Joe Ganbler I recall when Thorn Group (TGA) owned NCML that its...

Joe Ganbler

I recall when Thorn Group (TGA) owned NCML that its management rather liked agency collections, because it required no up-front investment. NCML had a significant debt-collections contract with the ATO, which, sadly for TGA, was soon lost. It is standard for Commonwealth agencies to have contractual clauses that disallow data to be sent abroad, and in some cases the recipient in Australia must have a secure data facility approved by the Commonwealth. This is why the Adelaide collections centre that CCP acquired from TGA is an approved secure facility, or at least it was.

Baycorp had a fair-sized collections agency business, which is why CCP now reports on the business, rather than simply bundling it into the PDL business, as it used to. Agency collection is a simple cost-of-collections-based business with the revenue being an agreed cut of what is collected, and hence the accounting is less subjective (no up-front debt provisioning, and no exposure to the subjectivity that the fair-value accounting model gives to the PDL business). This makes the business difficult to compare with either the PDL business or the Loan business, both of which also require considerable funds to be invested up-front. CCP would have a fair idea of the cost of collections for any pool of debt of a given quality, so it can ensure that it gets a collections commission commensurate with the expense to collect, and the desired profit margin.

The teams collecting the debt are the same for all three of CCP's businesses (PDLs, Agency and Loans) for any given quality of debt, so if PDLs are expensive, CCP can deploy its collectors to non-PDL collections. I Expect the Agency business to grow from being a tiny insignificant business to become a small, but significant, business. CCP is too dominant in the Australasion PDL sector to grow there, so it must look elsewhere.