Includes sub-prime and near-prime credit
NB 2023 report to be published later in March. Clients who purchase now will receive the old version immediately and the new one as soon as it is finalised.

About the report

Our review of the non-prime, or high-interest, consumer credit market describes the market for consumer credit agreements with average fixed interest rates over 30% per year, and profiles the main lenders involved in it. It includes:

– Discussion of key segment issues including the impact of regulation, and sets out our estimates of historical and forecast growth for each.
– A set of 40 lender profiles of those active in the sector, covering financial performance, ownership, loan products offered, market positioning, corporate activity and history of the lender.

We cover the following segments and lenders operating within them:

Many of the leading providers and their investors are now involved in more than one segment

We estimate total loan receivables across the market to have been just under £10bn at the end of 2020, a modest fall from a year preivously.

Average loan durations vary by segment from under 3 months to 30 months.
Loan impairment levels vary by segment from 10% to 35% of gross loans.
Average interest rates vary by segment from 30% fixed to 260% fixed

Following several years of double-digit growth, the market was flat between 2018 and 2019, and then decreased slightly in 2020 following suspension of new lending during the early stages of the Covid pandemic. Key changes to the market in 2020 and early 2021 include:

Guarantor lending remained suspended due to FCA interventions
Motor finance and instalment loans continued relatively strong growth
There was a shift towards instalment loans, away from high cost short term credit, guarantor and home credit segments, reflecting regulatory pressures, home credit providers being unable to visit customers during the lockdown periods and consumer preference
Among higher cost providers (those with APRs of 50% of more) there has been a trend towards lower rates and smaller initial loan sizes, which we believe is to help address regulatory concerns

Given these trends, only motor finance and instalment loans have grown over the last three years with sub-prime credit cards being broadly flat, while other parts of the market have reduced in size. More changes are seen from new lending rather than receivables figures

The macroeconomic picture supports ongoing demand:

Forecasts are for unemployment to remain at similar levels with significant under-employment (those in work who want to work more hours than they currently do).

After a significant increase this year, real wages are expected to be flat for the next two years followed by much more modest increases.

Financial Conduct Authority regulation of consumer credit, together with Financial Ombudsman judgements based on compliance with FCA rules, remains a key constraint on growth.
Our forecasts are for instalment loans and motor finance to account for most of the overall growth in the non-prime market with some recovery in other segments including guarantor and rent-to-own.
Our expectations for individual segments are set out within the report.

Other factors which have influenced the growth of the market, and which are analysed in the report, include:

General economic performance which influences the appetite of consumers for borrowing and also their ability to repay loans they take out
Overall consumer borrowing as, with many non-prime borrowers seeking to borrow for reasons similar to those of mainstream borrowers and availability of finance for both being subject to similar influences, demand for non-prime credit is likely to follow a similar trend to that of overall lending.
Levels of unemployment and underemployment, which affect the number of people who are in a position to obtain both non-prime and mainstream credit, as well as ability to repay loans
Trends in earnings from wages and benefits, which show that, while wages have grown in recent years, the government’s austerity agenda has led to significant working-age benefit cuts and that debt levels are high relative to earnings
Other workforce trends, such as self-employment and trade union membership, which show an increase in the precariousness of the labour force and a weakening of the ability of organised labour to increase wages
Trends in housing costs and affordability
Reduction in the number of bank branches and credit cards in circulation, which give some indication of reduced access to mainstream finance.
Personal insolvency levels, which remain high by historical standards
Rises in other measures of poverty such as food bank usage and rough sleeping levels, which confirm that the numbers in extreme poverty – who are likely to struggle to repay loans – are increasing

Who is the report intended for?

Operators of of non-prime businesses themselves
Investors in these businesses
Retailers
Market regulators and policymakers
Banks, analysts, consultants and other parties with interests in the sector

What are the sources and methodology?

Interviews with senior-level contacts in the consumer credit industry
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 flex them where required to model alternative scenarios.

Who was the report written by?

