Category Archives: Payday Loans

FCA Warning: Are Young People In The UK Borrowing Too Much?

FCA Warning: Are Young People In The UK Borrowing Too Much?

In a recent ”Money Matters” interview with BBC, the C.E.O. of the FCA, Andrew Bailey expressed concerns about growing debt among young people aged between 18 and 34 years in the UK. His concerns came as the number of insolvent individuals in the 18 to 34 age bracket increased by 31% between years 2015 and 2016, according to the Insolvency Service.

The latest Insolvency Service statistics show that seaside towns in Wales and England have the worst debt levels among the youth in the UK. The towns that are worst hit include; Scarborough, Torbay, and the Isle of Wight.

The FCA is currently focusing on sustainable, affordable credit, i.e., reducing high-cost payday loans and long-term credit card debt. In his interview, Bailey warned that there is an increasing number of young UK citizens taking out credit cards and payday loans among other short-term credit loans to cater for basic living expenses.

Although Bailey goes ahead to state that the current debt levels haven’t reached a critical level from a macroeconomic standpoint, there are serious concerns about why debt levels are increasing among young people. Bailey attributes this new disturbing trend to a generational shift in patterns of wealth and income. He doesn’t view this trend as reckless borrowing per se, but an indication of the current basic living standards.

Bailey feels basic living costs have increased drastically over the decades forcing the young generation to borrow more to meet essential living costs. He points out specifics like the high cost of rental houses as well as poor/lack of income growth as the main causes of the debt problem. Today’s youth also have lower asset ownership levels which is a different generational experience from decades ago.

Bailey also attributes the current debt levels among the youth to an increase in ”unsecured lending” ranging from credit cards and overdrafts to car loan and personal loans. According to the latest Bank of England statistics, consumer debt now stands at over £200 billion and increasing drastically at 10% every year. Savings are also decreasing due to low interest rates and higher cost of living.

Other sentiments

According to Vince Cable, the Liberal Democrat Leader, the current debt problem among young people in the UK is attributed to the conservatives’ failure to implement their manifesto pledge on creating better laws for people facing financial difficulties. Cable claims the pledge to offer legal protection ranging from interest to charges and bailiffs for 6 weeks to individuals in distress because of debt will go a long way to solve the debt problem in the UK.

Jonathan Reynolds who is the Treasury’s shadow economic secretary finds a lot of human tragedy in the UK debt story. According to him, the youth don’t have a choice. Labour suggests there should be a cap on charges on other forms of short-term debt in line with the payday loan cap. According to Shadow Chancellor, John McDonnell, there is a need for special focus on credit card debt which has spiralled out of control. McDonnell has plans to help over 3 million people in the UK who are currently paying more than they should in interest payments.

Joanna Elson, the C.E.O. of Money Advice Trust agrees with Andrew Bailey’s sentiments. Elson states that although the current debt levels among the youth may not be severe to the economy, the trend has a critical effect on an individual level. Elson stresses the importance of debt advice but recognises the fact that very few young people are seeking financial advice when they find themselves in financial problems.

FCA intervention

The FCA is currently looking at some practices as well as forms of high-cost debt which are the main contributors to the UK debt problem. Although a lot has been done to regulate payday loans among other short-term loans in the recent past, the FCA boss would love to see increased focus on sustainable, affordable credit provision. The FCA has also turned its attention to the rent-to-own industry which charges high interest for ”white goods” like washing machines.

The FCA clampdown on payday loan lenders which started in 2015 brought sanity to a troubled industry. Payday loan charges are now capped. Borrowers don’t need to worry about affordability as long as they choose a reputable payday lender. Furthermore, there has been reduced over-dependence on payday loans according to Treasury select committee member, Kit Malthouse.

