A financial watchdog has released regulatory data on the high-cost credit market for the first time – and it has revealed that borrowers repaid more than 165 per cent of the cost of their original loans.
The Financial Conduct Authority’s (FCA) figures, for between July 2017 and June last year, showed that over 5.4 million loans were made in that time with £1.3bn borrowed and £2.1bn repaid in total.
Consumers borrow £1.3 billion per year and repay over £2 billion – read our insights into the high-cost short term credit market #fcadatahttps://t.co/s7fYdCTSJtpic.twitter.com/HL7CKmrJC7
— Financial Conduct Authority (@TheFCA) January 24, 2019
The collapse of Wonga, who disappeared from the market last September, is not taken into account in the figures which show that lending volumes had been on the rise since 2016 – but were much lower than in 2013.
High-cost loans remain a huge driver of poverty, with soaring interest rates making payments soon stack up to unaffordable level, trapping people in debt.
North-west England has been particularly vulnerable to the rising prominence of high-cost loans with the highest number of loans per adult – there are 125 loans per 1,000 people in the region.