The depressing news from around the world continues to weigh heavily on the Australian economy, but until recently there have not been significant measurable consequences. Australia's banks have fared extremely well and have not been exposed to the "toxic loans" scenario faced across the United States, the United Kingdom and Europe. That said, the slowdown for Australian raw material exports that has been caused by the change in economic circumstances elsewhere has begun having an affect on Australia, and the economy has slowed, unemployment has begun to rise and collection activity has decreased.A survey of the major Australian debt buyers and contingent collectors confirms an expectation of continued growth both in account placements and in receivables outsourcing projects for the balance of this year and into 2010. The debt sellers will be assessing their strategies and reconsidering contingent placements as prices fall on the back on anticipation of a tougher recovery environment.
global focus What effect has the global economic slowdown had on the credit and collection industry in your region of the world? The depressing news from around the world Credit is more difficult to obtain with tighter risk continues to weigh heavily on the Australian evaluation. There is less money available due to economy, but until recently there have not been the difficulties faced by the banking sector, significant measurable consequences. Australia’s particularly in the home loans sector—with a banks have fared extremely well and have not been typical loan-to-value criteria of 75 percent, this has exposed to the “toxic loans” scenario faced across been compounded by 25 percent to 30 percent the United States, the United Kingdom and devaluation in house prices. Europe. That said, the slowdown for Australian raw material exports that has been caused by the Credit card companies have tightened their change in economic circumstances elsewhere has lending and in some cases have raised their interest Paul Cooney begun having an affect on Australia, and the rates, even though the bank base rate is .5 percent. economy has slowed, unemployment has begun to Debt recovery agencies are experiencing greater rise and collection activity has decreased. volumes, but maybe not as much as might have been expected. Collections are definitely more The impact of these changes is not dissimilar to difficult, with more consumers opting for that being experienced elsewhere in the world. repayment arrangements over the longer term However, because our unemployment has lagged rather than settling immediately. behind the losses that have occurred elsewhere, some of the drivers have remained solid for longer. More worrying is the frail position of some larger There is an increase in the volume of work being agencies and debt buying operations as their referred to agencies across the country and an holding companies find the difficult economic Paulson Lum increase in the number of accounts being offered climate and lack of funding is slowing down the for sale. Recovery rates are beginning to slow, but momentum. As a result, debt buying prices have
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