Skip to main content
SpringerLink
Log in

Small-Loan Providers: Sent Back to the Fringe

  • Chapter
  • First Online:
Taming the Fringe

Part of the book series: Palgrave Studies in the History of Finance ((PSHF))

  • 117 Accesses

Abstract

Policymakers blamed a proliferation of ‘irresponsible’ lenders for issuing expensive loans that entrapped poor borrowers in a cycle of debt. The Consumer Credit Act 2006 required stringent licensing of high-risk lenders, sending small-loan providers back the fringe. By 2014, many believed that payday loans made the problems of poverty worse. Social justice concerns over economic fairness and the financial inclusion agenda guided the implementation of price controls on payday loans—a major and monumental reversal of government policy. What has changed is how policymakers understand poverty and how the state protects the working poor from certain kinds of finance. Price caps pushed lenders from the lowest end of the market. The verdict was clear: payday loans were harmful and marginal borrowers were better off without one.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 99.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 129.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 129.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Bibliography

Archives

  • The British Library, London.

    Google Scholar 

  • PP2501—The Moneylenders’ Federation Manual and Directory, 1913.

    Google Scholar 

  • The Guildhall & City Business Library, City of London.

    Google Scholar 

  • 332.34—The Pawnbroker, 2005–present.

    Google Scholar 

  • A 42 DIR 57—London Yellow Pages.

    Google Scholar 

  • Official Publications

    Google Scholar 

  • Consumer Credit (Advertisements) Regulations 1989.

    Google Scholar 

  • Consumer Credit. 1971. Report of the Committee (4596).

    Google Scholar 

  • “Financial Inclusion: Credit, Savings, Advice and Insurance.” 2006. House of Commons Treasury Committee Twelfth Report of Session 2005–06, vol. 1, November.

    Google Scholar 

  • “Government Response to The Bristol University Report on High Cost Credit.” 2013. Department for Business, Innovation and Skills, March.

    Google Scholar 

  • House of Lords Select Committee on Financial Inclusion. Evidence Session 11, 25 October 2016.

    Google Scholar 

  • House of Lords Select Committee on European Union 36th Annual Report 2007, Chapter 4: UK Consumer Credit Legislation.

    Google Scholar 

  • Report from the Select Committee on Moneylending 1897 (364).

    Google Scholar 

  • Report from the Select Committee on Moneylenders 1898 (260).

    Google Scholar 

  • The Pawnbrokers Select Committee 1870 (377).

    Google Scholar 

  • The Consumer Credit Act 1974, c. 39.

    Google Scholar 

  • The Consumer Credit Act 2006, c. 14.

    Google Scholar 

  • “Transparency of Credit Charges.” House of Commons Treasury Committee First Report of Session 2003–04, vol. 1.

    Google Scholar 

Sources

  • “A Modern Credit Revolution: An Analysis of the Short-term Credit Market.” 2016. Social Market Foundation on Behalf of the Consumer Finance Association.

    Google Scholar 

  • “Access to Financial Service.” 1999. HM Treasury.

    Google Scholar 

  • Aldohni, Abdul Karim. 2013. “Loan Sharks v. Short-term Lenders: How Do the Law and Regulators Draw the Line?” Journal of Law and Society 40 (3): 420–29.

    Google Scholar 

  • Ali, Paul, Cosima McRae, and Ian Ramsey. 2015. “Payday Lending Regulation and Borrower Vulnerability in the UK and Australia.” Journal of Business Law 3: 223–25.

    Google Scholar 

  • “Annual Report.” 1989. Albemarle & Bond Holdings.

    Google Scholar 

  • “Annual Report.” 2006. Albemarle & Bond Holdings.

    Google Scholar 

  • “Annual Report.” 2014. The Consumer Finance Association.

    Google Scholar 

  • Avio, Kenneth. 1973. “An Economic Rationale for Statutory Interest Rate Ceilings.” Quarterly Review of Economics and Business 13: 61–72.

    Google Scholar 

  • Ben-Shahar, Omir, and Carl Schneider. 2011. “The Failure of Mandated Disclosure.” University of Pennsylvania Law Review 159 (3): 647–749.

    Google Scholar 

  • Berthoud, Richard, and Elaine Kempson. 1992. Credit and Debt. London: Policy Studies Institute.

    Google Scholar 

  • Boggan, Steve. 2016. “Pawn Again.” Guardian, October 20.

    Google Scholar 

  • Burton, Dawn. 2008. Credit and Consumer Society. Oxford: Routledge.

