Consumer Credit in the United Kingdom

PROSPECTS

Consumer confidence falls, negatively impacting consumer credit

Consumers were cautious in their borrowing in 2019, whilst lenders certainly became more prudent with regard to advancing unsecured credit. Consumer credit therefore saw a slowdown in growth in gross lending, as economic uncertainty drove down consumer confidence.

Brexit uncertainty and environmental concerns hit auto lending

Auto lending is in a fragile position. Following years of strong growth, auto lending, which is a key driver of growth in unsecured borrowing, decelerated, as consumers avoided committing to high-value purchases amidst Brexit uncertainty.

Greater concerns over the ability to pay back debt

Concerns are emerging over high levels of debt and the ability to repay debts. The high indebtedness of UK households, fuelled by unsecured credit, is becoming a major concern.

COMPETITIVE LANDSCAPE

Fintech companies have an innovative approach

With a passion for innovation and at the forefront of a growing market in Europe, the UK is one of the global leaders in the development of fintech companies. These continue to gain prominence in the UK, particularly as the economy becomes more digital and intangible, by leveraging innovation, new business models, speed and prices, to leapfrog banks.

Peer to peer lending gains ground; the potential end of payday loans

Alternative finance such as peer to peer lending continues to grow in popularity in the UK, and whilst it is a sector that gives more options to consumers, it also increases the competition for traditional banks. This type of lending is a solution for consumers and small businesses that may find it difficult to access finance from banks or are reluctant to borrow from traditional banks.

Open banking set to intensify the competition

Overall, consumer credit remains highly competitive, with more organisations being granted licences by the FCA to offer credit. There is a multitude of options available to consumers requiring credit.

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