Industry overview

Debt sale and purchase has been a feature of the UK credit industry for the past 15 years, and is directly linked to debt recovery, which is a key element of the business model of any provider of debt or other credit to consumers or commercial entities.

Typically, creditors achieve debt recovery either via internal debt collection, outsourcing to a third party specialist agency or, finally, the outright sale of debt to a third party organisation such as Arrow Global.  Most major creditors utilise a combination of these three approaches in order to maximise recoveries.

Receivables sold in the UK include credit card, personal loans, utility, telecommunications, motor, mortgage shortfall and retail debt.  Organisations that utilise debt sale represent a broad cross section of creditors, including financial institutions (particularly retail banks), utility providers, telecommunications companies and retailers.  Debt is typically sold either through one-off (spot) transactions or more regular and long term (forward flow) agreements, the latter of which exist for a pre-agreed period and provide the purchaser with a supply of new accounts at regular intervals, typically monthly.