Published: August-December 2015
Pages: 160
Format: PDF by email

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About this report

The high-cost credit market has shown rapid growth in recent years. However, more recently, factors such as the fall in the gold price and increase in payday lending regulation have led to some reverses. Nevertheless there remain some areas of strong growth and the outlook for the sector as a whole, now that the impact of regulation is becoming clearer, is more positive.

Lenders are often criticised for charging high rates of interest to low-income consumers. They are also frequently praised for offering credit to those who cannot obtain it from other sources and giving them an alternative to illegal loan sharks.

We aim to probe beneath these two viewpoints, explore the factors which have driven the recent growth trends in these segments and provide a view on how they are most likely to perform in the future, and why.

This high-cost credit market report combines all the findings and analysis from the latest versions of four separate market reports we have produced which review each of the main segments which go to make up the UK high-cost credit market. These are:

Online Payday Lending
Review of the market which grew rapidly but has recently been the main focus of regulators, with the FCA’s price cap having had a significant impact.

Rent-to-Own Retail 2015
An area which has seen fast growth in recent years making it one of the relatively few successes on the high street.

Pawnbrokers & Payday Loan Stores
Focuses on a sector which is adapting to the end of the gold price boom and has seen some recent restructuring of leading chains.

Home Credit
A large, but more mature segment

This report is therefore intended for clients with interest across all of these high-cost credit markets.

We quantify the market sizes, historical growth rates, segmentation patterns and levels of industry profitability while reviewing key factors behind these figures. We also carry out an in-depth analysis of the relevant drivers of industry growth – in particular the macroeconomic environment, trends in lending, the regulatory environment and other specific factors influencing high-cost credit markets such as the gold price, labour market trends and high-street retail trends – setting out historical patterns and available forecasts.

Our forecast for industry growth by segment is based on this analysis of historical trends and growth drivers.

Who is it intended for?

Payday loan companies
Home credit companies
Rent-to-buy retailers
Investors in those sectors
Government and regulatory bodies

What are the sources and methodology?

This market report is based on:
– Interviews with senior-level contacts across the high-cost credit market
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant market drivers
– Financial analysis of the accounts of companies in the industry.

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

Market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.