The annual rate of growth in the stock of secured lending to individuals was broadly unchanged. Mortgage approvals by all UK-resident mortgage lenders for house purchase fell over the three months to February, though were higher than the same period last year. Net monthly consumer credit flows remained subdued and were lower, on average, in the three months to February compared to the previous three months.

Conditions in longer-term wholesale funding markets improved in 2012 Q1, according to the major UK lenders. Spreads over reference rates on new lending widened for businesses in 2012 Q1, according to the Bank of England’s Credit Conditions Survey, and were expected to widen further in Q2. Spreads over Bank Rate on some quoted floating-rate mortgages have widened over the past six months. Effective rates on interest-bearing credit cards were broadly unchanged in the three months to February.

Credit availability was broadly unchanged for businesses and households, according to respondents. A survey of businesses conducted by the Bank’s network of Agents indicated that for most businesses, credit availability was little changed since last summer. In recent discussions, some major UK lenders noted that demand from small and medium-sized enterprises remained muted over the quarter. The availability of secured lending to households was unchanged in 2012 Q1 and was expected to fall slightly in Q2.

The Serious Organised Crime Agency (SOCA) says raids in Australia, Europe, the UK and US are the result of two years work. The sites, identified by SOCA as specialising in selling stolen payment card and online bank account details, used e-commerce type platforms known as Automated Vending Carts (AVC’s) allowing criminals to sell large quantities of stolen data quickly and easily.

Visitors trying to access these sites are now directed to a screen indicating that the web domain has been seized by law enforcement. Credit card numbers or bank account details of millions of unsuspecting victims were sold for as little as £2.

Two Britons and a man from Macedonia were arrested, with 36 sites shut down. Some of the websites have been under observation for two years. During that period the details of about two-and-a-half million credit cards were recovered – preventing fraud, according to industry calculations, of at least £0.5bn.

Lee Miles, Head of Cyber Operations for SOCA says that the operation is an excellent example of the level of international cooperation being focused on tackling online fraud: “Our activities have saved business, online retailers and financial institutions potential fraud losses estimated at more than half a billion pounds, and at the same time protected thousands of individuals from the distress caused by being a victim of fraud or identity crime.”

In April the Forum held a roundtable event at Westminster alongside representatives of the Government’s department of Business, Innovation and Skills (BIS), the Labour Party, the Institute of Credit Management (ICM), the Association of Certified, Chartered Accountants (ACCA) and Lloyds TSB Business to discuss late payment and the harm it does to SMEs.

New research it carried out in conjunction with the credit reference agency, Graydon UK, suggests more than half of all small businesses have been affected in some way by the practice in the last year alone, with 16 percent claiming it has nearly put them out of business. The data was presented for the first time at the meeting and was the focus of discussions.

“While we strongly support the Government’s plans to improve the public sector procurement process for the benefit of smaller private sector businesses, it would be extremely welcome if it were to ensure only those firms which pay their suppliers promptly are awarded these lucrative state contracts,” said the Forum’s senior policy advisor Phil McCabe.

“It would send a clear message to big business that late payment is not acceptable and will not be tolerated by government. This is an amazing opportunity for it to lead by example and set the standard for the private sector to follow.

“There really is the potential for massive impact here for very little effort and, after all, if government is paying primary contractors within 10 days, why should those same contractors not settle with their suppliers ASAP?

He added: “Our latest research on late payment shows clearly the impact late payment has  on small business. By being a beacon of best practice and only using firms which respect the supply chain by paying their dues promptly, the Government would be demonstrating huge support for small business.

“And let’s be frank, it has much to do to show it even has even a basic understanding of the needs of small business, despite it long ago pinning any hope of economic recovery on the sector’s front door. The fact the economy has stalled and is back into recession this week goes to show the private sector is not delivering this growth, so a small gesture such as this could help kick-start the process.”

Clive Lewis, ICAEW’s Head of Enterprise, believes that reducing regulatory burdens is a work in progress: “Following a review in early 2011 of the UK’s regulatory framework with final proposals published alongside the Autumn Statement, the Government has achieved a cumulative net reduction of regulation worth £3.3 billion to business,” he says. “The new measures will undoubtedly contribute further to this.”