Frank Proud

Frank founded Apex Insight in 2012 and set up our Consumer Credit practice
His background is strategy consulting, with two firms, Bridgewater and Burlington, which were originally founded by ex-Bain teams.
Subsequently, he was a senior member of the Transaction Support team at EY, advising private equity firms and corporate acquirers on commercial due diligence and other acquisition-related issues.
He leads Apex Insight’s consulting work for investors and clients in the industry
He has an MA in Economics from Cambridge University.

Julian Rose

Julian is a specialist in the regulation of asset finance markets including business leasing and consumer credit.
From 2008 to 2014 Julian was Head of Asset Finance at the Finance & Leasing Association.
His previous experience spans regulation with the Financial Reporting Council and Competition Commission (now the Competition and Markets Authority), management consulting with PwC and KPMG, and industry with NCR and UPS.
He is a Chartered Management Accountant and has Masters Degrees in Management from Boston University and Competition and Regulation from the University of East Anglia

About this report 2
Summary 5
Contents 9
Non-prime consumer credit market 17
Definition 17
Number of non-prime consumers 18
Non-prime consumer credit market segments 19
Market growth 20
Non-prime consumer credit segments 22
1. Guarantor Finance 22
Definition 22
Key players 22
Sector size 22
Sector trends 22
2. High Cost Short Term Credit (HCSTC) 23
Definition 23
Key players 23
Sector size and trends 23
Insight: Price cap makes traditional payday loans unprofitable 24
3. Home-collected Credit 25
Definition 25
Key players 25
Sector size 25
Sector trends 25
Source: Apex Insight analysis 25
4. Instalment Credit 26
Definition 26
Key players 26
Sector size 26
Sector trends 26
5. Motor finance 27
Definition 27
Significant players 27
Sector size and trends 27
Sector trends 27
Insight: Non-prime credit accounts for small part of car finance market 28
6. Credit cards and other revolving Loans 29
Definition 29
Key players 29
Sector size 29
Sector trends 29
7. Pawnbroking 30
Definition 30
Significant players 30
Sector size 30
Sector trends 30
8. Logbook loans 31
Definition 31
Significant players 31
Sector size 31
Sector trends 31
9. Rent-to-own 32
Definition 32
Significant players 32
Sector size 32
Sector trends 32
Insight: Non-prime finance slowly departs the high street 33
Alternatives 34
Credit unions 34
Community Development Finance Institutions 34
Fintech solutions 34
Government alternatives 34
Unauthorised lenders 34
Forecasts 35
High Cost Short Term Credit (HCSTC) 36
Home-collected credit 36
Instalment credit including some second-charge mortgages 36
Motor finance 36
Credit card and other revolving loans 36
Pawnbroking 36
Logbook loans 36
Rent-to-own 36
Drivers of Non-Prime Credit Usage 37
1. Economic growh 37
2. Consumer borrowing 38
3. Unemployment and underemployment 39
4. Wage growth and the impact of benefit policies 40
5. Levels of self-employment and trade union membership 42
6. Housing costs 43
7. Access to mainstream finance 44