The next step is making the payday loan rules an industry standard. The FCA boss has stressed the importance of sustainable credit in society and offered assurances on maintaining a close eye on high-cost lending going forward.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Data Protection Laws Set to Tighten in the UK

Data Protection Laws Set to Tighten in the UK

The British government has proposed a data protection bill meant to give the British people more power and control over how their personal data is used. The bill proposes a number of changes to the current data protection laws the most notable being; easier access to all data held by companies, increased ability to withdraw access as well as the ability to request data deletion.

The regulation which will bring GDPR (General Data Protection Regulation) into UK law is set to be in effect in less than a year according to Matt Hancock, the UK Digital Minister behind the proposed bill. Hancock states that the new data protection laws will offer the UK a more dynamic and robust set of data laws. In a statement issued by Hancock, ”UK citizens will have more control over how their data is used. The proposed data laws will also prepare UK citizens for Brexit.”

The new regulation has caused concern in organizations across the UK given the fines applicable are easier to issue and more damaging to companies which fail to comply. For instance, fines could amount to 4% of a company’s total global turnover which could easily lead to the downfall of many companies in the event of serve fines. Currently, data protection fines can’t exceed £500,000.

Data protection incidents

Data breaches in the UK have increased in the recent past. Hundreds of thousands of UK citizens have been left exposed by data breaches in the past. A notable example is the data breach that hit UK’s leading payday loan lender Wonga. The incident affected approximately 245,000 Wonga customers in the UK and 25,000 in Poland.

The Wonga data breach happened in March 2017. Wonga, however, waited until April 2017 to notify its clients after establishing the extent of the breach. The incident saw Wonga customer’s names, addresses, phone numbers, bank a/c and sort code numbers stolen. Wonga has suffered another data breach back in 2012/13. The identity theft incident saw Wonga customers lose £3 million after scammers made over 19,000 fraudulent payday loan applications.

UK telecom company TalkTalk has also been a victim of a data breach. In October 2015, TalkTalk systems were hacked compromising customer information belonging to 157,000 customers. The company was fined £400,000 which was far from substantial according to many people. The importance of better data protection laws can’t, therefore, be ignored. With the new laws, firms must be more vigilant in protecting customer’s data or face serious repercussions. Research from Veritas indicates that only 9% of companies in the UK have appropriate data protection practices in place today even with the ongoing regulatory changes.


With the proposed data protection laws set to take effect in less than a year, it is important for organizations to take all the necessary steps in the right direction.

Information Technology

Organizations using cloud and automation technology already will find it easier to cope with the new data protection laws. When GDPR comes into effect, all organizations handling personal data belonging to UK citizens will have to comply. The first step towards compliance is getting the right IT systems in place. Safeguards must also be built into all processes from the beginning to the end.

Data migration

Organizations may also be forced to move data. According to Peter Godden, Vice President of EMEA at Zerto, businesses may be required to move critical data in/out of Britain to comply with the new regulations. Many companies stand to struggle to move critical data across various systems without experiencing problems like downtime. Good businesses continuity plans are crucial going forward for companies keen on avoiding data migration problems.

Data storage

The new data protection laws will also introduce data storage challenges. According to Matthew Bryars, CEO of Aeriandi, ”many companies have not considered the impact of GDPR on data storage processes such as storage of customer calls done to improve customer service. The new laws give customers an express right to demand for their personal call information/data to be erased. The laws are also more stringent on backup and storage of voice call data. Businesses must develop the capacity and ability to store and retrieve customer call data faster on request.”

Nexsan COO, Geoff Barrall also shares the same sentiments. According to him, ”CIO’s must evaluate their current IT infrastructure and create purpose-built secure data storage environments to be able to meet the new data protection laws. Barrall stresses the need for either cloud-based or on-site storage customer data storage solutions as long as they are flexible, agile and secure.”

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The FCA Maintains the Payday Loan Price Cap in Place until 2020

The FCA Keeps the Payday Loan Price Cap in Place until 2020

On 31st July 2017, the FCA published the results of a review it had done on high-cost credit which included an assessment of the effectiveness of its recent payday loan price cap.

