Payday lending in the UK: the regul(aris)ation of a necessary evil?

Karen Rowlingson, Lindsey Appleyard, Jodi Gardner

Research output: Contribution to journalArticle

13 Citations (Scopus)
57 Downloads (Pure)

Abstract

Concern about the increasing use of payday lending led the UK's Financial Conduct Authority to introduce landmark reforms in 2014/15. While these reforms have generally been welcomed as a way of curbing 'extortionate' and 'predatory' lending, this paper presents a more nuanced picture based on a theoretically-informed analysis of the growth and nature of payday lending combined with original and rigorous qualitative interviews with customers. We argue that payday lending has grown as a result of three major and inter-related trends: growing income insecurity for people both in and out of work; cuts in state welfare provision; and increasing financialisation. Recent reforms of payday lending do nothing to tackle these root causes. Our research also makes a major contribution to debates about the 'everyday life' of financialisation by focusing on the 'lived experience' of borrowers. We show that, contrary to the rather simplistic picture presented by the media and many campaigners, various aspects of payday lending are actually welcomed by customers, given the situations they are in. Tighter regulation may therefore have negative consequences for some. More generally, we argue that the regul(aris)ation of payday lending reinforces the shift in the role of the state from provider/redistributor to regulator/enabler.
Original languageEnglish
Pages (from-to)527-543
JournalJournal of Social Policy
Volume45
Issue number3
Early online date3 Feb 2016
DOIs
Publication statusPublished - Jul 2016

Bibliographical note

Copyright © Cambridge University Press 2016 This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

Funder

Arts and Humanities Research Council, FinCris project [grant<br/>number AH/J001252/2].

Keywords

  • payday lending
  • regulation
  • welfare
  • insecurity
  • financialisation
  • credit

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