Credit, collections & insolvency news
New figures obtained by Mazars from the Financial Conduct Authority show the value of loans made by UK pawnbrokers has increased by 13% in the past 12 months,
reaching £252 million.
The value of pawnbroker loans increased from £224 million in 2022 to £252 million in 2023, as the cost of living crisis put stress on household finances.
Ed Thomas, Director in the restructuring services practice at Mazars, said “A big jump in lending by pawnbrokers is a bad sign for the financial health of British households. Where people with bad credit would once have taken out payday loans, they’re now being forced to pawn items like jewellery and watches.
“People who have reached the stage of considering pawnbroker loans should look at whether a formal insolvency process might be a better way forward for them. A pawnbroker loan is often just prolonging the inevitable.
“For people with debts under £30,000 a Debt Relief Order can be a much more sustainable way to deal with debt. The £90 fee to set one up has just been scrapped so it’s now much more accessible to people with low incomes who meet the criteria.
“In the longer term it would be great to see the Government progress with reform of the personal insolvency framework. Changes to the regime to make it work better for people in debt are long overdue. With a General Election on the horizon, it’s important that the next Government ensures this doesn’t drop off the agenda.”
