Credit Management November 2023

Higher
mortgage
rates put a
new cohort of
borrowers at
risk
A lead consultant at analytics software
leader FICO believes that rising
mortgage rates will inevitably lead to a
larger number of vulnerable customers
needing debt support and potential
forbearance.
The typical profile of customers
entering the collections space, he
believes, may also change and this puts
the spotlight firmly on how collections
teams operate.
“According to the Bank of England,
higher mortgage rates — combined with
rising costs of living — are now making
it far harder for borrowers to afford their
mortgage debt repayments,” says Peter
Lemon, Lead Consultant at FICO. “This
could cause some households to default
on payments or be obliged to cut back
sharply on their spending, posing a risk
to financial stability.
“Underlining the financial balancing
act many households face, our own
credit card data shows that average card
spending has reached its highest level
since our reporting began in 2006, at
£835 in June 2023. And the longer-term
impact of rising costs over the last 12
NEWS ROUNDUP
RSM reports significant
increase in revenues
LEADING audit, tax and consulting firm
RSM UK has reported a 14.3 percent
(£60.9m) increase in UK annual revenues
to a record £486.3m for its financial
year ending 31 March 2023. The results
mark consistent year-on-year growth
following last year’s 13 percent revenue
increase.
During the full financial year, the
firm increased its total headcount by
13 percent (up from four percent in
2022) to 4,715 people (including 356
partners), increased its new trainee
numbers by 24 percent to 818 (2022:
658) and maintained its promotion
numbers for both partners and directors.
The business says that this record
intake is part of its strategic ambition
months is evident in the proportion of
accounts missing payments.”
Peter says that accounts rolling
forwards from one to two missed
payments continue to increase steadily:
26.6 percent higher year-on-year in
June. The percentage of accounts going
over their limit has also shown a marked
increase over the last 12 months, with
new accounts (those open less than 12
months) showing the sharpest
increase.
“The reality is that there is likely to be
a larger number – and broader profile -
of vulnerable customers needing debt
support and potential forbearance,” he
says. “And for Tier One lenders and
debt collectors, there is likely to be an
increased need for digital-led payment
plans, as well as a higher demand for
loan modification so that the longerterm
financial impacts can be worked
through.
“Lenders and debt collectors will,
therefore, want to reassess best practice,
to enhance their collection capabilities
without negatively impacting
customers’ wellbeing.”
to strengthen the firm from within
its own ranks. The firm’s audit and
assurance service line delivered another
strong year within a heavily regulated
environment with an 20.1 percent
increase in revenues to £137.1m.
Rob Donaldson, CEO for RSM UK says
that despite the economic challenges of
the past year, RSM has kept investing in
its business: “I believe we have entered
a virtuous circle – robust financial
performance gives us the ability and
confidence to invest in our future. In our
fee-earners, our technology and in our
critical core functions, we are putting
more money back into the business
to become an ever more formidable
competitor,” he concludes.
>NEWS
IN BRIEF
Trade Ledger
TRADE Ledger is now accepting
applications from banks to join its
beta program which is being deployed
by Accenture. Copilot, built on top
of Trade Ledger’s data platform, “is
the last component of the tech stack
required to effectively crack open the
$120tn embedded lending opportunity
for working capital finance,”
according to Trade Ledger CEO Martin
McCann. Just a small number of
banks will be accepted for the beta
program, giving them exclusive early
access to what the firm is describing
as the world’s first generative AI
interface for embedded complex
business finance. The Trade Ledger
data platform is already being used
by banks such as HSBC and Barclays
in 15 countries to cut the application
to decision time for working capital
finance to 48 hours. Copilot is built
on top of the platform and will be
available to banks participating in
the beta program to distribute to
their customers as a simpler way to
understand and apply for working
capital credit.
True performance
TRUELAYER, described as Europe’s
leading open banking payments
network, has reached the milestone
of processing one million variable
recurring payment (VRP) transactions
in a single month. This news comes
just three months after TrueLayer
announced it had processed one
million VRP transactions in total.
The business says that this rapid
surge in VRP adoption reflects an
increasing recognition of the valuable
opportunities that they present to
both UK consumers and businesses.
As this growth continues, VRPs
are poised ‘to significantly impact
and potentially reshape traditional
methods like direct debits and cardon-file
payments’.
Forums acquisition
THE Order to Cash Laboratory (O2C
Lab) has officially launched as a
transformative force in the Order to
Cash (O2C) and credit management
industry. Co-founded by Chris
Sanders FCICM and Kerry McKevitt,
the company says it is poised ‘to
revolutionise the way organisations
engage as a credit management
community’. To support its strategy,
O2C Lab has acquired Forums
International, the company founded
by Laurie Beagle.
Brave | Curious | Resilient / www.cicm.com / November 2023 / PAGE 7