Four Debt Agencies Owned by Private Equity

In an investigation run by the Observer, it was revealed that four of the UK’s largest debt collection agencies were owned by private equity firms, a revelation that has caused concern amongst politicians.

A fifth is also partly owned by a hedge fund and two banks, including HBOS.

The largest of the four firms, is 1st Credit a large debt recovery company who are owned by Bridgepoint, one of the largest private equity firms in Europe. 1st Credit featured heavily in the press earlier this year after being hit with several serious sanctions by the Office of Fair Trading, who decided the firm caused unnecessary hassle and worry to debtors and raised concerns with the way in which 1st Credit handled debtors with mental or medical health problems.

The other three firms who are owned by private equity firms are Wescot Credit Services who are owned by Alchemy Partners, a leveraged financial outfit managed by Jon Moulton; Cabot Financial, one of the most profitable firms in the debt collection industry, owned by Nikki Citigroup; and Lowell Group, which buys debt from banks that most firms will not touch, owned by Exponent, a medium sized private equity firm.

Lord Oakeshott, the Liberal Democrat Treasury spokesman, said: “There are a lot of people who are struggling with debts and unemployment. They’re now paying for the private equity leverage boom as the economy pays a price for over-borrowings by these firms.”

Faisel Rahman, managing director of Fair Finance, which offers affordable loans to those with financial problems, said: “We have seen in recent months a shift in the way these firms approach their clients. As times get tougher, rather than being more responsive to the real difficulties people face, they are being far tougher.

“Banks lend to individuals through brokers and the debt is packaged up and sold on … My fear is, banks are so far removed they can’t see the impact on their customers.”