FCA Publish Pawnbroking Review


Key statistics and findings from the FCA Pawnbroking Sector Review

Key Statistics:

The Average Pawnbroker


Trading since 2008

5400 agreements per year

23 members of staff

Average loan £300

Operating across 4 stores

Maximum loan £2000

Revenue of £1.5m

LTV is 50%

Profit of £100,000

APR is 120%



The FCA data gathering exercise and visits to a number of firms led them to conclude that Pawnbroking is not a priority area in terms of potential risk or harm to consumers.

They identified a number of positive features in our analysis including:

  • business models focused heavily on customers with quality of service, long-standing relationships and trust being paramount

  • flexibility, and personalisation, of product terms in the interests of customers

  • staff culture focused on customers and treating them fairly

  • robust controls to minimise the risk of criminally obtained items being received

  • strong, proactive relationships with the local community (including the police) allowing prompt responses to incidents or trends regarding crime and firms are quick to respond to local police updates

  • a strong focus on security, stock control and the safety of staff and customers

    Key risks

    FCA key concerns regarding the Pawnbroking sector are that:

    -when an unredeemed pledge is sold above the redemption value, taken together with the expenses of sale, customers are not always receiving the ‘surplus’ money owed to them

    -the expenses of sale relating to the sale of an unredeemed pledge are not always reasonable. Some firms have opted for a fixed amount (i.e. £20), whereas others use a percentage fee (i.e. 20%). Section 121(7) of the CCA refers to ‘reasonable expenses of sale’. If the customer challenges this, the onus is on the firm to prove they were reasonable.

    -pawnbrokers may be at risk of being exploited for criminal purposes – whether being offered stolen goods or in an attempt to launder money and need appropriate systems, controls and staff training programmes (such as NPA ionline training). Money Laundering Reporting Officers (MLRO) need to know their role and be ready to report Suspicious Activity Reports (SARs) to the National Crime Agency (NCA). Further details on SARs can be found on the NCA’s website including how to report and guidance on submitting better quality SARs (link is external).  FCA encourage firms to read this as well as the FCA’s Financial Crime Guide, and to understand their responsibilities under the Money Laundering Regulations 2017 and SYSC 6.1.1 of our Handbook.

    -customers may not be aware of the absence of equivalent consumer protections when entering into unregulated agreements (e.g. ‘sale and buy back’ -SBB) or where agreements are regulated differently (e.g. peer-to-peer lending). Firms should have a policy which states which items or conditions make SBB more beneficial to the customer and train staff to explain options to the customer.