The review offers undisputed evidence that the FCA regulation on payday loan lending has worked in favour of consumers as intended given that approximately 760,000 payday loan borrowers in the UK are saving over £150m every year. The review also shows that payday loan firms are now seeing fewer borrowers and debt charities with debt problems arising from expensive short-term credit. For these reasons, the FCA has decided to leave the current payday loan regulation unchanged until 2020.

Other forms of high-cost short-term loans

Besides clearing concerns on payday loans, the review also addresses concerns on other high-cost credit such as overdrafts. According to the review, The FCA feels fundamental changes on overdrafts are necessary in the future. Fees charged on unarranged overdrafts remain high and complex.

Home-collected credit, Rent-to-own credit as well as catalogue credit sectors are also on the spot. Although high-cost products and markets have many similarities, there are significant differences on how these products and markets work as well as how borrowers use them. The FCA is in the process of making tailored solutions to address these issues and is set to give a way forward in spring 2018.

According to the C.E.O. of the FCA, Andrew Bailey, high-cost credit products are a key focus for the regulator given the risks they expose to vulnerable customers. Bailey is pleased with the current evidence showing a clear improvement in the payday loan market after a period where payday loan firms used unacceptable business models. Besides the obvious improvement, he feels there is more to be done in terms of identifying other areas where short-term credit consumers may be suffering. Bailey’s focus is now on the nature as well as the extent of problems surrounding unarranged overdrafts without touching on the positive that customers find useful.


Alongside the review are proposals published to clarify FCA rules on affordability and creditworthiness. Most lenders understand the regulator’s rules concerning checks on prospective borrower’s creditworthiness including the products they can afford, however, there are uncertainties in parts of the credit market. For this reason, the FCA is proposing to effect some changes to make its expectations clearer.

The regulator has also published additional details on its motor finance work highlighting the issues it is considering as well as the steps it will take to develop an understanding on the market. An update is expected to be issued in 2018 during the first quarter.

Industry reaction

The FCA review results and comments have been received well in the industry. According to Eric Leenders, Managing Director, ”UK Finance members are committed to responsible lending and serving better those clients who need access to credit regardless of the type of credit product they need.” Leenders affirms the importance of consumer credit in promoting economic growth when used sustainably and recognises the importance of lenders working hard to balance between helping customers and ensuring long-term affordability. Leenders also agrees that transparency is an important issue and UK Finance is doing everything necessary to make overdraft fees clearer. Leenders also stresses the fact that UK Finance members are open to help customers struggling with repayments and welcomes efforts by the FCA to work closely with lenders.

Stephen Sklaroff, Director General of the FLA (Finance and Leasing Association) is of the same opinion. According to Sklaroff, ”the FLA is working tirelessly to make sure its members lend responsibly as well as treat customers fairly. We are aware that the FCA has found that most lenders are addressing affordability appropriately and we look forward to engaging the FCA on affordability assessments as the regulator does more exploratory work in motor markets.”

Gillian Guy, Citizens Advice C.E.O. attests to the fact that the payday loan price cap has protected many borrowers from unmanageable debt. According to Guy, ”many people were subject to extortionate charges trapping them into debt. Since the price cap among other new measures, fewer people are seeking our help.” Guy, however, states that things have improved for payday loans only. ”Other high-cost loans such as guarantor loans, doorstep loans, rent-to-own services and overdrafts are experiencing problems. It’s good to see the regulator recognise this and take the necessary action. We think a similar price cap will help safeguard consumers of these other forms of high-cost credit.”


Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

10 Years Later, UK is Getting Ready for Another Debt Crisis

10 Years Later, UK is Getting Ready for Another Debt Crisis

Ten years after the dreaded 2007 credit crunch, the signs of another impending debt crisis have begun to show. Prices are rising nonstop year after year while wages remain the same. Many people have also resulted to loans to survive. Unsecured consumer debt has reached the 2008 levels at over £200 billion and what’s shocking is; it’s rising by over 10% every year. In a nutshell, the UK is back to where it was before the credit crunch. The only difference is, there are concerns about it early.


