Key to sustainable lending is to control credit risk and retain a low bad debt ratio. In 2013 our net bad debt cost further reduced to £116k despite the increase in the loan book and given the difficult economic environment.
We are very pleased with the progress achieved both in lending and control of delinquent loans. As a credit union, our ethos is to promote thrift and financial well being through saving. We continue to promote the need for regular savings, and all borrowing members must have savings plans.
One of our key concerns remains the number of applicants we see with a high cost credit problem – a problem that appears widespread and out of control. We can sometimes offer refinance, but more often than not debt advice and support is needed first.
We also note with concern the sharp rise in debt management plans, debt relief orders and other insolvency action. Particularly we note the poor quality of debt advice, which is often very short term in its nature and all too often comes with high fees payable to the debt adviser. This is an unregulated sector preying on the vulnerable consumers who are also at risk from and targeted by the high cost lending sector, which has seen such exponential growth in our city.
At this time Citysave has only very limited ability to address these concerns in Birmingham. We will though continue to campaign widely for better regulation of financial services which will over time limit the financial impact on those we would wish to serve.