    Google Scholar 

  • Cartwright, Peter. 2015. “Understanding and Protecting Vulnerable Financial Consumers.” Journal of Consumer Policy 38 :119–38.

    Google Scholar 

  • Caskey, John. 2012. “Payday Lending: New Research and the Big Question.” In The Oxford Handbook of the Economics of Poverty, edited by Philip Jefferson, 681–708. Oxford: Oxford University Press.

    Google Scholar 

  • Cayne, David, and Michael Trebilcock. 1973. “Market Considerations in the Formulation of Consumer Protection Policy.” University of Toronto Law Journal 23: 396–430.

    Google Scholar 

  • “Changing Household Budgets.” 2014. Money Advice Trust, June.

    Google Scholar 

  • Christie, Sophie. 2014. “Rated: The Best and Worst Banks This Year for Customer Service.” Telegraph, August 28.

    Google Scholar 

  • Collard, Sharon, and Elaine Kempson. 2005. “Affordable Credit: The Way Forward.” The Joseph Rowntree Foundation.

    Google Scholar 

  • Collard, Sharon, Elaine Kempson, and Claire Whyley. 2011. “Tackling Financial Exclusion: An Area-based Approach.” The Policy Press.

    Google Scholar 

  • “Consultation Response: FCA Proposals for a Price Cap on High-cost Short-term Credit” 2014. Money Advice Trust, August.

    Google Scholar 

  • “Consumer Credit Act 2006.” 2008. Slaughter and May.

    Google Scholar 

  • “Consumer Credit Regulation.” 1994. Office of Fair Trading.

    Google Scholar 

  • “Consumer Credit Regulation: Guidance on the Regulations Implementing the Consumer Credit Directive.” 2010. Department for Business, Innovation and Skills, August.

    Google Scholar 

  • Consumer Credit Sourcebook (CONC) Release 8. 2016. Financial Conduct Authority.

    Google Scholar 

  • Consumer Credit Sourcebook (CONC) Release 1. 2013. Financial Conduct Authority.

    Google Scholar 

  • “Credit Union Association Response to Caps.” Undated. Association of British Credit Unions.

    Google Scholar 

  • Cribb, Jonathan. 2013. “Income Inequality in the UK.” Institute for Fiscal Studies.

    Google Scholar 

  • Davies, Richard, and Peter Richardson. 2010. “Evolution of the UK Banking System.” Bank of England Quarterly Bulletin Q4.

    Google Scholar 

  • Davis, Philip. 2015. “Economic Theories of Poverty.” Joseph Rowntree Foundation, June.

    Google Scholar 

  • “Detail Rules for the Price Cap on High-Cost Short-Term Credit, Including Feedback on CP 14/10 and Final Rules.” 2014. Financial Conduct Authority PS14/16.

    Google Scholar 

  • Domoto, Hiroshi. 2012. “The Risk of Yamikin Market, Which is Spreading Quietly in Japan.” Institute for Research on Credit Business 12 (003): 1–18.

    Google Scholar 

  • Dunkley, Emma. 2014. “Wonga Caps Fees on Payday Loans.” Financial Times, December 16.

    Google Scholar 

  • Edmonds, Timothy. 2014. “High Cost Consumer Credit.” House of Commons Library Briefing Paper 05849, July 15.

    Google Scholar 

  • “Fair, Clear, and Competitive: The Consumer Credit Market in the 21st Century.” 2003. Department of Trade and Industry, December.

    Google Scholar 

  • “FCA’s Proposals for a Price Cap on High-cost Short Term Credit.” 2014. Citizens Advice Bureau, August.

    Google Scholar 

  • “Financial Inclusion: An Action Plan for 2008–11.” 2007. HM Treasury, December.

    Google Scholar 

  • “Financial Inclusion: The Way Forward.” 2007. HM Treasury, March.

    Google Scholar 

  • Friedman, Milton. 1970. “Defense of Usury.” Newsweek, April 6.

    Google Scholar 

  • Glaeser, Edward, and Jose Scheinkman. 1994. “Neither a Borrower nor a Lender Be: An Economic Analysis of Interest Restrictions and Usury Laws.” National Bureau of Economic Research Working Paper 4954: 1–45.

    Google Scholar 

  • Hilton, Matthew. 2003. Consumerism in Twentieth Century Britain: The Search for a Historical Movement. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • “Hope for Millions of Borrowers Stuck in a Cycle of Debt, Which?” 2014. Response to the FCA Announcement on a Price Cap for Payday Lenders, Which? November 11.