Credit rating agency Moody’s and the Bank of England are among the institutions which have raised concerns about the impending debt crisis. The concerns of these institutions are however focused on the risks the current debt situation has on the economy.

The FCA (Financial Conduct Authority) has also expressed concerns and appears to do a better job by breaking the problem down at street level. According to the FCA, one in every six people with credit card debt, personal lending as well as car loans is in serious trouble. This translates to approximately 2.2 million people.

A recent TUC report dubbed ”Britain in the Red” highlighted this issue in 2016. According to the report, 3.2 million UK households were experiencing debt problems with 1.6 million people in serious debt problems i.e. spending over 40% of their monthly income to service debt.

What’s to blame?

The 2007 crash was blamed on reckless spending on luxury as well as household goods. The situation today isn’t much different with the biggest blame falling on cars.


One of the most favourite ways of getting money to spend on luxuries and household goods as a home owner in the past was to remortgage your home. But this only worked for homeowners who had bought homes before the market reached its peak. For those who are buying now, remortgaging isn’t an option. If the interest rates rise by 1%, 18,000 Britons risk going bankrupt according to the Insolvency Service.

The problem

The UK is just about to get into another debt crisis because of several factors. One, zero-interest deals are in abundance again. Many people are managing their credit cards by simply transferring debt. According to recent statistics, 43% of all credit card users in the UK have zero-interest deals. This may appear favorable to borrowers on face value, however; it has left many in persistent debt. Lenders love customers who manage to meet their minimum monthly repayment objectives. There are millions of such borrowers in the UK.

Personal loans are also a problem. Before the 2007 crash, the payday loan industry in the UK wasn’t as big. Nevertheless, people had begun depending on payday loans for survival. Statistics indicate that approximately 250,000 people were using short term loans such as payday loans as of December 2006.

The demand for short-term loans is also a problem. The recent payday loan regulations have made it harder for payday loan lenders to exploit vulnerable borrowers. However, the regulation can’t deal with the demand. Today, few people can be able to survive without debt. In 2017, debt is being taken for basic necessities as opposed to luxuries.

The reasons behind this are obvious. Wages have stagnated, yet prices keep rising. After the 2007 debt crisis, households cut off spending on new items. With time, however, spending is inevitable since things become old or get damaged. Most personal loans today are on rent-to-buy deals. Modern necessities i.e. white goods are being acquired more and more this way today.

What’s more is; people don’t save to buy such goods anymore. The low-interest rates have discouraged saving. As a result, fewer households have funds for catering for emergencies, let alone white goods when they are needed.

The biggest problem of them all is Britain’s skewed economy where wages don’t match the cost of living. Although low wages have been a problem for a long time, there were incentives like tax credits before. Today, the welfare state is being used to punish people. Individuals who are dependent are forced into accepting poor pay/conditions as well as debt simply because they don’t have an alternative.

Unsecured loans replaced Government tax credits after the crash.

The effects of this is; the poor will get poorer while the rich get richer. All signs show that the UK is getting into another debt crisis soon, unless something drastic is done to boost wages.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

5 Important Tips to Keep You Safe From Fraud

5 Important Tips to Keep You Safe From Fraud

Cybercrime incidences have increased drastically over the past decade. According to the Financial Fraud Action UK, online fraud incidences have increased by 53% over the past year alone. The latest statics show that someone is scammed online, in the UK, every 15 seconds. Most of these cases are affecting credit and debit card users who divulge their personal/bank details online making it easier for scammers to use this information in cases of data breaches. Short term loan borrowers like payday loan borrowers have also been victims of online fraud in the UK since such loans are acquired online.

There are a few quick steps you can take to avoid being part of this shocking statistic. One, you must trust your gut feeling when selecting offers or submitting personal information online. If an offer seems dodgy or too good to be true, it probably is. Two, you should never open unsolicited emails. Lastly, keep your pin/s and passwords secret/safe. Never divulge pin/password information online. Here’s a more in-depth discussion avoiding fraudsters.

