They show that 1,290 firms had receivers or administrators appointed, compared with 1,173 in the final three months of last year.

The number of people being declared insolvent in England and Wales fell slightly during the first quarter.

At 28,723, the total was down 1% from the previous quarter.

Joanna Elson, the chief executive of the Money Advice Trust, said: “Insolvency figures only represent the tip of the iceberg when it comes to the scale of debt problems faced by households across the UK.”

“Survey data suggests around 10 million individuals in the UK (around 20% of the adult population) find themselves in a constant struggle to manage their debts.”

Personal insolvency

Compared with a year ago, both corporate and individual insolvencies were down in the first three months of this year.

Company insolvencies fell by 2% and individual ones by 5%.

Among individuals becoming insolvent, the number of bankruptcy orders has dropped by 27% in the past year – despite rising in the past three months – while both debt relief orders (DROs) and individual voluntary arrangements (IVAs) were up on a year ago.

Charles Turner, vice president of the insolvency practitioners association warned that the level of insolvencies may rise further this year.

“More sole traders and partnership businesses [are] seeking advice on debt issues as they struggle to cope with the recession,” he said.

“There remains real concern about the prospect of a new wave of personal insolvency casualties with many consumers facing further challenges to their household budgets, not least from rising mortgage costs.”

‘Zombie’ companies

David Birne, an insolvency partner at the accountants HW Fisher said the second wave of recession in the UK was showing through with more companies going under due to their debts.

“As output falls, the company insolvency rate in England and Wales is creeping up stubbornly.”

“But there are still thousands of ‘zombie’ companies which are stumbling on, as banks are reluctant to push all but the basket cases into insolvency.

“Banks are showing remarkable levels of forbearance, sometimes even with the firms that are dead from the neck up – and with little prospect of clearing all their debts,” he added.

Manchester-based company, First Money Direct Ltd, which offered loan brokerage services to financially distressed clients, has been wound-up by the High Court following an investigation by Company Investigations of The Insolvency Service.

The company claimed on its website that it was “ideally suited to offer loans and financial solutions to a wide range of clients especially those who have previously been turned away by other lenders”.

The investigation found that clients who contacted the company were informed by staff that the loans they applied for were either approved or guaranteed, and asked to pay an administration fee, typically of either £49.95 or £99.95, though the company’s records indicate that many clients were charged a higher administration fee.

However, First Money Direct Ltd either failed to arrange the loans which its staff said had been approved or guaranteed, or the clients were offered loans on significantly different and unfavourable terms. Numerous clients were not offered a refund or only partly refunded the fee if they complained. Some clients also complained that First Money Direct Limited claimed to be lender rather than a loan broker.

The company kept inadequate records, which meant that the full extent of its trading could not be established, but it appears to have received fees in excess of £360,000.

Commenting on the case, Colin Cronin, Investigation Supervisor said:

“First Money Direct Limited used misleading methods to obtain fees from clients by claiming that their loan applications had been approved or were guaranteed when, in reality, the company was doing no more than gathering information for onward submission to lenders.

Those behind such companies should be aware that The Insolvency Service will take firm action when the public are deliberately misled in any way.”

Link: http://www.bis.gov.uk/insolvency/

The number of mortgage approvals for house purchase rose 1.5% to 49,860 in March but this is down on the previous six-month average of more than 53,000 and is a sharp drop on the relatively strong month of January, when nearly 58,000 approvals were recorded, Bank of England figures showed.

Home owners are expected to have a tougher time obtaining a mortgage in the coming months as lenders exercise caution amid the weak economy.

Lenders have already started making their borrowing criteria more restrictive, triggering a fall in the proportion of mortgages being approved, and have been putting up their mortgage rates.

More than a million home owners saw the cost of their mortgage payments increase from Tuesday, with lenders blaming the weak economy and the increased cost of funding a mortgage.

Approvals for remortgaging also increased slightly to 29,511, but this figure was lower than the six-month average of more than 31,000.