Key measures outlined by the government include: Exemption from new domestic regulation for micro and start-up businesses for two more years; the launch of an extensive public review to reduce the existing stock of regulation; online registration of the main business taxes online; and an increase to the qualifying period for unfair dismissal.

Clive Lewis adds, “As reflected in our UK Enterprise Survey at the end of 2011, the regulatory environment continues to challenge businesses. In particular, businesses often incur extra costs and find meeting regulatory requirements to be an administrative burden. Many cite employment legislation, employment tax and health and safety regulations as a hindrance to their business.

“ICAEW research also shows that almost two thirds of businesses say there has been no change in the regulatory environment in the past year, with one quarter report that it is now worse. Sadly, 93 percent of our members have either not heard of the Government’s ‘one-in, one-out’ approach to business regulation or do not think it will help. It is therefore important that improvements are made, and that these are communicated to business.

The participants in the discussion made it clear that banks are not opposed to reform. They support measures to strengthen the resilience of the financial system, but call for their adequate application. Reforms that unduly affect credit supply are not without consequences, for banks, existing and potential investors, the underlying economy and, arguably, society. The discussion concluded that reforms should take account of the impact on the real economy and be calibrated, timed and sequenced so as not to extinguish the fragile economic recovery.

Angela Knight, Chief Executive of the British Bankers’ Association, says that the industry is supportive and engaged with the regulatory reform programme and the focus on strengthening of capital and liquidity requirements: “A robust regulatory framework that gives financial stability and market confidence is important for economies and for our customers and plays an essential part in the long process of restoring trust,” she says.

“But growth does not automatically follow from stability and some of the new rules can easily have the effect of restraining economic recovery. For example there has been considerable focus on the need for some banks to raise much more capital, but as the European Banking Authority and others have pointed out, the liquidity requirements are even larger. The combination has the potential both to increase the cost of borrowing for businesses and individuals and as banks’ business models adapt to the new regulatory environment, constrain the supply of credit, especially on the upturn.”

The North East of England, a region that has traditionally been one of the hardest hit for insolvencies, recorded a significant improvement in failure rates, declining from 0.22 per cent of its business population in March 2011 to 0.14 per cent in March 2012. This was the biggest year-on-year improvement of any region.

The health of the business community in the North East – measured using an average of Experian financial strength scores attributed to local businesses – rose from 81.71 in March 2011 to 84.50 in March 2012.  Only businesses in the East Midlands recorded a bigger average improvement in financial strength, from 81.82 in March 2011 to 84.89.

Max Firth, UK Managing Director for Experian’s Business Information Services division, says that March was a positive month for businesses in the North East and an improving financial strength score is encouraging:  “It highlights that even in regions which have experienced some of the highest rates of insolvencies over the past year, there will be potential pockets of opportunities for organisations to extend credit and increase business,” he says.

“However, the North East does still have the second highest insolvency rate in the UK, so it is vital that businesses fully understand the financial risks associated with firms they deal with.  This message is pertinent across the UK, regardless of region or sector.  Where there are risks there are also opportunities.”

Of the UK’s five biggest sectors – business services, building/construction, property, IT and leisure/hotel – the building/construction sector experienced a small drop in its insolvency rate – from 0.20 per cent in March 2011 to 0.19 per cent in March 2012.  Coupled with this, it was the sector to see the biggest improvement to its average financial strength score – from 78.11 in March 2011 to 82.67 March 2012.

The biggest increase in the insolvency rate came from the leisure/hotels sector.  The rate rose from 0.17 per cent in March 2011 to 0.21 per cent in March 2012.  In comparison to all 34 sectors analysed, the leisure/hotels sector held the third highest insolvency rate in March.

Whereby in the past, distribution would mainly have been focused on large, central locations, the reach has now become much more widespread, with the increased need for more small-scale deliveries taking place to a wider range of smaller sites.

While this brings welcome growth and diversity to the industry, it also brings with it added challenges. The increased distance these services have to cover means an increased workforce and mileage, which translates into additional costs. The challenge, of course, is whether such costs can be absorbed, or whether they van be passed on to the customer.

Some organisations have been developing ways of managing the growing demand. The Pall-Ex Group, for example, has developed the ‘Hub and Spoke’ model which involves all deliveries being taken to a central ‘hub’ and grouped by destination and delivered by postcode. By sharing trailers with other freight bound for the same destination, haulage costs are reduced.

