We Introduce You

The Money Debt and Credit group (MDCG) started to trade on the stock market today. The organisation has a capitalisation of £10million and raised £3million (gross) through its recent flotation.

This again increases the number of listed companies dealing in IVAs and it will be interesting to see what happens to the industry in the coming months. As you may have heard, the various government bodies have said they will not regulate the market for now and this has led to a self-regulatory body being formed.

Being wary that the dramatic increase in IVAs is increasing their write offs, the banks are being very vocal about the industry and the IVA industry is ping-ponging the comments back by saying the banks should lend more responsibly in the first place.

As most of the companies involved in IVAs are pretty small fry, it is an absolute certainty that there will be some industry consolidation in the next few months.

For your interest, I’ve listed out all the LSE companies I could find dealing in IVAs and I’ve attempted to add a rough percentage of how much they say their turnover has increased in the last reporting period and also included a listing date. Some of the businesses deal purely in IVAs, whereas others complement them by dealing in things like Secured Loans. You can see from the list that nearly all of them were floated quite recently.

Debts.co.uk (DETS) - Listed May 2006 - turnover up 79.3%
Accuma Group PLC (ACG) - Listed March 2006 - turnover up 250%
Debt Free Direct (DFD) - Listed December 2002 - turnover up 91% (Interims)
Debtmatters Group (DEBT) - Listed June 2005 - 465% (Interims)
Cleardebt Group PLC (CLEA) - Listed February 2006 - difficult to establish turnover increase, but impressive month on month growth in IVAs. Cleardebt was renamed from Carrwood PLC.
Invocas Group PLC (INVO) - March 2006 - 50% increase (Interims). Deals in Protected Trust Deeds (Scottish equivilant of IVAs)
Compass Finance Group PLC to rename to the Debt Advisor Group. Recently entered IVA market through an acquisition earlier this year.

This morning Debmatters, who recently reported a good set of interims, announced a boardroom change. Jonathan Timmis joins on January 2 as Technical Director on the Operations Board.

Jonathan is a licensed insolvency practitioner and has held several positions within the industry including roles at Lathams as well as Ratcliffe & Co.

Ges Ratcliffe, the Debtmatters CEO, has previous experience of working with Timmis at Ratcliffe and Co., which was a predecessor to Debtmatters.

In this mornings announcement Debmatters say, “Jonathan, who joins from his own successful Lancaster based practice, which he founded in 1999, will bring with him a portfolio of cases as well five experienced members of staff who will join Debtmatters’ Corporate and Commercial Division.”

So it appears on the face of it, Timmis must be getting more out of the deal than merely a place on the board.

Debmatters entered the Secured Loans market through its purchase of Loanmakers in June and hopes to grow the cross referral of IVAs and secured loans between the two businesses.

In another change, Elephant Loans and Mortgages, who reported yesterday, announced the appointment of Maria Giambrione as Company Secretary. Elephant say Maria will be responsible for the accounts and administrative functions of the Group.

She replaces, David Gammond, who recently worked on the IVA operating subsidiary DebtSmashers, and has handed over his executive responsibilities but will be responsible on a non-executive basis for overseeing corporate strategy and specific projects.

One thing I’ve always found interesting is how the press reports things. As an example, take the recent knife amnesty. More or less as soon as it was announced the Press Association started to report individual stabbings and all of a sudden the general public were whipped into a belief that there was a growing knife culture. In reality the number of stabbings hadn’t materially increased since the beginning of accurate records began.

I recall this because in some ways a similar sort of ’selective reporting’ has happened again today.

Let me explain. In 2005 a task force was formed by CWC and Le Bea Visage to increase the sales of income protection. Members of the task force include Prudential, Bupa, Friends Provident and Legal and General and the idea behind the movement is to counteract the falling sales of Income Protection.

As opposed to individual protection for each product bought, like taking out Mortgage Payment Protection Insurance (MPPI) against a home loan, income protection covers the total loss of all income. Up until quite recently income protection was called Permanent Health Insurance (PHI).

Today the taskforce produced a 40 page white paper outlining its views on why people weren’t buying Income Protection, why they should and laid down a nine point recovery plan of how it was going to instigate a market recovery. In the same document the task force also openly criticised the sale and profiteering of payment protection insurance.

The thing that I find interesting is that, as Payment Protection Insurance (PPI) is hot news, the newspapers (or the on-line versions at least) hardly mention the substance of the white paper and just report the PPI elements of it. For example the Guardian tells us “Taskforce demands consumer protection over PPI” and the Daily Mail says, “Task force slams PPI sales tactics”.

To quote the old adage any press coverage is good press coverage, so maybe the task force will be content, but perhaps we should remember our hunger for sensationalism will always override the fact that 95% of real news really is actually quite boring.