Archive for the ‘Financial News’ Category

Central London prices rise 34% since March 2009

Tuesday, July 5th, 2011

Prices of prime London property rose 0.9% in June 2011, contributing to annual growth of 8.3%, report Knight Frank.

Prices have risen 34% since their recent post-credit crunch low in March 2009. Prices are now at a record high, 2% higher than their previous peak in March 2008.

Demand is holding steady as new supply looks set to surge – prices will continue to grow, albeit at a slower pace in the second half of 2011. Knight Frank revises its forecast for prime central London price growth from 3% to 9% this year

Liam Bailey, head of Knight Frank Residential Research, comments:

“Price growth in the prime central London market continued through June with a further 0.9% rise in prices. Aside from a brief stumble last autumn, prices have been rising strongly since April 2009, and prices are now 2% higher than their previous peak in March 2008.

“Looking behind the headline numbers for price growth, activity measures are pointing to continued strong conditions in the central London market over the next few months.

“While the number of exchanges fell year-on-year in June by 9%, this was not unexpected, bearing in mind the surge of sales prior to 6 April as buyers tried to complete their sale under the old 4% £1m+ stamp duty rate rather than the new 5% rate.

“More tellingly there appears to be a new wave of sales coming through, with the volume of properties going under-offer (sold subject to contract) rising by 52% year on year in June.

“On the demand side the number of new buyer registrations has held steady (up slightly by 0.4% this June compared to June 2010), although viewings volumes were up 8% over the same period.

“If demand has risen marginally, supply has risen more rapidly – much to the relief of buyers who have faced thin choice in the market for the last 18 months.

“Stock volumes have risen 12% in the year to June, but there is more in the pipeline – with the numbers of new instructions rising 55% in June compared to last June.

“In the light of ongoing strong conditions in the market, we have revised our 2011 forecast for prime central London prices upwards from 3% growth to 9% over the year – this forecast assumes a slowing in price growth in the second half of the year, driven in part by rising supply and a more competitive environment for vendors.”

Tags: annual growth, knight frank, london property, prices
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Improving Your Credit Control

Monday, July 4th, 2011

Give the current state of the market and the difficulties it faces, SME’s are finding late payment becoming a common occurrence from their Clients. Previous sources of cash that SME’s could rely on, such as bank loans, have seemingly dried up as purse strings are tightened by lenders and it is not an uncommon theme for small business owners to use their own credit cards to support their business.

However, by making some small adjustments to their credit control procedures SME’s can help their own business to deal with these issues. Putting the right systems into place can help to support the cashflow of the company. Simple changes to existing systems such as the length of time credit is available to a customer, everyday credit control, debt collection, dealing with companies and safeguarding against bad debt can all have a positive impact.

Their is a greater need than ever for companies to be ensuring that their debt collection processes are in place and not allowing overdue invoices to build up and accrue while waiting for payment.

One useful method to help protect against bad debt is to make use of company credit checks, from a credit reference agency such as Creditusre, which can show if a company has a poor credit history, judgements and overdue accounts. By checking the company before you do business with them you can make an informed choice about offering credit.

Another common trend that is currently doing the rounds is larger companies demanding extended payment terms from SME’s, in particular in the construction and recruitment sectors. SME’s need to stay strong and not allow companies to dictate to them when they will be paid. The impact that extended terms can have on a business could be detrimental to the business itself.

Ultimately cashflow is as much about making sure a business is paid for the goods or services it has provided than anything else. A strong cashflow is key to ensuring the continued operation of a company

Tags: cashflow, credit check, credit control, credit management, debt collection, SME's
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Barclays to Settle Payment Protection Insurance Claims

Wednesday, June 22nd, 2011

Barclays has said it will pay out compensation to everyone to whom it sold payment protection insurance and who made a complaint before 20 April.

Customers will be reimbursed the total value of all premiums plus 8% interest.

The bank said the move would affect tens of thousands of customers, particularly those put on hold during a recent judicial review.

Barclays said it was the first bank to pay out PPI compensation on a “no-quibble” basis as it stated its customers had waited long enough because of the long-running judicial review, and this would allow it to clear the backlog quickly and assess new cases more quickly.

“We can confirm that we are contacting customers whose complaint was put on hold on or before 20 April with an offer to settle their complaint in full as a gesture of goodwill.”

Separately, the FSA has given three banks – Barclays, Lloyds, and RBS – more time to deal with their huge backlogs of complaints and a flood of new complaints.

As an indication of the scale of the problem, the Financial Ombudsman Service (FOS) revealed that since the start of April this year, it had received 40,000 new PPI complaints from people unhappy that their original complaint had been turned down by their bank

Huge Compensation

In April, the banking industry lost its High Court challenge to new rules on the sale of PPI which were then imposed last year by the Financial Services Authority (FSA) and the FOS.