By using a network of smaller member companies, The Pall-Ex Group is able to utilise local knowledge while passing on benefits to its group members, such as greater vehicle fill, the ability to offer wider delivery ranges and technological benefits such as state-of-the-art Track & Trace IT.

One such member company was the Brentwood-based haulage and distribution firm Pallet Distribution Services Limited. The Company offered general haulage services covering South East England, as well as storage, warehousing and nationwide pallet distribution. It had an approximate annual turnover of £1.6 million and employed 20 people.

PDS had strong values and strived to always provide ‘rapid and reliable delivery of its consignments at competitive prices’. But it was these competitive prices, coupled with the increase in fuel costs that led to the company experiencing financial difficulties.

The company entered into administration on April 24, 2012, when SFP’s Simon and Daniel Plant – both licensed members of the Insolvency Practitioners’ Association – were appointed joint administrators.

Simon Plant, Group Partner at SFP, believes that the rising fuel costs that affected the future of Pallet Distribution Services Limited, may be a sign of things to come: “Profit margins are constantly squeezed for transport companies, with increased competition and high running costs, so it seems inevitable that increases on fuel charges will have a major effect on these businesses,” he says.

“PDS is not the first freight transport company we have tried to save in recent months, and it will undoubtedly not be the last,” he says. “It is a highly competitive sector where scale seems to be particularly important.”

Earlier in April, The AA reported that petrol had risen 10.23p a litre and diesel 7.32p a litre since pump prices started their climb at the start of 2012, adding a considerable amount to the smooth running of a fleet of delivery vehicles. Shortly after, the threat of a strike by the fuel tanker delivery drivers pushed up diesel prices still higher, leading the Road Haulage Association (RHA) to accuse certain fuel retailers of profiteering.

While a good infrastructure and strong business model will provide a stable base for any company, these unforeseen factors can cripple an otherwise sound company, as in the case of Pallet Distribution Services Limited.

Unfortunately for businesses such as this, unforeseen issues like tax increases, or an increased competitive market can be very difficult to bounce back from, and while all options of a business turnaround and rescue were investigated, in this case it wasn’t possible.

At the end of 2011, the total value of unpaid consumer debt held by CSA members for collection stood at £58 billion (£58.179bn), comprising £31 billion (£31.239bn) placed by creditors with DCAs to collect, and a further £27 billion (£26.940bn) of purchased debt owned by Debt Buyers.

The total volume (i.e. number) of consumer debts awaiting collection by CSA members now stands at a staggering 32 million (32,130mn) as at the end of December 2011 – the equivalent of at least one significant debt for every UK household or £1,000 of uncollected debt owed by every man, woman and child in the country.

Six months earlier (H1 2011) the total value of unpaid consumer debt stood at £52 billion (£51.875bn) across 28 million (28,049mn) cases – so both the volume and the value of debts are rising, a fact that the CSA President Sara de Tute attributes to a range of different factors:

“The economic environment has undoubtedly become more difficult,” she says, “and so it is no surprise that debts are rising. But there are also other reasons, including ‘new’ creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse.

“Indeed the government has gone on record recently (as part of its Fraud, Error and Debt initiative) as reporting that overdue debts cost it between £7 – £8 billion – 95 percent of which resides with the Department of Work and Pensions (DWP) and HMRC – and part of this has now been passed to our members for collection.”

Sara says that despite the vast sums of money involved, this is far from being a ‘boom time’ for the industry; members are working more closely with debtors and advice services to help individuals out of financial difficulties: “Our role is a difficult one,” she says, “since we are at the end of an often very long recovery chain.

“But we recognise fully that engaging with customers and treating them fairly brings the best outcomes for all concerned, and that is reflected in the increase in collection rates. There is a clear trend at the moment for consumers to be more inclined to pay off their debts or reach a settlement wherever possible. Such deleveraging is a clear indicator of individuals working to improve their personal balance sheets in these times of economic uncertainty.”

Consumer collections by CSA members were £1.207 billion in H2 2011, reflecting increasing quarter on quarter collections that ended Q4 at £479 million – a rise of almost £100 million since Q2.

