Insolvencies rise amongst the wealthy

Yuan Phoon

May 4, 2012

The Insolvency Service today revealed that there was a 4.7% drop in personal insolvencies over the first quarter of the year compared to the same quarter in 2011.

Experian investigated the demographic of the insolvencies using its Mosaic classification system.

Those in the Active Retirement group, consisting of retirees likely to be on an occupational pension, and the Rural Solitude segment of those people living in small villages, both saw the proportion of insolvencies in their demographic increase since Q4 2011.

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These groups saw 2.70% and 3.35% of insolvencies respectively in January to March this year.

The largest share of UK insolvencies continued to be from the Ex-Council Community classification, typically individuals living on council estates where a large number of residents have exercised their right to buy.

This group made up 9.26% cent of the UK adult population and they accounted for 14.6% of all insolvencies, a rise of 23bps compared to the same quarter last year.

Young professionals experienced the biggest drop in their share of personal insolvencies in the past 12 months.

The New Homemakers group, typically young professionals who have recently bought a new home, saw its proportion of insolvencies decrease by 41bps to 5.39% in Q1 2012.

The Liberal Opinions group consisting of young, professional and well educated people also experienced a fall in its share of insolvencies, from 5.76% in Q1 2011 to 5.38% in Q1 2012.

Experian revealed that while the total number of individuals being declared insolvent had fallen across the country, some pockets of the UK continued to struggle.

St Albans saw the biggest increase of 31% with five in every 10,000 households encountering insolvency in Q1 2012, compared to four in every 10,000 households this time last year.

Birmingham Central and Skipton also saw rising levels of personal insolvencies, up by 21% and 20% respectively.

Poole, the large coastal town of Dorset recorded the UK’s biggest drop in insolvencies, with just three people in every 10,000 households being declared insolvent, 69% less than Q1 2011.

London remained one of the least affected regions with four in every 10,000 households experiencing insolvency in Q1 2012, compared to six in every 10,000 in Q1 2011.

Simon Waller, head of customer management and collections for Experian UK and Ireland, said: “Although it’s positive news that personal insolvency levels are continuing to fall in the UK overall, it is clear that this positivity is not being felt uniformly across the country.

“Understanding that an individual’s circumstances as well as their environment can impact their ability to meet their credit commitments is critical for when assessing portfolios.

“By using data and analytics to identify the specific needs and characteristics of customers, lenders can better identify those that are genuinely struggling to service their household bills and credit commitments so they can treat them sensitively and according to their individual circumstances.”

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