Among other things, the rules require sellers of PPI polices to review all their past sales to see if their customers have a claim for mis-selling, whether or not they have actually complained.

While the legal case was going on the banks put on hold tens of thousands of fresh PPI complaints that came in.

After losing their case, Lloyds Banking Group set aside £3.2bn to cover the cost of this compensation, followed by Barclays (£1bn), RBS (£850m) and HSBC (£269m).

Barclays now says complaints lodged before 20 April will be eligible for automatic reimbursement, while those received since then will be assessed on merit.

Which? chief executive Peter Vicary-Smith welcomed this move.

“It’s fantastic to see Barclays stepping up in this way, acknowledging their mistakes and refunding customers what they’re owed, no questions asked. Hopefully this will have a domino effect and other banks will follow suit.”

Later, Lloyds said it would not be paying out on a “no quibble” basis.

New Complaints Timetable

Normally, complaints would have to be dealt with in eight weeks but now the FSA has decided that as a temporary measure, complaints put on hold during the judicial review must be settled by the end of August with fresh complaints since the end of the judicial review but received before 31 August must be dealt with in 16 weeks.

PPI complaints received after the end of August but before the end of 2011 can be dealt with in 12 weeks but after that, the normal eight-week timetable will apply.

Margaret Cole of the FSA said this would help firms process complaints “properly and fairly”.

“Some firms are facing a huge backlog and now a surge of new complaints, which has created a bottleneck. It is not in the interests of consumers to receive further poor handling of their complaints as a result.”

Tags: Barclays, Complaints, Payment Protection Insurance, PPI
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Crackdown on Council Tax Sees Extra £4m in Arrears Collected

Monday, June 20th, 2011

Welsh councils have increased debt collection rates by 16% as council tax arrears drop by £2.1million from last year.

The good news was slightly tempered by the fact that local authorities still faced arrears owed of £81.2m as of March 31st 2011. Welsh councils brought in the extra £4 million in arrears in 2010-11, with the total amount of previous year’s debt collected rising from £24.8m in 2009/10 to £28.8m.

As a result collection rates across Wales saw an increase from an average of 96.3% in 2010-11 to 96.6% for this year.

Steve Thomas, Welsh Local Government Association chief executive, was extremely upbeat about the figures claiming it was a “remarkable achievement” during a time of downturn in the economy and added pressure on family budgets. Mr Thomas went on to say:

“Councils recognise that they have a duty to all taxpayers in their area to ensure that those who should pay taxes do, so that this money can be reinvested into vital council services, however at the same time it is a balance between collecting and helping people who are in financial difficulty. Today’s figures show that council workers have got that balance right.”

“Councils have been working closely with the WLGA, Welsh Government and the Citizens Advice Bureau to offer people practical support to help them make their payments; from practical suggestions to providing people with access to the financial support they need. They have also been proactive in making people aware of the council tax benefit which they may be entitled to and helping them in making their application.”

“Councils’ main aim is to help people address their difficult financial situation before they get to an unmanageable level of arrears and today’s figures show that their approach is working. Every council in Wales continues to urge any citizen who is experiencing financial difficulty to contact them for advice and information.”

Flintshire council saw the largest decrease in percentage of arrears owed as it reduced it’s debt by 22% from £1.9 million to $1.5 million.

Kerry Feather, head of finance said:

“We are very pleased that despite the difficulties being faced by people as a result of the economic downturn that we have been able to increase the amount of council tax collected in the year and have worked positively with those who have experienced difficulties to reduce the level of arrears.”

However, the percentage of tax councils were able to collect varied from 98.2% in Denbighshire to 94.5% in Cardiff.

The Welsh Conservatives suggested Welsh councils would be almost £18m better off if all local authorities reached a 98.2% collection rate.

William Graham AM, Shadow Minister for Local Government, said:

“While it may be somewhat unrealistic to expect councils to collect 100% council tax, they do have a responsibility to raise collection rates to maximise the resources available to invest in local public services. If too many council tax payments are left uncollected, this forces up bills for the vast majority of hardworking law-abiding taxpayers.”

Tags: council tax, council tax arrears, debt collection, welsh councils
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Distressed Companies Received £1bn Lifeline

Friday, June 17th, 2011

Since the start of the latest recession a unique group of UK turnaround investors have found cause to invest almost £1bn in distressed companies over the last 12 months, according to research undertaken by KPMG.

