Number of payday loans taken out drops by a third

The number of payday loans being taken out by consumers has collapsed by third according to a freedom of information request, made to the Financial Conduct Authority (FCA) by income streaming app Wagestream.

The latest statistics for Q1 2019 show that there were 861,781 payday loans taken in the first three months of the year. That represents a drop of 31.7% (399,339) from the 1,261,120 recorded by the FCA in the same quarter in 2018.

The loans registered for the first quarter of this year represent £240m of credit and also reveals that the number of payday loan firms reporting quarterly to the FCA has fallen a quarter year on year. The number of firms has dropped 24.5% from 94 to 71 in Q1 2019.

Wagestream says that it campaigns against payday poverty and blames the payday loan industry for trapping low-income workers in a damaging cycle of credit dependency. Wagestream’s income streaming solution tackles payday poverty — something exacerbated by the monthly pay cycle — by giving workers early access to a percentage of their accrued salary when they need it. This solves a major cash flow issue for UK workers that is created by monthly wage payments, forcing many to take short term high interest credit options. The average advance is £84 and the average employee uses Wagestream 2.2 times per month, paying a flat fee of £1.75 each time they use it.

Peter Briffett, CEO and Co-Founder, Wagestream, said “This sharp collapse in the number of payday loans taken out is fantastic news for UK consumers who, to their credit, are getting wise as to how expensive and toxic this form of borrowing is. Wagestream’s mission is to destroy the payday loan industry and the tide finally seems to be turning on exploitative loans that create misery and financial deprivation wherever they appear.”

“Consumers are becoming savvier and the backdrop to this collapse in payday and high-cost loans is a more general slowdown in the overall amount of consumer credit people are taking on, as evidenced by the latest Bank of England Money & Credit report. That has been the run of play since the EU referendum. “However, it’s in payday loans that the loss of appetite is most apparent and it’s fantastic to see this parasitical industry finally begin to contract.”