Lenders and estate agents reported a rush from first-time buyers earlier this year to beat the deadline for a two-year stamp duty concession, which ended in March, but warned that this surge could be followed by a dip.

Paul Diggle, a property economist at Capital Economics, said: “While the post stamp-duty concession slump in approvals for house purchase may have come to an end already, we can’t help but think that a genuine recovery in approvals remains a distant prospect.

“After all, news that the UK has re-entered recession can only have dampened consumer confidence, which already looks weak relative to the level of housing market activity.”

He warned that mortgage rate rises are “probably not over yet” as problems in the eurozone drive up banks’ funding costs.

The most common types of ‘Secured‘ debt include:
Mortgage – A mortgage would be normally secured against a house or property.

Hire Purchase Agreement (HP Agreement) – Often, this type of debt would be secured against an expensive asset, such as a vehicle, motorbike or a caravan.
Secured Loan – It is also possible to borrow additional funds against any equity that is available in a house or property.

With Secured debts, the creditor would have a guarantee in place and so failure to maintain payments on a mortgage on your home or any other loan secured against it can mean your home is at risk. If payments were not made on a HP Agreement for example, the creditor would be able to repossess the Car because the agreement may have been broken.

These are the most common type of ‘Unsecured‘ debts:
• Personal Bank Loans.
• Personal Credit Cards.
• Bank Overdrafts.
• Store Cards.
• Catalogues.
• Mobile Telephone Bills.
• Unpaid Utility Bills.
• Credit For Electrical Goods.

Although an unsecured debt is not guaranteed by an asset there are still serious consequences for not keeping up with your repayments on an unsecured debt. In fact, a creditor could take various routes to legal action and the debt may eventually become secured.

If you are struggling with unsecured debts, you should get advice as there are various solutions designed to help people in this situation. A Debt Management Plan or an IVA (Individual Voluntary Arrangement) could help reduce your monthly repayments to a more affordable level.

It is important to remember that any debt solution that involves changes to your original repayments will have an impact on your credit rating, and could cost you more over time. In the case of an IVA, you might also be required to release equity from your home in the final year of the arrangement.

When it comes to getting help with secured debt, it can be a little more difficult as the lender would possibly be able to recover their money by repossessing an asset that you have used as security. You should talk to your lender (e.g. your mortgage provider) as soon as you realise you might not be able to keep up with your payments. They may be able to suggest ways they could help you repay the debt at an affordable rate.

To get advice or help regarding Unsecured Debt, Contact Smooth Financial on 0800 027 5421

If you are struggling to pay a secured debt such as a mortgage it is critical you get help help immediately, for advice call our specialist team on 0800 027 5420.

Have you been told you can clear your debts in 2 – 3 years?
There are companies in the industry promising to clear your debts for less than the outstanding amount over a shorter period of time. Debt elimination schemes work through monthly payments, of these payments the company will take a fee, hold the majority of the payment and then send out a token payment to the creditors. This means they can save up funds on their accounts until there is enough to complete a settlement with the creditors. The downside to this would be the possibility of interest and charges being applied, defaults and further actions such as CCJ’s and even a Charging Order on your property if you’re a home owner. No company will be able to guarantee a stop to further action.

Have you been told you can have your debt written off?
In recent years it has been found that companies are offering consumers a “debt free quick” scheme claiming they can have the majority of debts written off due to unenforceable credit agreements. These types of companies will request high set up fees to look into obtaining credit agreements to see if they are unenforceable. Consumers are advised to seek independent advice regarding companies such as these. Unenforceable credit agreements are few and far between due to the legal requirement in the financial industry, the majority of creditor agreements have been drawn up by highly qualified lawyers.