KPMG Restructuring Director, Will Wright said:

“We have seen a new breed of investor come to the distressed acquisition market since the beginning of the downturn. Historically, distressed investors acquired companies out of administration to salvage what remained. While the traditional model still exists, we have seen small investors in the UK looking to step into businesses while they are still solvent. This change in approach is driven by a need to step into a distressed situation before it unravels into insolvency and precious value is destroyed.”

“The UK turnaround investor community, which has emerged in the past few years, differentiates itself from the traditional distressed investor model by rescuing companies earlier; 76% of firms surveyed have completed a solvent acquisition in the last year. There are also key differences with the typical private equity investment model where – rather than suffer possible delays created by due diligence and committee decision-making which could prevent a solvent business rescue – many UK distressed investors can write a cheque on the spot.”

Several key findings from the research are:

There are around 60 specialist turnaround investors in the UK
The group has completed 73 deals in the past 12 months
Over £940m has been invested in UK headquartered businesses in the past 12 months
76% of turnaround investors have completed a solvent acquisition in the last 12 months
80% of turnaround investors are seeing more opportunities than a year ago

When asked more about he individuals in the UK turnaround investors, Mr Wright continued:

“The funds themselves are typically set up by small groups of high net worth individuals, often with a background in restructuring, who understand that timing is crucial in business rescue. There will always be an inherent block in identifying acquisitions targets, in that directors find it difficult to admit to the severity of their problems until it is too late but 80% of the investors we surveyed said they were seeing more opportunities in the next year.”

“Deals such as Gardner Aerospace, acquired last year by Jon Moulton’s Better Capital, and structural steelworkers Robinsons, acquired by Jamie Constable’s RCapital (both rescue transactions avoiding insolvency) show that the community is prepared to put its cash to work. It is difficult to estimate the total fire power of the UK distressed investor community as their style is to tap into their network of contacts when the right deal comes along. However, with nearly a billion spent in the last year and the community seeing more opportunities in the year ahead, we’re certainly looking above the billion mark.”

“With such a large pool of cash to invest, this emerging breed of specialist investor is good news for business rescue in the UK.”

Tags: debt, distressed companies, insolvency, investors, KPMG, uk
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SME’s to Recieve Financial Support From Government

Thursday, June 16th, 2011

Small and Medium sized enterprises (SME’s) are to be given access to a new range of government backed financial schemes which will allow access to a variety of loans and grants.

There will be initially two main UK-wide initatives, the Enterprise Finance Guarantee (EFG) scheme and Enterprise Capital Funds (ECFs), alongside a range of separate programs in England, Scotland, Wales and Northern Ireland.

ENTERPRISE FINANCE GUARANTEE SCHEME

EFG was set up by the former Labour government to encourage more bank lending to SMEs.
Under the scheme, the government guarantees 75% of an SME’s bank loan, with the lenders covering the remaining 25%.
It is open to companies with an annual turnover of up to £25m, and loans from £1,000 to £1m are available, repayable over 10 years.
Firms can seek to use EFG to access new loans, refinance existing loans, convert overdrafts into loans, gain a new overdraft or extend a current one, and cover cash flow shortages.
It is available for all sectors of the economy except the coal industry.
However, there are partial restrictions in the agriculture, financial, education, forestry, insurance, and transport sectors.
In November 2010, the coalition government announced that EFG would continue for the next four years, making about £2bn available.
It aims to help 6,000 SMEs each year access capital.
Companies seeking to gain an EFG-backed loan due so via their bank.
A guide to the full terms and conditions of the EFG scheme is available from the Department for Business website.

ENTERPRISE CAPITAL FUNDS

ECFs are government-backed venture capital funds that aim to invest in fast-growing SMEs.
Established in 2006, £150m of public funds have been invested in the scheme so far.
And the coalition government announced last month that a further £200m would be made available over the next four financial years.
Organised by government agency Capital for Enterprise, the government now invests in nine venture capital funds, having a stake of up to 67% in each fund.
It is to one of these funds that SMEs need to approach to make an application.
The current ECFs are: Amadeus Enterprise Fund, Catapult Growth Fund, Dawn ECF, IQ Capital Fund, MMC Ventures ECF, Oxford Technology ECF, Panoramic Growth Equity, Seraphim ECF and the Sustainable Technology Fund .
Although open to SMEs in most business sectors, it is typically hi-tech companies that make successful applications.
In exchange for a stake in their business, SMEs can access million of pounds worth of investment, typically over a 10-year period.
After that time, they have to pay back the funds plus interest.
Companies making the following products cannot seek ECF investment – synthetic fibres and yarns, motor vehicles, shipbuilding, steel, coal, agricultural and fisheries items.
Transportation firms are also ineligible.