Create ”perfect” passwords

You can’t afford to use regular words or obvious number combinations as passwords today. Hackers can ”break” such passwords. You should never use obvious words as passwords, i.e. your middle name, children’s names, etc. as name passwords are the easiest to crack. The ”perfect” password today consists of; random words that are unrelated to your life. The password should also have many digits preferably six or more that are random but easy for you to remember. Stay away from birth dates. Your ”perfect” password should also include symbols such as $, #, %, etc. Ideally, the symbols should be inserted randomly between the numbers and letters/words that make up your password. Lastly, use both capital and small letters. A great example of a perfect password would be You1r7Kin9gSh88ip05$$!! You can use password testing tools to analyse the strength of your password.

Maintain unmatched social media safety/privacy

Social media has made it easy to acquire a person’s personal information without their consent. If you don’t set the appropriate security/privacy setting on all your social media accounts, you don’t have control over who views your personal information such as; your real names, date of birth, personal address, etc. which can be used to hack your online accounts. Don’t add people you don’t know to your social media profiles or disclose too much personal information on social media. Disclosing your pet’s name for instance can make your online accounts vulnerable if you have used your pet’s name as a security question.

Maintain unmatched email safety

Anyone can send you an email provided they know your email address. Considering emails are used to send viruses/malicious software, you should never open unsolicited emails as well as unknown attachments or click on links whose source can’t be verified. You should also be wary of emails sent from sources you assume to know, i.e., your bank. Many people have fallen for spear phishing in the UK where fraudsters send automated emails appearing to originate from people/institutions you know such as your bank/credit card company. If you open and click on links on such emails by mistake, change applicable passwords immediately. You should also pay attention to the email safety information your bank sends to you as well as familiarise yourself with the official email address of your bank/credit card company.

Invest in a good anti-virus software

You can save yourself from all the trouble of keeping up-to-date with the latest online scams by investing in the best anti-virus software you can get. A good anti-virus will offer you all kinds of protection online giving you a stress-free experience. Never use free anti-virus software if you use your computer to do online banking transactions among other online transactions involving sensitive personal information. Free anti-virus software offers basic protection which isn’t enough to detect and deal with threats effectively.

Don’t forget to protect your phone

You should also invest in a good Smartphone anti-virus. Smartphones have substituted personal computers and laptops. Many people make payments and submit sensitive personal information over their phones. To avoid exposing yourself to fraudsters, make sure you Smartphone has an anti-virus. You should also restrict the data/information you share with websites. It’s also advisable to disable features such as autofill and unsolicited notifications. You should also avoid performing sensitive transactions over your Smartphone. Lastly, make sure your phone has a strong password/passcode. Your personal information should not be at risk if you lose your phone.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Facebook Planning to Crackdown on Deceptive Payday Loan Advertisers among Other ''deceptive'' Advertisers

Facebook is Planning to Crackdown on Deceptive Payday Loan Advertisers

The hunt for payday loan advertisers isn’t over. After Google’s May 2016 announcement that they were going to ban payday loan ads that met certain criteria, Facebook has decided to do the same.

Facebook has announced that it is going to trace and punish advertisers who bypass its review policies, particularly those advertisers who encourage Facebook users to click on ”phony” links. Facebook intends to use AI and human review processes to get rid of ads which create ”disruptive or negative experiences” for its users. The social media giant has already banned thousands of advertisers guilty of the practice popularly referred to as ”cloaking”.

This financially-motivated marketing technique has seen many bad actors disguise the actual destination of their ads or post links as well as the real URL content taking users to unrelated pages. These actors then generate income from views or clicks with affiliate deals. What’s more is; these unrelated pages host shocking content or scams.

Facebook cloaking is easy. A simple search on Google reveals countless tutorials on how to do it. Cloakers have been getting away with this unethical practice by showing Facebook’s approval team one ad and another totally different ad to the audience that clicks on the ad. Facebook’s new AI and human review processes will help it get rid of this malpractice that usually leaves its users shortchanged in most cases.