What to do next?
Here at Smooth Financial we are always looking into viable options to help our clients to manage their debts and will always be in contact if there is an option available for you. We also advise all our clients who have been approached by companies offering the above solutions to contact us at Smooth Financial on 0161 905 5670. The BBC ran a story on a company that was shut down by the MOJ for running a very similar operation 2 years ago: http://news.bbc.co.uk/1/hi/business/8574956.stm

Feel free to give us a call on 0161 905 5670 to discuss any viable options relevant to your current financial situation and to answer any questions you may have about the solutions.

For alternative solutions to solve your debt solutions take a look at our main website: www.smoothfinancial.co.uk

Commenting David Mond, DRF chairman said:

“We welcome this new guidance, which formalises current good practice and provides clearer and more specific guidance for debt management companies. This guidance is automatically part of DRFs own mandatory members’ code of standards – which exceeds that required by OFT.

 ”We believe that reputable debt resolution companies already meet and exceed these standards and DRF has robust annual inspection by the independent Insolvency Practitioners Association, in place to ensure consumers and creditors can have confidence in our members.

 ”DRF also applauds the recent change in OFT’s procedures for examining new applications and renewals of Consumer Credit Licences. This is no longer a rubber-stamping exercise, but means that those individuals and companies that succeed in obtaining or keeping a licence will have jumped through many more hoops than before, including a much more rigorous examination of their business model, sources of leads and processes, as well as ensuring the people in the business have the right experience, skills and training. DRF has made a huge contribution to the latter, with the introduction of the 210 hour study Certificate in Debt resolution, now awarded to, or being studied for, by over 600 individuals.

 ”DRF welcomes OFT’s emphasis on dealing appropriately with vulnerable people and has already piloted course in conjunction with mental health charity, MIND, to ensure DRF members’ staff can identify vulnerabilities and advise appropriately.

 ”DRF believes that a mixed economy for debt advice is essential in the UK, where charitable debt advisors are being required to concentrate on the most vulnerable individuals and to advise around 50% more cases in 2012-13 with the same funding as last year.

 ”There are hundreds of thousands of people who need debt advice and can afford the fees our members charge – the cost of financial failure need not fall on the public purse. The OFT’s guidance, and the work of trade associations like DRF will ensure consumers can go to a fee-charging debt resolution company in confidence that they will not be misled or their money mishandled”.

• Do you have any extra responsibilities?
• Have you saved or made the company any money, if so how much?
• Are you now more qualified due to completing a course?
• Has your role changed?

In order to gain a payrise you must show your worth. So how do I do this?

If you need to ask for a payrise, one of the most popular ways to approach this is to ask for extra work or responsibilities and link this to a pay rise, if not immediately then in the future. This is a more positive approach that employers respond to better rather than simply asking for more pay for doing the same job.
Consider taking extra courses outside of work to improve in your job role, this will illustrate to your employer that you are improving yourself.
Another approach is to ask for a performance related bonus or pay increase as a result of achieving more, based on what the current target is for your role whether this be KPI’s or improving working standards. This again should be received positively by the employer because you are offering something in return, and not simply asking for more money, which most people tend to do.

So what factors will the employer consider when you ask?

• How well paid you are at the moment compared to the average pay for your role, you can
check this on www.totaljobs.com/salary-checker/salary-  calculator
• The current rate of inflation, this will have an impact as if the country is experiencing high inflation the costs of goods increase but also the companies costs do too.
• Where you live and work, this is important as the cost of fuel, food, drink differs depending on your geographical location, be sure to also   mention any other travelling costs such     as tollbooths.
• The company’s position concerning staff turn-over, retention, recruitment ad promotion.
• The company’s turnover and profit margins, all payrises will be subject to the amount the company has budgeted for staffing.
• What expectations would be set for other employees by giving you a rise
• How valued you are to the company
• How easy it would be for them to replace you with someone of similar capability and value at the same or less salary
• How much extra responsibility you are prepared to take on
• What value would giving you a payrise have to the company.

The decision to revoke the licences was taken in light of evidence that Yes Loans has failed to comply with the Consumer Credit Act 1974 and associated regulations, and with requirements previously imposed by the OFT.