OTHER ENGLISH SCHEMES

At the end of November the coalition government launched the Regional Growth Fund.
While available across the whole of England, it is specifically designed “to help those areas and communities that are currently dependent on the public sector make the transition to sustainable private sector-led growth and prosperity”.
So areas such as the North East are likely to be in the driving seat for successful bids.
A total of £1.4bn of funds – grants, loans and loan guarantees – will be available from 2011 to 2014.
The aim of the scheme is to support projects “with significant potential for creating long-term private sector led economic growth and employment”.
SMEs and larger companies will be able to apply on their own, or in partnership with other firms and/or public sector bodies.
The minimum bid threshold is £1m, and more information on the scheme – and how to apply – is available from the Regional Growth Fund page of the Department of Business website.
Local authorities also usually have grants available for small firms, as do the nine English regional development agencies, who can also advise on what European grants may be available.
However, the regional development agencies are to be abolished by March 2012 at the latest.
They will be replaced by a new Local Enterprise Partnerships, which will be partnerships between local authorities and business groups.
When established, these will take over the business support roles of the regional development agencies.
In addition, SMEs in England can get a full range of advice on what financial support is available to them by contacting Business Link – the government advice service for English companies.

OTHER SCOTTISH SCHEMES

For details on all the various finance schemes available in Scotland, the first port of call is Business Gateway, the Scottish government’s business support agency.
Specific initiatives in Scotland include innovation grants available from Scottish Enterprise.
And like in England, grants are also available from local authorities, and via European Union funds.
SMEs in the north of Scotland and its islands, should also contact the Highlands and Islands Enterprise.
This assists by investing in the development of strategic industries, product and market research, and in pilot projects.

WELSH SITUATION

In Wales, the Welsh Assembly Government itself takes the lead on business support matters.
The business support page of its website lists all the forms of government-backed grants and loans available for Welsh SMEs.
Further, its subsidiary body, the Welsh European Funding Office, offers in-depth advice on applying for European Union finance.
Local authorities across Wales can also provide details of what grant schemes they operate.

PICTURE IN NORTHERN IRELAND

Information on additional government-backed finance schemes in Northern Ireland is provided by Invest Northern Ireland, Northern Ireland’s regional economic development agency.
In addition to its own website, it operates nibusinessinfo – Northern Ireland’s online business advice service.

Tags: financial support, Government, grants, Loans, SME's
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CSA to be Consulted in OFT Guidance for Debt Collectors

Wednesday, May 11th, 2011

In the forthcoming update to the Office of Fair Trading (OFT) Guidance for Debt Collectors, which is expected in the latter part of the year, it has been announced that the Credit Services Association (CSA), who are the voice of the Debt Collection industry in the UK, will be consulted as a key stakeholder.

The CSA’s Code of practice, which was originally published in 2003, has had large parts of it’s content used as the basis for the new Guidance. It is expected that the new Guidance will have clearer instructions around data accuracy and a specific section dedicated to debt purchase according to CSA’s Head of Membership, Compliance and Educational Services, Claire Aynsley:

“It is vital that the consultation has insight from those in the collections and debt purchase sectors who have front line knowledge of collecting debts in often challenging conditions,” she says.

“Members of the CSA, and colleagues within the Debt Sale & Sellers Group (DBSG) will help ensure that any future Guidance is properly informed, so that best practice can be highlighted to the ultimate benefit of all parties.”

Tags: Credit Services Association, CSA, debt collection, debt collectors, debt recovery, Guidance, OFT
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No win – No fee Debt Collection…. too good to be true??

Tuesday, April 12th, 2011

A recent e-news article from the UK Debt Collection Bureau explores the myth behind no win – no fee Debt Collection.

Whilst British Business remains in the grip of tight economic conditions, over the past couple of years, there has been a rise in the demand for Debt Collection Companies advertising themselves as operating a ‘No win – No fee’ policy when this clearly is not the case. As this practice continues to grow, so does the misinformation surrounding this ‘no win – no fee’ culture within the Debt Collection Industry.

The position of some is that as they seemingly pay nothing initially, the Debt Collection firm in question will work harder to recover the money and that there is nothing to be lost, only gained. The simple truth of the matter is very different and should be taken very seriously.

The ‘No win – no fee’ term is simply being used as a marketing slogan in the Debt Collection Industry to mask over a hidden ‘drip pricing’ structure and quite often companies that advertise themselves as ‘no win – no fee’, require a membership of joining fee which straightaway, is an immediate contradiction of their key selling point which should give a clear indication of what is to follow.