    Google Scholar 

  • “Information Package.” 2017. The National Pawnbrokers Association, March.

    Google Scholar 

  • “Irresponsible Lending – OFT Guidance for Creditors.” 2011. Office of Fair Trading, February.

    Google Scholar 

  • Jenkins, Jamie. 2010. “The Labour Market in the 1980s, 1990s and 2008/09 Recessions.” Economic & Labour Market Review 4 (8): 29–36.

    Google Scholar 

  • Jones, Rupert. 2013. “Crackdown on Payday Loans Advertising.” Guardian, July 1.

    Google Scholar 

  • Kempson, Elaine. 2002. “Over-Indebtedness in Britain.” A Report to the Department of Trade and Industry by The Personal Finance Research Centre, University of Bristol, September.

    Google Scholar 

  • Kempson, Elaine, and Claire Whyley. “Extortionate Credit in the UK.” 2009. A Report for the Department for Trade and Industry by the Personal Finance Research Centre, University of Bristol, 1999.

    Google Scholar 

  • Kempson, Elaine, Claire Whyley, Sharon Collard, and John Caskey. 2000. “In or Out? Financial Exclusion: A Literature and Research Review.” Financial Services Authority.

    Google Scholar 

  • “Key Facts.” 2015. National Pawnbroker Association, October 2.

    Google Scholar 

  • Lewis, Martin. 2011. “Don’t tell MPs I’m against payday loan regulation!” moneysavingexpert.com, January 28.

    Google Scholar 

  • Leyshon, Andrew, and Nigel Thrift. 1993. “The Restructuring of the UK Financial Services Industry in the 1990s: A Reversal of Fortune?” Journal of Rural Studies 9 (3): 223–41.

    Google Scholar 

  • ———. 2005. “Geographies of Financial Exclusion: Financial Abandonment in Britain and the United States.” Transactions of the Institute of British Geographers 20: 312–341.

    Google Scholar 

  • Lim, Youngee, Trey Bickham, Cassie M. Dinecola, Julia Broussard, Brittany E., and Martin Lewis. 2014. “Don’t Tell MPs I’m Against Payday Loan Regulation!” moneysavingexpert.com, January 28.

    Google Scholar 

  • Marron, Donncha. 2013. “Governing Poverty in a Neoliberal Age: New Labour and the Case of Financial Exclusion.” New Political Economy 18 (6): 785–810.

    Google Scholar 

  • “Memorandum of Association.” 2006. H&T Group, May 1.

    Google Scholar 

  • Morgan, Donald, and Michael Strain. 2007. “Payday Holiday: How Households Fare After Payday Credit Bans.” Federal Reserve Bank of New York Staff Reports 309.

    Google Scholar 

  • Nickell, Stephen. 2003. “Two Current Monetary Policy Issues.” Bank of England Monetary Policy Committee, September 16.

    Google Scholar 

  • Offer, Avner. 2007. The Challenge of Affluence. Oxford: Oxford University Press.

    Google Scholar 

  • Osborne, Hillary. 2013. “Payday Lenders May Vanish Within a Year as Result of Price Cap, Says Economist.” Guardian, November 10.

    Google Scholar 

  • “Our Quarterly Magazine.” 2016. BCCA 73, July.

    Google Scholar 

  • “Overdraft Charges More Expensive than Payday Loans.” 2016. Which? July 9.

    Google Scholar 

  • Palmer, Guy, Tom MacInnes, and Peter Kenway. 2006. “Monitoring Poverty and Social Exclusion 2006.” The Joseph Rowntree Foundation and the New Policy Institute.

    Google Scholar 

  • “Payday Lending Compliance Review Final Report.” 2013. Office of Fair Trading 1481.

    Google Scholar 

  • “Payday Lending: Fixing A Broken Market.” 2014. The Association of Chartered Certified Accountants, May.

    Google Scholar 

  • “Payday Lending Market Investigation: Final Report.” 2015. Competition and Markets Authority, February 24.

    Google Scholar 

  • “Pawnbroking Customers in 2010.” 2010. A Report for the National Pawnbrokers Association Prepared by the Personal Finance Research Centre, University of Bristol.

    Google Scholar 

  • “Promoting Financial Inclusion. 2004. HM Treasury.

    Google Scholar 

  • “Proposals for a Price Cap on High-cost Short-term Credit: Consultative Paper.” 2014. Financial Conduct Authority CP 14/10, July.

