Consumer debt solutions market now approaching £400m in value according to Apex Insight research

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New research into the outlook for the UK consumer debt solutions industry, comprising IVAs, DMPs and other consumer insolvency services, quantifies the market size, identifies challenges and sets out a forecast for its future direction.

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“There is uncertainty over when the economy will recover, what impact recovery will have on the market - as it could ease pressure on debtors but also allow them to run up bigger debts - and regulation"

This new market report by Apex Insight on the consumer debt solutions industry reports that, based on analysis of both company revenues and insolvency statistics, the industry is now approaching £400m in size.

The industry had its roots in the Insolvency Act (1986). This act created Individual Voluntary Agreements (IVAs) and, by introducing the role of the intermediary to consumer debt management, led to the establishment of informal Debt Management Plans (DMPs). It grew strongly during the period up to 2010, as expanding consumer lending led to high personal debt levels. Since then, despite a harsher economic climate with increased unemployment, low wage growth and high borrowing costs, which has led to ever more people falling into insolvency, market growth has been checked.

While the enduring recessionary environment currently being experienced is a particularly potent one for DMPs, the factors behind the slowing of the market include pressure on fees, changes in product mix and the tighter consumer credit market. This is illustrated by levels of unsecured debt which, in 2011, fell below what they had been in 2005 and hence fees related to repayment of debt were correspondingly lower.

New financial products, such as payday loans, now have an important role in the marketplace with some consumers using them to service other debts. However, the high interest rates associated with these products – and the possibility of further regulation in that area – mean this may not be a sustainable strategy and some experts are concerned that it could lead to a further round of credit card and personal loan write-offs.

The market is served by large players, such as Think Money, Paymex and Fairpoint, sometimes referred to as ‘factories’, as well as a long tail of smaller practitioners and a significant not-for-profit sector. In recent years, leading providers have expanded their product ranges, sometimes by acquisition, to increase their chances of being able to provide a solution to every potential customer, and reshaped their businesses to respond to take advantage of growth segments and new fee structures.

Frank Proud, director of Apex Insight, says: “The outlook for the industry is complex with uncertainty over when the economy will recover, what impact the recovery will have on the market – as it could ease pressure on debtors but also allow them to run up bigger debts – and also regulation: the OFT is currently looking at Payday Loans and DMP regulatory power moves to the new FCA in April 2014.”

Apex Insight’s forecast, which analyses historical relationships between key drivers and variables and takes into account market views, sets out how this might look in practice, providing a view of future market revenues up to 2016.

The full market report: “UK Debt Solutions: Market insight report” is available from

Contact: Frank Proud    frank(dot)proud(at)apex-insight(dot)com     020 7100 7239 / 07904 486 525

Notes for editors
Apex Insight is an independent provider of research, analysis and advice covering business services markets in the UK and Europe. It supports managers, investors and advisers in making better business decisions.

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