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Citizens Advice calls for action on high-cost credit as households face growing insecurity

28 February 2018

Matthew Upton, Head of Consumer Policy at Citizens Advice, will give evidence to the Treasury Committee this afternoon as part of its inquiry into household finances.

The national charity says households are facing growing insecurity due to more unpredictable incomes and have less financial resilience as a result of a lack of savings, inflexible budgets and high levels of debt.

A Citizens Advice report released last week revealed people struggling on volatile incomes - such as those on zero-hour contracts or in part-time work - are five times more likely to turn to high-cost credit products such as rent to own and doorstep lending.

To protect consumers, the charity is calling for the successful payday lending cap to be extended to other high-cost-credit products so that lenders do not charge customers more than twice what they borrowed.

Figures show:

  • People using rent-to-own products pay up to 400% of the original credit value

  • Outstanding doorstep loan debt has doubled since 2014

  • More than 1 in 10 catalogue credit purchases ends in default.

Mr Upton will give evidence alongside representatives from Stepchange and the Big Issue Foundation.

Directors of Brighthouse, Morses Club and The Cash Shop will also appear before the committee today.

Matthew Upton, Head of Consumer Policy at Citizens Advice, said:

“A lack of savings, no slack in budgets and continued high levels of debt paints a picture of growing insecurity in household finances.

“At Citizens Advice we know households struggling with unstable incomes are five times more likely to turn to high-cost credit.

“There needs to be a safety net for vulnerable consumers to ensure they’re protected from the harm these products can cause and, so short-term financial difficulties do not spiral into persistent debt.

“We want to see the Financial Conduct Authority extend the success of the payday lending cap extended to other high-cost credit products including rent-to-own and doorstep lending. Such a cap will protect the most vulnerable from severe problem debt by ensuring they do not pay back to lenders more than twice what they borrowed.

“Longer term, we need better ways to help people save alongside alternative borrowing options for those who don’t have the option to get credit affordably from commercial providers.”

Notes to editors

  1. Citizens Advice submitted written evidence on the Household finances: income, saving and debt inquiry which is available on the Treasury Committee’s website.
  2. The ‘Walking On Thin Ice’ report is based on a nationally representative YouGov opinion poll of 2,116 respondents conducted in June 2017, analysis of the Living Costs and Food Survey, and qualitative interviews.
  3. In 2017, Citizens Advice helped 340,000 people with debt problems of which 121,000 people had problems with high-cost consumer credit. The Financial Conduct Authority is currently undertaking a review of high-cost credit products and will be releasing its findings in May 2018.
  4. Rent-to-own companies sell products through hire purchase arrangements. The ownership of these goods is held by the company until the customer pays off the loan, even though the retail value of these goods are limited. Consumers typically make weekly payments over three years and loans have interest of up to 99.9%. Doorstep loans, or ‘home credit’ loans, are provided directly to customers’ homes by lending agents who return each week to collect repayments. Loans are typically from £100 to £1,000, although at least one major lender offers repeat customers loans of up to £2,000. The APRs on these loans are variable, but can be as high as 1557.7%. Catalogue credit items paid for over a long period incur interest and are often more expensive than items purchased in high street shops. 
  5. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  6. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  7. To get advice online or find your local Citizens Advice in England and Wales, visit
  8. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  9. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  10. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.