    Google Scholar 

  • “Proposals for a Price Cap on High-Cost Short-Term Credit.” 2014. Financial Services Consumer Panel, August 2.

    Google Scholar 

  • “Proposals for a Price Cap on High-Cost Short-Term Credit.” 2014. Trading Standards Institute, August.

    Google Scholar 

  • “Proposals in Response to the CMA’s Recommendations on High Cost Short Term Credit.” 2015. Christians Against Poverty, October.

    Google Scholar 

  • “Response to the FCA Consultation CP 14/10: Proposals for a Price Cap on High-Cost Short-term Credit.” Undated. Community Investment Coalition.

    Google Scholar 

  • “Response to the FCA’s Proposals for a Price Cap on High-cost Short-term Credit. 2014. The Money Charity, August.

    Google Scholar 

  • “Review of High Cost Credit. 2010. Office of Fair Trading (1232).

    Google Scholar 

  • Robinson, Mabel. 1888. “Pawnbroking in England and Abroad.” Fortnightly Review 44 (259): 69–88.

    Google Scholar 

  • Rose, Nikolas. 1999. Power of Freedom: Reframing Political Thought. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Rossiter, Jenny, and Niall Cooper. 2005. “Scaling Up for Financial Inclusion.” Debt on Our Doorstop Campaign.

    Google Scholar 

  • Rowlingson, Karen, Lindsay Appleyard, and Jodi Gardner. 2014. “Capping the Cost of Payday Lending in the UK: What Will the Impact Be?” A Paper for the Financial Conduct Authority, July.

    Google Scholar 

  • Skiba, Paige, and Jeremy Tobacman. 2011. “Do Payday Loans Cause Bankruptcy?” Vanderbilt Law and Economics Research Paper 11 (13): 1–32.

    Google Scholar 

  • Staten, Michael, and Robert Johnson. 1995. “Case for Deregulating Interest Rates on Consumer Credit.” Credit Research Center, Purdue University, Indiana: 1–60.

    Google Scholar 

  • Stegman, Michael, and Robert Faris. 2008. “Payday Lending: A Business Model that Encourages Chronic Borrowing.” Economic Development Quarterly 17 (1): 8–32.

    Google Scholar 

  • “StepChange Debt Charity Response to FCA.” 2014. StepChange, September.

    Google Scholar 

  • Stephen, Timms MP. 2005. “Labour, Financial Secretary to the Treasury.” In ‘Scaling up for financial inclusion’, Church Action on Poverty: Debt on Our Doorstep.

    Google Scholar 

  • Tebbutt, Melanie. 1983. Making Ends Meet: Pawnbroking and Working-Class Credit. Leicester: Leicester University Press.

    Google Scholar 

  • “The Consumer Credit Bill.” 2005. House of Commons Library Research Paper 05/03, January 11.

    Google Scholar 

  • “The Consumer Credit (Total Charge for Credit) Regulations.” 1980. The Department of Trade, April 28.

    Google Scholar 

  • “The Impact on Business and Customers of a Cap on the Total Cost of Credit.” 2013. A Report for the Department for Business, Innovation and Skills by The Personal Finance Research Centre, University of Bristol.

    Google Scholar 

  • “The Pawnbrokers Guide.” 1999. The National Pawnbrokers’ Association.

    Google Scholar 

  • “The True Cost of Credit.” 1990. Office of Fair Trading.

    Google Scholar 

  • “Tougher Rules for Payday Lenders Take Effect. 2014. Financial Conduct Authority Press Release, July 1.

    Google Scholar 

  • “Transact Response to FCA Price Cap.” 2014. Transact, August.

    Google Scholar 

  • “Unjust Credit Transactions.” 1991. Office of Fair Trading.

    Google Scholar 

  • Woloson, Wendy. 2009. In Hock: Pawning in America from Independence Through the Great Depression. Chicago: The University of Chicago Press.

    Book  Google Scholar 

  • Zinman, Jonathan. 2010. “Restricting Consumer Credit Access: Household Survey Evidence on Effects Around the Oregon Rate Cap.” Journal of Banking & Finance 34 (3): 546–56.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Economics, Villanova University, Villanova, PA, USA

    Craig McMahon

Authors
  1. Craig McMahon
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Craig McMahon .

Rights and permissions

Reprints and permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

McMahon, C. (2021). Small-Loan Providers: Sent Back to the Fringe. In: Taming the Fringe. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-70615-9_5

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-70615-9_5

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-70614-2

  • Online ISBN: 978-3-030-70615-9

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation