To accurately assess the outlook for the credit industry, in particular the debt recovery market, it is essential to look at the sector from two perspectives. Both market competition and the global economy are primary factors in how debt recovery is going to proceed in the future. Not only does the UK’s economy as a whole play a big part in the performance of a debt agency, but so too does the performance of that company’s competitors.
The market as a whole is worth approximately £500 million, a figure that has not changed significantly since 2007, despite what was occurring throughout the financial world since that year. Competition is rife in the debt recovery industry, not only do large financial institutions and high street banks have their own departments that handle debt recovery, but the market is split between a few big name companies such as Wescot and many more companies that own a small percentage of the market share. One reason as to why there are so many debt recovery companies is that if collection rates are high and the business is efficient, there is more opportunity for a variety of aspects. Greater competition for example, has forced companies to present clients with greater price comparisons.
Looking more broadly, debt recovery companies have had to overcome a tumultuous economy, which has put pressure on their operations. Prior to 2007, there were a large number of personal loans being issued which naturally means a higher frequency of defaults; a stronger economy also provided customers with the means to eventually repay these debts. After the credit crunch however, consumers have been slow to borrow money and with more economic pressure on the individual, those who have defaulted are struggling to return their debt. This means that the industry as a whole has had to drastically change their strategies to remain abreast of the new difficulties.
For companies like Wescot, the outlook for the industry still remains positive. The fact that the market’s worth as a whole has not changed in seven years despite the banking crisis is testament to this. The debt recovery industry’s capability to adapt their methods quickly has ensured its security for the time being.