8. Personal insolvency and bankruptcy 45
9. Other poverty indicators: food bank usage and rough sleeping 46
Non-Prime Credit Regulation 48
FCA regulation 48
Insight: Affordability regulation is key to the market 49
FOS complaints / losses 50
Financial performance of lenders 52
Productivity analysis 53
Firms leaving non-prime consumer credit 54
Major lenders (loan books >£20m) 55
1st Stop 55
Ownership 55
Corporate activity 55
Products 55
Advantage Finance 56
Ownership 56
Corporate activity 56
Products 56
Recent information 56
Amigo Loans 57
Ownership 57
Corporate activity 57
Products 57
Recent information 57
Avant Credit 58
Ownership 58
Corporate activity 58
Products 58
Other information 58
Bamboo 59
Ownership 59
Corporate activity 59
Products 59
Billing Finance 60
Ownership 60
Corporate activity 60
Products 60
Other information 60
Blue Motor 61
Ownership 61
Corporate activity 61
Products 61
Recent information 61
Capital One 62
Ownership 62
Products 62
CashEuroNet UK (Enova) 63
Ownership 63
Corporate activity 63
Products 63
Other information 63
Caversham Finance (Brighthouse) 64
Ownership 64
Corporate activity 64
Products 64
Recent information 64
Darwin loan solutions (Evolution, Progressive) 65
Ownership 65
Corporate activity 65
Products 65
Recent information 65
DJS (UK) 66
Ownership 66
Corporate activity 66
Products 66
Recent information 66
Elevate Credit International (Sunny) 67
Ownership 67
Corporate activity 67
Products 67
Recent information 67
First Response 68
Ownership 68
Corporate activity 68
Products 68
Other information 68
Gain Credit 69
Ownership 69
Products 69
H & T Group PLC (Harvey & Thompson) 70
Ownership 70
Corporate activity 70
Products 70
Other information 70
Indigo Michael (Safety Net Credit) 71
Ownership 71
Corporate activity 71
Products 71
Madison CF UK (118 118 Money) 72
Ownership 72
Corporate activity 72
Products 72
Other information 72
Marsh 73
Financials 73
Ownership 73
Corporate activity 73
Products 73
Other information 73
Morses Club 74
Ownership 74
Corporate activity 74
Products 74
Other information 74
Mutual 75
Ownership 75
Corporate activity 75
Products 75
Other information 75
MYJAR 76
Financials 76
Ownership 76
Products 76
Other information 76
New Day 77
Ownership 77
Corporate activity 77
Products 77
Ownership 78
Corporate activity 78
Products 78
Other information 78
Norfolk Capital 79
Ownership 79
Corporate activity 79
Products 79
Other information 79
Oakbrook Finance 80
Ownership 80
Corporate activity 80
Products 80
Other information 80
Private & Commercial 81
Ownership 81
Corporate activity 81
Products 81
Provident 82
Ownership 82
Corporate activity 82
Products 82
Other information 82
Startline 83
Ownership 83
Corporate activity 83
Products 83
Recent information 83
Temple Finance 84
Ownership 84
Corporate activity 84
Products 84
Other information 84
Other lenders (loan books £5m to £20m) 85
Active Securities 85
Cash on Go 85
Ferratum UK 86
Go Car Credit 86
Greenlight Credit 87
Instant Cash Loans 87
Loans2Go 88
Mallard Leasing 88
PDL Finance 89
Premium Plan 89
Ramsdens Financial 90
Speedloan Finance 90
Think Money 91
Uncle Buck Finance LLP 92
Valour Finance 92

