High Cost Credit
Business, Innovation and Skills
Norman Lamb (North Norfolk, Liberal Democrat)
I have today published a progress update which BIS has received from the University of Bristol Personal Finance Research Centre into the impact of a variable cap on the total cost of high-cost credit.
The research team have completed a targeted review of previous evidence and mapped the key findings against the research objectives. Fieldwork on the business survey has also been completed. This comprised qualitative in-depth telephone interviews with representatives from five high-cost lender trade associations and 24 lenders.
The topics covered in the trade association interviews were: market size and trade association coverage; the concept of a cap on the total cost of credit; how a cap on the total cost of credit might be structured; the level of a cap on the total cost of credit; profitability; problems said to be associated with these markets
The topics covered in the lender interviews were: background information about the business; loan product details; customers; risk assessment and management; costs and profitability; capping the total cost of credit; default charges
The consumer survey of 1,500 customers of payday loans, home credit and pawnbroking covered the following topics: general views and attitudes towards the high-cost credit sector used; shopping around for the loan; repaying the loan; satisfaction and self-reported impacts; other high-cost borrowing; financial circumstances and other borrowing; socio-demographic characteristics. This survey is being supplemented by around 15 qualitative in-depth interviews with consumers who have used high-cost credit.
We expect to publish the final report of this research during the summer and use its findings to help us develop policy.
We are placing copies of the progress update in the Libraries of both Houses.