The OFT found evidence that Yes Loans had engaged in unfair business practices, including:

• Using high pressure sales tactics to persuade consumers to provide their debit or credit card details on the false premise that they were required for an identity and/or security check.
• Deducting brokerage fees without making it clear that a fee was payable, and/or without the consumer’s consent.
• Failing to introduce some consumers to the product originally sought, frequently arranging short-term, high interest, loans instead.
• Misleading consumers into believing it was a loan provider rather than a credit broker.
• Treating customers poorly by not providing refunds in a timely manner.

Following the OFT’s investigation, Yes Loans made a number of changes to how it operates, including no longer charging upfront fees. A number of other associated companies also surrendered or withdrew their consumer credit licences or applications.

Despite these changes, the OFT determined that the evidence of prolonged engagement in deceitful and oppressive business practices, and the continuing presence of some of the staff responsible for running the businesses, makes them unfit to hold a consumer credit licence.

David Fisher, Director of Consumer Credit at the OFT, said:

‘We will take decisive action to tackle businesses that fail to treat people properly, especially the most vulnerable.

‘This action also makes it clear that belatedly changing business practices when facing the prospect of enforcement action by the OFT does not make a company fit to hold a credit licence’.

The report focuses on the regulation of consumer debt, payday loans, the role of the Money Advice Service and Debt Management Companies.
Commenting on the report’s conclusions regarding debt management companies, chair of DRF David Mond said:

“This report is published at a time of great change in debt resolution, with new guidance from the OFT expected shortly, with changes in funding and access to debt advice being put forward by the Money Advice Service and with the possibility of the development of a protocol compliant or regulated debt management plan being put forward by the Insolvency Service.”

Little of this has been taken fully into account by the committee’s report.

“However, the DRF welcomes a number of the committee’s recommendations, including powers for regulators to ban harmful products and a fast track procedure to suspend credit licences. The DRF believes the latter would be best achieved by properly resourcing the OFT and its successor, the Financial Conduct Authority (FCA), rather than introducing a fast-track procedure that could lead to compliant businesses having licences suspended without due process, something that would almost certainly force a viable business into insolvency.

“DRF supports full transparency regarding debt management companies’ fees, something that has been achieved by the members of trade associations like DRF. We do not however support the phasing out up-front fees, which effectively remunerates companies for the high proportion of the work that is done at the beginning of any debt management plan in setting them up.

“The DRF wholeheartedly welcomes the committee’s recommendation that there should be an effective audit of debt resolution companies’ client accounts. Industry practice in this area is not consistent and could lead to real consumer harm in the event of a company’s insolvency. The DRF will be putting forward standards to address this”.

The firm has also recently moved into its new 14,200 sq. ft. offices in Jackson House, to accommodate for this growth, which will include recruiting 10 apprentices, as well as trained debt resolution specialists.

Mark Broadstock, managing director of Smooth Group, and member of the debt resolution forum, commented that this is an important step for Smooth as it has already made a number of senior level appointments over the last six months, with this further expansion part of its 2012 growth strategy.

He said:

“Despite the region’s high unemployment figures, that reached 9.3 per cent this month, and therefore a larger pool of potential employees, it has been a challenge to find the right quality applicants locally, to fill our current staffing requirements.

“However, with the rapid rate of growth the company has experienced recently, we are in need of expanding our workforce to ensure that our high level of customer service is maintained, as well as allow for further increases in demand. We have therefore joined up with The National Apprenticeship Scheme which we hope will provide us with enthusiastic and top-quality candidates, as well as establish our own in-house teaching facility, Smooth Academy, to ensure that all new starters, as well as existing staff, have access to continuous training in customer services, debt resolution and regulation, and progress their career in this industry.

“This is a substantial stride forward for Smooth Financial and demonstrates not only our commitment to the company as we continue to deliver first-class service to all our clients, but to the region as well as we look to significantly invest in the local community.”