Sara says that this is a significant sum to feed back into the UK economy: “This has a direct impact both on the amount of future credit available and the interest rates that we all have to pay,” she concludes.

The CSA represents 90 percent of the debt collection industry and all of the major players.

David Kerr, Chief Executive of the Association, examined the planned reform of the complaints regime, highlighting the steps to be taken by the regulators working with Government to build greater independence and consistency in this important part of the regulation process. Some of this work has been led by the IPA, for example in respect of a soon to be published common sanctions guidance to reinforce consistency of disciplinary outcomes.

Philip King, Chief Executive of the Institute of Credit Management (ICM), also addressed the delegates, opening with a reminder to Insolvency Practitioners (IPs) of what was expected of them by the unsecured creditors, making the point that the most common complaint from unsecured creditors was the lack of communication.

Philip did however make the point that creditors did not always help themselves as many did not make the effort to engage with IPs by joining creditors’ committees. He believed that if there were greater engagement between IPs and unsecured creditors from the initial appointment throughout the process then IPs would gain the trust of the creditor community.

“The IPA conference presented a real opportunity for me to engage, on behalf of ICM members, with the IP community,” Philip said. “Our objectives should be the same – to see the best return for all creditors from insolvencies – and this is best achieved by improving communication between credit professionals and IPs.”

The keynote speaker was Nick Howard, Director of Policy at the Insolvency Service. He examined how different stakeholder groups could contribute to improving confidence in the profession and expressed the view that the reforms to the complaints regime should go a long way to help to achieve this, not least because “the RPBs would be seen to dispense justice and apply sanctions”. He went on to say that the Insolvency Service would play their part in the process as the oversight regulator, monitoring the performance of RPBs and encouraging an effective and transparent sanctions regime. Nick went on to explain to the delegates that the Government was looking for non-legislative means of introducing reform wherever possible, so that business was not burdened by more red tape.

Speaking after the conference Nick said that the Insolvency Service believes that increasing confidence in the insolvency profession should be at the heart of any changes made to our regime: “All stakeholders have a role to play in this, and our focus should be on differing interests working together to increase understanding and engagement.”

A new report from Euler Hermes, the world’s largest credit insurer, says that the challenge now is whether those local suppliers can gear up sufficiently to meet demand, and whether they can obtain the necessary funding to exploit the opportunity.

“Smaller companies will find it more difficult to get finance and that needs to change,” says Shannon Murphy, Risk Underwriting Manager for Euler Hermes. “The global re-trenching by the UK based OEMs back to a localised supply base following the Tsunami in March 2011 is a clear trend, and that is encouraging. A phrase we hear increasingly today is ‘best cost, not low cost’ and to this end UK based suppliers are definitely back in favour, but they will need support.”

Shannon says that Euler Hermes’ exposure to the UK Automotive sector increased by almost 30 percent to £812.6m throughout 2011 – a clear indication both of the dynamism of the industry, and the credit insurer’s appetite for risk: “We are clearly playing our part in supporting our clients supplying to the sector,” he says. “It is now up to the Government and the Banks to ensure that similar support is available in terms of funding.”

With press commentary about the stalling economy, company failures and job losses, Shannon says that it is easy to forget that there are some sectors that are currently performing well: “The automotive industry has shifted into top gear with last year’s figures showing car production in the UK ahead by nearly six percent with 1,343,810 new cars rolling off the production lines,” he says.

“Last year was certainly a significant year for the UK motor industry following a series of major investment announcements by the global vehicle manufacturers with a total of £4bn of investment planned for the UK, securing new model programmes, production facilities and jobs.”

Shannon points to announcements from Toyota, Honda and Rover about plans to increase their workforces substantially, and a clear cultural shift in favour of ‘Made in Britain’ as a strong selling point for vehicles such as the new Range Rover Evoque. Jaguar Landrover (JLR) recently announced record results for the last quarter of 2011, and an especially buoyant export market in Asia. This is in turn good news for the supply chain: “We have seen significant requests for increased cover on suppliers into JLR as productions levels surge with the level of demand,” Shannon adds.

Recent figures revealed that the positive trend has continued into 2012 with 127,382 cars rolling off the production lines, 15.6 percent ahead of January last year. The majority of the cars produced in the UK – 83.4 percent – were exported.