CSFI

CSFI
“The growth of online financial services reflects this, responding to an
increasing consumer appetite for speed and convenience. Short-term
lenders were the pioneers of web-based financial services and led the
way for what is now an acknowledged “fintech” sector. With advanced
use of powerful analytics, lenders have developed sophisticated data
models to assess affordability and underwrite credit. The technology is
more advanced than in mainstream financial services, and short-term
lenders have a deeper understanding of their customers’ profiles and
behaviour. This point often gets lost in the moral debate about highcost
credit, which means that innovation could be held back.
“There is no doubt that the FCA’s new regulatory regime has had an
impact. The CFA has estimated that, by the summer of 2016, 51 firms
had received full FCA authorisation to offer high-cost, short-term credit,
compared with around 240 firms two years ago. However, many of
these permissions are for franchised businesses, micro-businesses
or firms not lending. The majority of high-cost, short-term loans are
provided by about a dozen firms. (However, there are also a number
operating on interim permissions, which have mixed portfolios and a
different application deadline.)
“As the market settles into the new regulatory framework, we will
inevitably see consolidation and a reduction in the number of lenders,
coupled with a widening of the range of customers attracted to
alternative finance. Having been forged in the furnace of political and
media fires, short-term lenders are emerging as modern, high-tech
businesses for the digital age.”
Russell Hamblin-Boone,
Chief Executive, Consumer Finance Association
Rent-to-Own
The 'nevernever'
is
back...
Payday lending and recourse to loan sharks are not the only problem area. Another is
what is now known as rent-to-own (RTO) – what we used to know as Hire Purchase
(or the never-never).
Like most forms of high-cost borrowing in the UK, rent-to-own experienced rapid
growth in the era of “austerity”, establishing itself on the High Streets of less affluent
towns, cities and communities. RTO businesses now provide credit to more than
400,000 households, typically with low incomes and reliant to some degree on
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