research demonstrates creditors may need to act soon in order to plan for a spike in problem debt. 

“Many individuals are growing anxious about their ability to stay on top of their personal finances and some have already begun to run into trouble. We can expect to see an increasing number of ‘new’ customers entering collections and recoveries who are unused to dealing with arrears.”

“We’re also seeing a change in the mix of creditors who are owed money, reflecting a growth in non-traditional credit default.”

Over time, he adds, this will change the ‘payment hierarchy’.

“In the coming months it will be major issues like the fallout from the General Election and Brexit, rather than micro industry challenges, that will have the most impact on collections and recoveries.”

“The key focus will be to maintain flexibility around strategy and suppliers, while also building capacity to deal with an overall increase in delinquency and default. Companies must respond now to limit their exposure to rising bad debt levels.”

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