BenchMark Consulting International, an international management consulting firm to the financial services industry, announced the results of the 2004 Consumer Credit Collections Study, which revealed a slight decrease in the overall average consumer loan dollar delinquency rate, a rise in the overall charge-off rate, and a decline in the recovery rate, year over year. Benchmark's 2004 study is a detailed analysis of collection and recovery activities and trends within the consumer lending industry and coordinated with the Consumer Bankers Association (CBA).

Respondents of the study, which measured collections and recovery activities of 43 North American financial service organizations from January 2003 to December 2003, included commercial banks, automobile finance companies, savings and loans, and consumer finance companies.

This year, the average consumer loan account size is 29-percent larger than last year's average size and the highest size in the past five study periods. On the other hand, overall average dollar delinquency rate is the lowest it's been in the past five study periods reflecting the increasing influence of home equity outstandings on the study's composite consumer loan portfolio. The 1.31-percent dollar delinquency rate is well below the 12-year average delinquency rate of 1.44 percent.

Product delinquency rates decreased across the board from last year's reported results with the exception of automobile loan delinquency rates, which are 12-percent higher. Indirect and direct automobile loans contributed more than 55 percent to charged-off dollars. And dollar charge-off rates, defined as dollars charged off divided by dollars delinquent, increased overall to 6.2 percent from a four-year low of 4.7 percent, reported last year.

While recovery rates were reported to be at a four-year low on an overall average, the use of recovery incentives is at an all-time high among the small and large class of participants. The average dollars recovered among those who do offer incentives is more than five times higher than those who do not offer incentives. Of those paying incentives, monthly awards double the dollars recovered on average versus quarterly awards.