According to a blog post co-written by Rob Leathern, Facebook’s product director alongside software engineer, Bobbie Chang, ”we can now observe differences in the kind of content offered to people using apps compared to Facebook’s internal systems. In the recent past, these new efforts have allowed us to take down thousands of offenders misleading Facebook users.”

Facebook has also been on the record threatening to remove all Facebook pages found to be engaging in cloaking. The company has also initiated collaborative efforts with other companies in the industry to discover new and more effective ways of finding and punishing bad actors. These efforts come in the midst of a spam content and fake news crackdown within its walls.

There are also ongoing efforts to make the global digital ecosystem more transparent. Many global tech leaders are also focusing on improving digital experiences for their users. The largest marketing spenders in the world such as P&G and Unilever have also been calling for tech giants to tackle ad fraud.

What motivates cloaking?

There is a clear link between cloaking and making money from clicks as well as page views originating from Facebook ads. Facebook is at the forefront of this problem given the social media site has over 2 billion active users every month which accounts for 42% of the total monthly social media visits globally.

Similar actions

Google had to deal with a similar problem being the biggest search engine in the world. Google’s efforts were, however, more targeted, i.e., the search engine giant was focused on getting rid of payday loan ads which featured high-interest rates (36%+ APR) as well as tight repayment periods (i.e., 60 days from date of issue).

Starting 13th June 2016, Google banned all payday loan ads meeting these criteria. This was a follow-up for a similar ban that saw Google disable approximately 780 million ads back in 2015 for reasons such as counterfeiting, phishing, and obscenity. Google has been hunting for ”questionable” service/product ads for a while now. After getting rid of porn ads, the search engine giant turned its attention to payday loan ads and other high-interest financial product/service ads.

Google has been on a mission to protect its users from harmful or deceptive ads according to David Graff, Director of Global Product Policy at Google. The search engine has already terminated 1,300 advertiser accounts guilty of cloaking. Like Facebook, the search engine’s actions were motivated by external pressure (from consumer privacy and protection groups).

In 2016, Google banned 1.7 billion ”bad ads” for a number of offenses. This included 68 million ads featuring unapproved pharmaceuticals, 80 million ads deemed to be misleading or shocking to users as well as 5 million payday loan ads.

Facebook stopped showing payday loan ads back in 2015. Advertisers have however become smarter using tactics like cloaking which have forced the social media giant back to the drawing board. Any payday loan advertisers among other deceptive advertisers on Facebook today have their days numbered. The new AI and human review process are effective enough to deal with cloaking once and for all.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

How Falls in Real Wages Could Increase Demand for Payday Loans

How Falls in Real Wages Could Increase Demand for Payday Loans

People use payday loans as a means to tide them over to their next pay cheque in a wide range of situations. For example, they may rely on this type of credit if they are short of money to cover expenses such as rent or mortgage payments and food costs, or if they encounter unexpected expenses like car or property repair bills.

More people may be turning to these short-term loans as the pressures on consumers’ finances continue to rise.

Official statistics

According to figures from the Office for National Statistics, when adjusted for inflation regular pay dropped by 0.5 per cent year-on-year in the three months to May. This came after a fall of 0.6 per cent in real pay in the three months to April and a 0.4 per cent year-on-year decrease over the three months before that.

Rising levels of inflation and stagnating wages mean many households now have less, if any, money to spare each month. Inflation hit 2.9 per cent in June, which was up from 2.7 per cent the previous month and was considerably above the Bank of England’s target of two per cent.

With the prices of goods and services increasing relative to pay, more people may struggle to balance their budgets and this could result in an increase in applications for payday loans in the UK.

Public sector workers under strain

Workers in the public sector may be among those who are especially likely to need short term loans. There has been a lot of attention on public sector pay restrictions over recent weeks, with the government under pressure to lift pay limits first imposed in 2011-12. Since a two-year pay freeze starting in 2011-12, rises have been limited to one per cent.

