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Arrow Global


Debt Defaulters Receive Insufficient Recognition of Repayment by Consumer Credit Industry
Published on 14/07/2016

The consumer debt industry could do more to recognise positive steps taken by debt defaulters to put their finances back on track, according to the latest findings from a major report from FTSE-listed Arrow Global. The report is published in full today, called ‘Debt Britain 2016: The Big Picture - The Arrow Global Guide to Consumer Debt’.

As part of ‘Debt Britain 2016: The Big Picture - The Arrow Global Guide to Consumer Debt’, Arrow Global analysed a sample of 20,000 customer accounts to assess how much consumers’ credit score improved when they rehabilitate their debt by starting repayment plans or settling a debt.*

The analysis found that debt defaulters benefit from a marked improvement to their credit score once they have fully repaid or partially settled a problem debt. The average credit score for defaulters who repaid a debt improved by 3.8%; for those with lower credit scores the impact of settling a debt was an 11% improvement to their credit score. (see figure 1)

However, debt defaulters who start a repayment plan see only a marginal improvement to their credit score at first compared to non-payers. This suggests that there is insufficient recognition for consumers who take this highly positive first step. The average credit score of a payer increased by 1.8% once they set up a repayment plan, only slightly more than a non-payer (1.4%).

The Traffic Light System
In a bid to improve the recognition of repaying customers, Arrow Global has suggested the implementation of an industry-wide ‘traffic light’ system. This would sit alongside a consumer’s credit score and would change according to their repayment activity.

The meaning of any traffic light signals could be, for example:

  • Green for those who had not defaulted in the past six years
  • Amber for those who had defaulted but had subsequently made good or stuck to a repayment plan for at least six months
  • Red for those who had defaulted and failed to maintain a plan for six months to make good the shortfall

Arrow Global plans to arrange an industry round table based on the insights in the report, to work towards industry consensus on changes that could be made to better recognise debtor rehabilitation amongst other topics.

Figure 1: Credit scores improve when customers settle their accounts


Source: Arrow Global analysis of a group of its credit card debts

Tom Drury, Group Chief Executive Officer of Arrow Global comments:
“We believe that the consumer debt industry could be better at recognising and encouraging debtor rehabilitation. Getting a problem debt under control is a significant achievement with major long-term benefits for the individual. All participants in the consumer debt sector should be encouraging consumers and ensuring their progress is recognised in a clear and transparent way that is visible and comprehensible to all consumers.

“This is why we want to build on the insights from our Debt Britain report to help improve outcomes for consumers. We have some ideas on changes which can be made, including a new debt traffic light system that shifts from red to green as consumers progress towards repayment, but it is important that all industry participants work together. Discussions between stakeholders including credit reference agencies, lenders, collectors and debt charities, will be a first step towards improved recognition of consumer debt rehabilitation.” 

More information about Debt Britain 2016: The Big Picture - The Arrow Global Guide to Consumer Debt’

‘Debt Britain 2016: The Big Picture - The Arrow Global Guide to Consumer Debt’ is a report on the state of personal indebtedness in the UK and the consumer debt industry, with 60 pages of analysis of all issues affecting consumer debt in the UK. Some of the findings of the report include:

  • The first ever econometric forecast of consumer debt defaults, forecasting that rising consumer borrowing coupled with higher interest rates will fuel a 17% increase in households in default by 2020
  • A comprehensive analysis of personal indebtedness in facts and figures
  • The role of debt as a turbocharger for the economy
  • Consumer research to understand the borrower, with insight into typical attitudes towards consumer debt and debt default

Tom Drury, adds:
“We commissioned this report to explore the role of debt in consumers’ lives and in the nation’s economy, providing a balanced assessment against the background of the steady flow of reports focused on consumers’ problem debts.

“For a variety of reasons a proportion of consumers will always fall behind on their repayments. The circumstances that drive such defaults are most often not of the borrower’s making. The report explores these causes and the consequences of default. Crucially, we want to build on this analysis to agree on improvements that could be made to provide a more effective system to manage customers through difficult circumstances and encourage debt rehabilitation.”

Full copies available here.


For further information:

Arrow Global                                                   +44 (0)161 242 5896
Alex Barnett
Paul Fitzjohn

Instinctif Partners                                             +44 (0)20 7457 2020
Laura O’Connell
Louis Auty

About Arrow Global

Arrow Global is one of Europe's largest and fastest growing providers of debt purchase and receivables management solutions. We purchase customer accounts from a range of businesses, including retail banks, credit card and telecommunications companies. The Group manages over 8.6 million owned customer accounts and over £19.2 billion total assets under management.

Arrow Global works closely with customers whose debts we acquire to find affordable repayment plans based on their individual circumstances.  Arrow Global does not charge customers interest or fees on defaulted debt, unless there is a statutory requirement, in effect freezing the amount they owe.

Through representation on industry bodies such as the Credit Services Association and SCOR (The Steering Committee on Reciprocity), the executive team plays a key role in initiating, shaping and implementing industry compliance standards and programmes.

In October 2013, Arrow Global listed on the London Stock Exchange (ARW) and is authorised and regulated by the Financial Conduct Authority (FCA).

Notes to editors

*Arrow Global’s analysis of its defaulted customers covered 20,000 customer records, but the analysis cannot take into account the broad range of other factors than can impact a consumer’s credit score, such as:

  • repayments or defaults on debts not managed by Arrow Global
  • other potential factors such as changes in income or multiple applications for additional credit by the consumer

The report was authored for Arrow Global by Rob Thomas, Director of Research at Instinctif Partners and formerly a Bank of England economist, high profile analyst at the investment bank UBS and senior policy adviser to the Council of Mortgage Lenders (CML). Rob was also the project originator and manager at the European Mortgage Finance Agency project and created the blueprint for the Government’s NewBuy mortgage scheme.

Alex Barnett - Senior Corporate Communications Manager


Arrow Global Limited is registered in England and Wales with company number 05606545. Its registered office is at Belvedere, 12 Booth Street, Manchester M2 4AW. Arrow Global Limited ("AGL") is authorised and regulated by the Financial Conduct Authority for certain credit-related regulated activities, and is part of the Arrow Global Group. AGL is registered on the Financial Services Register under registration number 718754.