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Pawnbroking customers in 2020

Evidence type: Insight i


Previous research has suggested that fewer than one per cent of the UK adult population uses a pawnbroker, rising to around two per cent among people on low incomes. The basic premise of pawnbroking is that a customer takes an item to a pawnbroker, where they agree the amount of money that will be lent and secured against the value of that item. A loan agreement is taken out that details the loan period and the amount of interest that will be charged. The agreement is secured against the item that is pledged and if the item pawned is not redeemed the item may be sold. While the customer will not be chased for any debt in excess of the proceeds when the item is sold, if there is any surplus on the sale (after costs) this can be collected by the customer. As the loan is made against the value of the pawned item and since the debt would not be chased whatever the outcome, there is no need for a credit check.

The study

Since a similar survey that was conducted by PFRC in 2010 (Collard and Hayes), the regulatory environment and the role of pawnbrokers has changed significantly. While a review of the pawnbroking industry in 2018 by the Financial Conduct Authority (FCA) identified numerous strengths in the sector, it also raised concern about how fairly customers were treated when they did not redeem their pledge.

This 2020 report from the University of Bristol’s Personal Finance Research Centre presents the findings from an online survey of 1,669 pawnbroking customers conducted in February and March 2020 (before the full impact of the Covid-19 pandemic). The report also analyses loan-level information of 85,000 loans from some of the UK’s major pawnbroking companies, using data up to the end of 2019. Cross-tabular descriptive analysis is presented in the report, alongside findings from regression analysis which can determine the importance of multiple characteristics simultaneously.

Key findings

  • The profile of pawnbroking customers was similar to that in the 2010 report. Two-thirds (67%) of customers were women, with a similar proportion under the age of 54. About a third (34%) lived in households with dependent children.
  • Almost a third of customers (31%) lived in households in which no one worked, in comparison with over half of all respondents in the 2010 survey. The majority of respondents had a household income of below £1,500 per month, significantly below the UK median income of £2,634 in 2018.
  • More than one-in-five respondents (22%) reported that they were struggling to keep up with household bills and credit commitments.
  • When asked for the three main reasons for using a pawnbroker, survey respondents cited convenience (45%), speed (39%), and simplicity (37%).
  • The median amount borrowed was £120, with a mean loan amount of £243. The most commonly pledged item was gold jewellery.
  • For almost one-in-five (18%) of the customers surveyed, it was their first loan.
  • As with the 2010 survey, the majority of customers had taken out a loan to pay for day-to-day expenses (59%), or to pay for bills (14%).
  • More than two-in-five respondents (62%) redeemed their loan, while a quarter renewed the loan and 14% forfeited the item.
  • Repeat customers were more likely to forfeit their item than new customers, while customers with loans worth less than £50 were also more likely to forfeit the item.
  • Those who forfeited items generally did so because they didn’t have the funds to redeem them (71%) rather than not wanting the items any more (29%).
  • Most customers (91%) were satisfied with the service they received.
  • The findings support the FCA’s 2018 review that said the pawnbroking industry was not a ‘priority area in terms of potential risk of harm to customers’.
  • Although pawnbroking is included in the FCA’s high-cost credit portfolio, cost was not a concern for many customers in this survey (and lower than in 2010), corresponding to other research that has shown pawnbroking to be at the lower end of the range in terms of cost when compared to other forms of alternative credit.
  • With pawnbroking customers often pledging items to meet day-to-day costs, the potential detriment caused by not being able to borrow must also be considered when assessing the impact of the loans.

Points to consider

  • Methodological strengths/weaknesses: The methodology appears sound and the findings are tested for statistical significance, so we can have a fair degree of confidence in the robustness of the findings.
  • Generalisability/ transferability: This report is of significant interest to politicians, policymakers and other stakeholders with an interest in high-cost credit in the UK, particularly in relation to pawnbroking.
  • Relevance: The findings are situated in the context of Great Britain, though some of the learnings may be transferrable to countries with similar high-cost credit provisions.

Key info

Year of publication
United Kingdom