Often these companies will charge exorbitant commission rates, quite often as high as 50% (even higher in some instances) and will have hidden costs contained within their services. It is also common that these type of companies are fronts for firms of fee earning solicitors who will simply wish to matter to proceed to litigation so they can begin to apply their hourly fees (Average £250 per hour) as well as any other costs incurred therein. There have been instances where a debt has been collected and the actual amount that was owing in recovery fees was nearly 3 times what the actual debt was in the first place

Other ‘No win – no fee’ companies have ties with Debt Management and Insolvency firms looking for free, direct and easy lead generation as once details of a debtor are supplied, they will bombard them with details of ‘how to clear their debts with one easy payment’ which involves the usual bankruptcy, liquidation or IVA/CVA option. This a far more financially lucrative option than actually attempting to collect the debt and will severely prejudice any of your attempts to recover what is owing to you.

With most ‘no win – no fee’ Debt Collection companies, it is simply a numbers game. It is a simple economic fact that a company cannot operate without cash flow so how can a Debt Collection firm work for ‘free’ or deliver the service they promise for ‘free’ without some sort of guarantee. Some Debt Collection firms actually have it written in their Terms & conditions that if they fail to collect then you will be liable for their costs.

No company can operate without cash flow so the question is, what will they actually do to recover your money? They cannot offer you any form of service by means of updating you etc and they will try to charge you where possible. More often than not, it is simply a numbers game. If you have a case with no merit then maybe this is a valid option for you but once again, you may be liable for an invoice in the event that they cannot collect it.

5 Facts to consider

Fact 1: Many Debt Collection Companies that advertise as ‘No Win – No fee’ will still require a joining fee or membership fee as they like to call it.

Fact 2: No Bona fide Debt Collection Company operates any form of ‘Money Back guarantee’ scheme

Fact 3: Some ‘No win – No fee firms’ allegedly have ties to Debt Management & Insolvency Firms which will seriously prejudice the potential of successfully recovering your debt.

Fact 4: The commission rates charged by ‘No win – No fee’ firms will be far higher than other means.

Fact 5: Most ‘No win – No fee’ operate excessive drip pricing structures and minimal transparency in relation to what is actually being done.

As the old saying goes ”if something is too good to be true then it probably is”. You may think you have nothing to lose by using a ‘No win – No fee’ debt collection company, you will probably lose more than you thought!

Tags: debt collection, no win - no fee, UK debt collection Bureau
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Edinburgh Writes Off £230k in Unpaid Debt

Tuesday, April 5th, 2011

Just under £230,000 has been written off by Edinburgh City Council as it has been deemed as “unrecoverable.”

IT has been a bitter pill for Council Cheifs to swallow after finally admitting defeat in their debt collection attempts in which they had attempted to recover the outstanding mount by “all possible means of debt recovery.”

Despite recovery efforts dating back to financial year 2009/10 £228,392 remains outstanding.

The figure itself is made up of a variety of council services such as unpaid council tax, business rates and other payments for council services and the debtors themselves consist of both individuals and companies who are considered to not be in a position to make a payment as they are considered to have no monies or assets. The amount has sparked cries of outrage for more effort to be made to recover the outstanding monies from the people or businesses who owe them.

Conservative councillor Alastair Paisley said: “We used to get a list of the irrecoverable debts circulated among councillors, and you could go through them and see that one is because the debtor is in prison, or one is because he is unemployed and has no assets.

“But I used to go down the list and say ‘he’s got several shops, that one’s loaded, and he’s living in a big expensive house’. You sometimes wonder how they decide they are irrecoverable.”

“If a solicitor company took on the debt recovery process on behalf of the council they would say ‘unless you pay this we will take you to the cleaners’. That would help make sure some of these people pay up.”

“We’ve got about £23 million of council tax debt that has still not been collected – any debt collection agency would welcome that business and would work night and day to get that money back. So we need to be trying a lot harder to get this money back.”

Recently released figures have indicated that upwards of 350 people per day are being threatened with court action in Edinburgh for failure to pay council tax with the number of summary warrants issued soared to 95,549 in the year to the end of March 2010, compared to 59,940 two years earlier.

However, city chiefs say a significant sum within the £228,392 will still be returned to the council at the time that any sale of the debtor’s property takes place – so will not be written off indefinitely.

Councillor Phil Wheeler, the city’s finance leader, said: “The council has taken legal steps to ensure that money due to us is paid when individuals sell their properties as an ‘inhibition charging order’ precludes the sale of a property owned by a debtor until the debt is discharged.

“This makes up £182,531 of the debt.

“I appreciate in these difficult financial times we must ensure that all measures are taken to try to recover all debt to the council.”

Tags: council tax, debt collection, edinburgh
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