List of charts and tables

Non-prime net receivables by sector 2018 (£ million) 5
Growth rates in non-prime receivables 2016-2018 (CAGR) 6
Revenue by non-prime segment 2018 (£ million) 19
New lending by non-prime segment 2018 (£ million) 19
Net receivables by non-prime segment 2018 (£ million) 20
Non-prime consumer credit net receivables - active firms (£ million) 20
Non-prime receivables growth (2016-2018 CAGR %) 21
Guarantor Finance sector key data December 2018 (estimates) 22
HCSTC new lending value (£ billion) 23
HCSTC Finance sector key data December 2018 (estimates) 23
Summary of profitability of HCSTC loans 24
Home Credit lenders revenue 25
Home collected credit sector key data December 2018 (estimates) 25
Instalment credit sector key data December 2018 (estimates) 26
Motor finance sector key data December 2018 (estimates) 27
Used car finance market shares by revenue, 2017 28
Credit cards and other revolving loans sector key data December 2018 (estimates) 29
Pawnbroking key data December 2018 (estimates) 30
Logbook loans key data December 2018 (estimates) 31
Rent-to-own key data December 2018 (estimates) 32
Number of high street stores offering non-prime consumer credit 33
Historical and forecast new non-prime lending by segment / £m 35
Historical and forecast new lending by segment excluding credit cards/ £m 35
UK real GDP / annual changes 37
UK historical & forecast unsecured household debt / £bn 38
Unemployment and underemployment / m 39
Number of people in employment / m 39
UK median earnings (current prices) / % annual change 40
UK welfare spending by recipient segment / % of GDP 41
UK household debt to income ratio 41
UK self-employed workers / ‘000 42
UK trade union membership / ‘000 42
Ratio of median house price to median gross annual residence-based earnings (England and Wales) 43
Number of UK bank branches 44
Number of credit cards in issue / m, end of year 44
Historical number of new personal insolvencies per year (England) / '000 45
Food bank usage/ ‘000 parcels distributed by Trussell Trust 46
Rough sleeping – England 47
Key FCA regulatory requirements relevant to Non-Prime Consumer Credit 48
Complaints handled by non-prime firms 50
Complaints handled by Financial Ombudsman Service 50
Volumes of new FOS complaints by product 51
Profitability and loan provisions of leading firms 52
Profitability and loan provisions of leading firms (excluding NewDay, Capital One) 52
Net loan receivables per employee, CAGR 2016-18 53
Non-prime consumer credit receivables (net of impairments) £ million 2017/8 54
Key firms leaving market 54
1st Stop Financials 55
1st Stop Receivables / £m 55
Advantage Finance Limited Financials 56
Advantage Finance Limited Receivables / £m 56
Amigo Loans Limited Summary Financials 57
Amigo Loans plc Receivables / £m 57
Bamboo Limited Summary Financials 59
Bamboo Limited Loan Receivables / £m 59
Billing Finance Limited Summary Financials 60
Blue Auto Holdings Limited Summay Financials 61
Capital One (Europe) PLC Summary Financials 62
Capital One (Europe) PLC Loan Receivables / £m 62
CashEuroNet UK Summary Financials 63
Caversham Finance Limited Summary Financials 64
Darwin Loan Solutions Limited Summary Financials 65
Darwin Loan Solutions Limited Loan Receivables / £m 65
DJS (UK) Limited Summary Financials 66
DJS (UK) Limited Loan Receivables / £m 66
Elevate Credit International Limited Summary Financials 67
Elevate Credit International Loan Receivables / £m 67
First Response Finance Limited Summary Financials 68
First Response Finance Limited Loan Receivables / £m 68
Gain Credit LLC Summary Financials 69
Gain Credit LLC Loan Receivables / £m 69
H&T Group Summary Financials 70
Indigo Michael Limited Summary Financials 71
Indigo Michael Limited Loan Receivables / £m 71
First Response Finance Limited Summary Financials 72
Madison CF UK Limited Loan Receivables / £m 72
Morses Club plc Summary Financials 74
Morses Club plc Loan Receivables / £m 74
Mutual Clothing and Supply Company Limited Summary Financials 75
Mutual Clothing and Supply Company Limited Loan Receivables / £m 75
MyJar Limited Summary Financials 76
NewDay Group (Jersey) Limited Summary Financials 77
NewDay Group (Jersey) Limited Loan Receivables / £m 77
Non-Standard Finance plc Summary Financials 78
Non-Standard Finance Loan Receivables / £m 78
UK Credit Limited and Mobile Money Limited Summary Financials 79
UK Credit Limited and Mobile Money Limited Loan Receivables / £m 79
Oakbrook Finance Limited Summary Financials 80
Oakbrook Finance Loan Receivables / £m 80
PCF Bank (Consumer Finance Division) Summary Financials 81
Provident Financial Group PLC Summary Financials 82
Provident Financial Group PLC Loan Receivables / £m 82
Startline Motor Finance Limited and Startline Auto Receivables Limited Summary Financials 83
Startline Auto Receivables Loan Receivables / £m 83
Temple Finance Limited Summary Financials 84
Temple Finance Limited Loan Receivables / £m 84

UK Non-Prime Consumer Credit: Market Insight Report 2023