According to an analysis conducted by the Trades Union Congress, firefighters, nurses and border guards may all see their real wages decline by more than £2,500 over the next three years if the pay restrictions remain in place. Meanwhile, the National Union of Teachers suggested that teacher pay has dropped by around 15 per cent in real terms since 2010.

Decreases in inflation adjusted earnings like this could make people more likely to approach payday lenders seeking short-term loans.

Could a payday loan be the right option for you?

Regardless of the sector you work in, if you’re short of money, you might be considering taking out a payday loan. Whether you need cash to cover a particular expense such as a bill or you simply need some extra money to help you meet your general living costs, these loans could offer a solution. One of the benefits of these products is the fact that they can be easy and quick to access, even if you have a bad credit history. If your application is approved, you may be able to receive the money the same day.

However, it’s important to realise that these financial agreements are only suitable if you want to borrow small sums of money. If you’re applying for a loan through Swift Money, you can request up to £1,000. If you require a larger sum than this, you will have to consider other options, for example taking out a personal loan. Also, bear in mind that payday loans tend to have higher interest rates than alternatives such as personal loans and the repayment terms are shorter.

Before you sign up to one of these products, make sure you have shopped around to find the best payday loans on the market. It’s also important that you’re confident you can meet the repayment terms set by the lender.


Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

CMA competition markets authority

Summary of the UK Payday Lending Market Investigation by the Competition Market Authority (CMA)

Just recently, the Competition Market Authority (CMA) conducted a payday lending market investigation (Click here to download the official report). Below is a summary of the findings as well as recommendations.


According to the CMA investigation, the average size of a payday loan in the UK stands at £260 and almost all loans are £1000 or less in value. The loans vary depending on repayment terms with most loans repayable in a month or less with a single instalment.

The average term of most payday loans in the UK is just over 21 days or three weeks.
In terms of growth, the UK payday loan industry grew the fastest from 2008-2012. During this period, payday loan lenders we issuing approximately 10.2 million loans per year valued at approximately £2.8 billion. Growth has been reducing since then. In 2013 for instance, payday loan industry revenues dropped by 5%. The market also contracted in 2014 with the number of new loans falling by approximately 27% between January and September 2014.

The year 2014 saw four out eleven major payday loan lenders, as well as many small lenders, stop offering payday loans. The market hasn’t recovered since following the introduction of Price Cap Regulation in January 2015 which saw many payday lenders unable to operate profitably under the new regulation.

In-depth CMA findings

The CMA payday lending market investigation reveals a lot of information on various aspects of the industry. Here’s what you need to know;

1. Payday loan usage (number of loans taken out per customer)

According to the CMA report, most payday loan customers take out many payday loans over time with the average lender taking out approximately six loans every year. In regards to borrowers’ lender preferences, most borrowers use two or more lenders.

2. Online vs high street borrowing

In regards to loan platforms, most payday loan customers today prefer taking out loans online i.e. 83% vs. 29% who take out loans on the high street. 12% of all payday loan users borrow using both channels today. On amount, borrowers borrow more online i.e. £290 compared to the high street £180.

3. Borrower loan application assessment

Most payday lenders today have developed computerised risk models that help them conduct thorough assessments on their client’s credit worthiness as well as their ability to repay the loan successfully. Borrower assessment has been and is still part of every lender’s loan application process. The sophistication of risk models, however, varies from one lender to another. In regards to loan application success, the number of loan applications turned down was above 50% for most of the major lenders back in 2012. The figure continues to rise to date as lenders become more cautious in the wake of the new FCA regulations.

4. Payday loan customer profile

The CMA investigation shows that the typical online payday loan customer in the UK has an average income of £16,500 while high street borrowers have an average income of £13,400. In general, most people who have been using (and are still using payday loans) in the UK earn less than the average income in the UK which stands at £17,500.
In regards to gender and occupation, most payday loan customers in the UK are male working in full-time jobs. They also happen to be younger (than average) and living in larger households.

