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YORKSHIREMEN are supposed to be no-nonsense, hard-working and “vigilant” with money. (Who invented copper wire? Two Yorkshiremen fighting over a penny.) All traits that may serve Luke Hirst well in the emotionally fraught, uncharted world of debt counselling.
As MD of DebtBusters, Hirst – who hails from York and only moved to South Africa six years ago – has been building up the country’s largest debt counselling group measured by debt under management (R2.5bn).
After earning a postgraduate degree in microbiology, Hirst worked at Morgan Stanley, State Street and SWIFT in London for eight years when homesickness overcame his South African wife, Lauren.
Visa restrictions made pursuing a job in SA’s financial industry difficult so Hirst started a couple of small businesses, mostly in wine. In 2007, fellow Brits Ian Wason and Richard Pembroke – who had established debt consolidation and insurance group Intelligent Debt Management in 2004 – enlisted his help in getting a debt counselling service off the ground.
SA’s National Credit Act allowed overindebted consumers to turn to accredited debt counsellors, who would typically propose more manageable repayment schedules to their creditors. Should creditors refuse the new terms, counsellors could turn to the courts.
DebtBusters quickly built up a national client base of 6 000, serviced by 90 employees in Cape Town’s CBD. Its typical client has an income of R17 000/month, with 10 credit agreements and R600 000 in debt (including cars and mortgages).
“South Africans have a weakness for spending on up-market brands,” says Hirst. “In particular new, expensive cars – the fastest way to lose money – are ruining household finances.”
While there’s been a slight decrease in household indebtedness, Hirst doesn’t see any light at the end of tunnel. He expects salary hikes to level off, while living expenses (school, municipal and electricity bills) will continue to soar. When interest rates eventually start to rise, this will add to the pressure.
Already 11 million South Africans are in arrears. And with only 200 000 receiving counselling, DebtBusters finds itself in a growth industry. Hirst also expects many debt counsellors who saw an opportunity to make a quick buck will bow out – in part due to the stressful and upsetting nature of the job and the constant confrontation with lives ruined through debt and retrenchments.
“We only have strong characters working for us, with the empathy and skills to offer the best advice.”
Debt counselling itself is also facing an uphill battle due to court backlogs and massive distrust from creditors: just 25% of those under debt review actually make their agreed monthly repayments.
DebtBusters has seen to it that 75% of its clients honour their payments and Hirst stresses the importance of working with financial institutions in particular. “We need to keep the banks strong.”
DebtBusters is currently earning the bulk of its income from its clients’ rehabilitation fees – the equivalent of one month’s debt payment under the new repayment plan, up to a maximum of R3 000, plus 5% of the monthly debt payment.
“We want to work for that 5%,” says Hirst. DebtBusters encourages its clients to remain in contact. That’s part of the group’s vision of establishing a long-term relationship with clients, seeing them through rehabilitation (normally three to five years) and then helping them to build wealth.
The group employs a number of financial planners and looks to expand its current services, which include negotiating better life insurance deals for clients. DebtBusters also hopes to eventually provide financial education services to companies, schools and universities.
Disproving the old joke that the only difference between a Yorkshireman and a coconut is that you can get a drink out of the latter, Hirst remains involved in providing wine to both the local and export market through his Vivo Pronto shop in Cape Town.
- FinWeek
As MD of DebtBusters, Hirst – who hails from York and only moved to South Africa six years ago – has been building up the country’s largest debt counselling group measured by debt under management (R2.5bn).
After earning a postgraduate degree in microbiology, Hirst worked at Morgan Stanley, State Street and SWIFT in London for eight years when homesickness overcame his South African wife, Lauren.
Visa restrictions made pursuing a job in SA’s financial industry difficult so Hirst started a couple of small businesses, mostly in wine. In 2007, fellow Brits Ian Wason and Richard Pembroke – who had established debt consolidation and insurance group Intelligent Debt Management in 2004 – enlisted his help in getting a debt counselling service off the ground.
SA’s National Credit Act allowed overindebted consumers to turn to accredited debt counsellors, who would typically propose more manageable repayment schedules to their creditors. Should creditors refuse the new terms, counsellors could turn to the courts.
DebtBusters quickly built up a national client base of 6 000, serviced by 90 employees in Cape Town’s CBD. Its typical client has an income of R17 000/month, with 10 credit agreements and R600 000 in debt (including cars and mortgages).
“South Africans have a weakness for spending on up-market brands,” says Hirst. “In particular new, expensive cars – the fastest way to lose money – are ruining household finances.”
While there’s been a slight decrease in household indebtedness, Hirst doesn’t see any light at the end of tunnel. He expects salary hikes to level off, while living expenses (school, municipal and electricity bills) will continue to soar. When interest rates eventually start to rise, this will add to the pressure.
Already 11 million South Africans are in arrears. And with only 200 000 receiving counselling, DebtBusters finds itself in a growth industry. Hirst also expects many debt counsellors who saw an opportunity to make a quick buck will bow out – in part due to the stressful and upsetting nature of the job and the constant confrontation with lives ruined through debt and retrenchments.
“We only have strong characters working for us, with the empathy and skills to offer the best advice.”
Debt counselling itself is also facing an uphill battle due to court backlogs and massive distrust from creditors: just 25% of those under debt review actually make their agreed monthly repayments.
DebtBusters has seen to it that 75% of its clients honour their payments and Hirst stresses the importance of working with financial institutions in particular. “We need to keep the banks strong.”
DebtBusters is currently earning the bulk of its income from its clients’ rehabilitation fees – the equivalent of one month’s debt payment under the new repayment plan, up to a maximum of R3 000, plus 5% of the monthly debt payment.
“We want to work for that 5%,” says Hirst. DebtBusters encourages its clients to remain in contact. That’s part of the group’s vision of establishing a long-term relationship with clients, seeing them through rehabilitation (normally three to five years) and then helping them to build wealth.
The group employs a number of financial planners and looks to expand its current services, which include negotiating better life insurance deals for clients. DebtBusters also hopes to eventually provide financial education services to companies, schools and universities.
Disproving the old joke that the only difference between a Yorkshireman and a coconut is that you can get a drink out of the latter, Hirst remains involved in providing wine to both the local and export market through his Vivo Pronto shop in Cape Town.
- FinWeek
