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Private equity firms own four major UK debt collectors
Private equity giants own some of the UK's most aggressive debt collection agencies, an Observer investigation has revealed - a discovery that has prompted concern among politicians.
Four of the most significant operators in the UK debt recovery industry are private-equity-owned, with a fifth partly owned by a hedge fund and two banks including HBOS.
The biggest such firm is 1st Credit, which is owned by Bridgepoint, one of Europe's most powerful private equity firms. 1st Credit was hit with serious sanctions early this year from the Office of Fair Trading, which said the firm had caused unnecessary alarm to debtors and voiced concern over how it had dealt with those suffering mental health or medical problems.
The three other major debt collection agencies owned by private equity firms are Wescot Credit Services, owned by Alchemy Partners, the leveraged financial outfit managed by Jon Moulton; Cabot Financial, one of the most profitable firms in the sector, owned by Nikki Citigroup; and Lowell Group, which buys debt from banks that most firms will not touch, owned by Exponent, a mid-range private equity firm
A fifth, Link Financial, which chases debts worth £5.15bn in 20 countries, is partly owned by HBOS, Morgan Stanley and Cheyne Capital Management, an alternative investment house.
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."
Debt collection agencies are coming under scrutiny for harassing the jobless and those in deep debt. In recent months, banks unsuccessful at chasing their customers' debts have sold off billions of pounds' worth of unsecured consumer loans to niche agencies at steeply discounted rates - as little as 5p in the pound in some cases.
The amount of debt passed on to such agencies has more than trebled in the past six years, to £21bn, according to the Credit Services Association, the industry's main trade body.
Private equity chiefs admit mistakes are made in targeting the wrong people but point out that debts have to be repaid. They believe they deal sensitively with those facing hardship but insist there are many people who simply refuse to pay their debts. The boom in consumer credit, along with rising unemployment, is likely to see such agencies grow in strength.
I like this quote best:
'Lowell Group, which buys debt from banks that most firms will not touch'
Wonder why
Lumi x
Private equity firms own four major UK debt collectors
Private equity giants own some of the UK's most aggressive debt collection agencies, an Observer investigation has revealed - a discovery that has prompted concern among politicians.
Four of the most significant operators in the UK debt recovery industry are private-equity-owned, with a fifth partly owned by a hedge fund and two banks including HBOS.
The biggest such firm is 1st Credit, which is owned by Bridgepoint, one of Europe's most powerful private equity firms. 1st Credit was hit with serious sanctions early this year from the Office of Fair Trading, which said the firm had caused unnecessary alarm to debtors and voiced concern over how it had dealt with those suffering mental health or medical problems.
The three other major debt collection agencies owned by private equity firms are Wescot Credit Services, owned by Alchemy Partners, the leveraged financial outfit managed by Jon Moulton; Cabot Financial, one of the most profitable firms in the sector, owned by Nikki Citigroup; and Lowell Group, which buys debt from banks that most firms will not touch, owned by Exponent, a mid-range private equity firm
A fifth, Link Financial, which chases debts worth £5.15bn in 20 countries, is partly owned by HBOS, Morgan Stanley and Cheyne Capital Management, an alternative investment house.
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."
Debt collection agencies are coming under scrutiny for harassing the jobless and those in deep debt. In recent months, banks unsuccessful at chasing their customers' debts have sold off billions of pounds' worth of unsecured consumer loans to niche agencies at steeply discounted rates - as little as 5p in the pound in some cases.
The amount of debt passed on to such agencies has more than trebled in the past six years, to £21bn, according to the Credit Services Association, the industry's main trade body.
Private equity chiefs admit mistakes are made in targeting the wrong people but point out that debts have to be repaid. They believe they deal sensitively with those facing hardship but insist there are many people who simply refuse to pay their debts. The boom in consumer credit, along with rising unemployment, is likely to see such agencies grow in strength.
I like this quote best:
'Lowell Group, which buys debt from banks that most firms will not touch'
Wonder why
Lumi x