Most payday loan customers also happen to have experienced financial problems in the recent past. According to the CMA investigation, 38% of all payday loan customers have a bad credit score/rating while 10% have been visited by a debt collector or bailiff. In a nutshell, 52% of payday loan customers have faced some debt problems in the near past. The number of people who repay their payday loans in full has also decreased over time.

It’s also worth noting that most payday loans are taken on Fridays at the beginning or end of the month. Most borrowers also seem to be under some financial pressure when borrowing leaving little room for assessing other suitable credit alternatives that may be available to them. In fact, less than 50% of all payday loan borrowers shop around effectively before taking out payday loans. The typical payday loan customer is also recurring. Repeat customers account for a majority of payday loan business. Most borrowers also take loans from multiple lenders mainly because of problems with existing lenders i.e. late repayment, outstanding loan/s, etc.

5. Overall Payday loan usage

In regards to overall usage, most payday loan consumers (53%) use payday loans to cater for living expenses like utility bills and groceries. 10% take payday loans to pay for vehicle/car related expenses while 7% take payday loans to pay for general shopping such as clothes and household items. Only 52% of payday loan consumers use payday loans to pay for emergency-related expenses. This is despite the fact that payday loans are actually meant for catering for emergency expenses.


The CMA investigation reveals some difficulties in the industry which need to be addressed. Luckily, the CMA has given recommendations for dealing with these problems. Here’s what needs to be done;

1. There is a need to boost the effectiveness of price comparison websites

Most payday loan customers don’t have the luxury of choice when taking out loans as revealed in the investigation. Since borrowers take loans under duress, better price comparison websites can help borrowers shop for loans more effectively regardless of the time constraints or other problems present when taking out loans.
Better price comparison websites will also create a perfect environment for competition which will, in turn, result in better payday loans in every regard from the pricing/fees/charges to variety. Existing price comparison websites have numerous limitations that make it impossible for payday loan customers to make accurate comparisons.

2. More transparency on late fees/overall cost of borrowing

The CMA also feels there is a need for more transparency on fees charged in the industry by different lenders. The Authority believes the FCA needs to take more action to ensure all lenders have a legal obligation to disclose all their fees/charges on previous loans clearly to allow effective cost analysis.

3. Cooperation between the FCA, payday lenders, credit reference agencies and authorised price comparison websites

The CMA also feels the FCA must cooperate with all industry players more so lenders, credit reference agencies, and price comparison websites to improve payday loan borrower abilities to search the payday loan market extensively without compromising their credit history.

4. Real-time data sharing

There is also a need for real-time data sharing according to the CMA. Such efforts will benefit both borrowers and lenders. When lenders are able to get real-time access to their clients’ credit information, they will be in a position to do better borrower assessment and in turn, avail the best possible terms.

5. Increased transparency on the role of third parties like lead generators

The CMA also feels there should be more transparency on the role played by third parties like lead generators, affiliates, brokers, etc. since most of them pose as actual lenders when that’s not the case. The CMA stresses the need for the FCA to do more to make sure borrowers know upfront if they are applying for loans directly or indirectly. This move will reduce instances of erroneous expectations since most third parties tend to overpromise or provide inaccurate information.


The UK payday loan industry is far from its peak in 2012. The number of payday lenders has reduced following the introduction of the price cap regulation by the FCA. Lenders have also become stricter today. Unscrupulous lenders may have reduced, but borrowers remain vulnerable even after the new regulation since most of them borrow under pressure. There is hardly any time to compare payday loan lenders effectively, and price comparison websites are doing very little to help. This explains why the CMA is calling for better price comparison websites among other recommendations like transparency on fees, real-time data sharing and cooperation between the regulator, lenders, credit rating agencies and price comparison websites. Third parties also need to be more transparent when promoting lenders to ensure payday loan customers make the best possible decisions when taking out loans.

Financial education is also important to reduce over reliance on short-term credit to cater for living and emergency expenses. Financial education is bound to improve the customer profile of the typical payday loan user.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.