Lewis Group passes £1 Billion in debt purchased
Published Monday 04 September 2006
The Lewis Group, one of the UK's major providers of consumer and commercial debt collection, has passed the £1 billion mark in debt purchased*, seeming to confirm the continuing rise and rise of the Debt Purchasing phenomena.
But whilst The Lewis Group's success has been on the back of sensible pricing and quality delivery, Managing Director David Berry is concerned that a number of recent entrants to the industry may be tempted to ‘buy' market share.
"I do not believe that some of the prices currently being paid are sustainable in the long-term, and you have to wonder if over-payment will result in casualties within the industry," he says.
Mr Berry recently brought the industry's attention to the issue of selling debt on to a second purchaser to help Debt Purchasers compete whilst prices remain high. "The cost of portfolios is rising significantly," he continues. "Whereas previously the actual outlay for a tranche of debt may have been low hundreds of thousands, now it is not untypically closer to a million. For many, the costs are simply too great, and smaller operators are unable to take part.
"Being allowed to re-sell the debt would allow many more smaller operators to become involved. A bigger market, with more buyers is a positive outcome for the seller. It means the supply and demand curve moves distinctly in his favour. It also means further opportunity for the market to flourish."
Mr Berry confirms that some institutions are already looking to secondary sales: "I have seen one contract, recently, from one of the major players where provision is made and specific clauses added to enable the purchaser to re-sell the debt if they wish. Of course it requires the buyer to obtain the express permission of the seller before doing so, but it also states that such permission should be not unreasonably be withheld.
"If sellers want to maintain the prices as they currently stand, then they have to give the buyers the opportunity of maximising the return on their debt," he concludes. "The price is only right – and sustainably right - if the buyer can get back more than he paid, but he must be free to explore innovative ways in which this can be achieved. To me that looks like a ‘win win' situation all ‘round."
The Lewis Group extends a range of debt purchasing solutions to a variety of lenders such as banks and building societies through to mail order companies aimed at improving those organisations' profit and loss and balance sheet performance by providing them with a guaranteed income for selling their debt. It is one of the largest players in the market, working with its clients in valuing portfolios and maintaining the flexibility to structure bespoke deals in line with demand.
It is a founder member of the Credit Services Association and the Debt Buyers and Sellers Group (DBSG)