NPA Bank Research Highlights Banking Crisis for Pawnbrokers


NPA Research Highlights Banking Issues faced by Pawnbrokers

The National Pawnbrokers Association (NPA) has carried out research on its members to ascertain the extent of the banking crisis for pawnbrokers. The Association has also compared this with the situation in their previous survey in October 2015. According to Government research there are currently 1.3 million unbanked working adults, and the Treasury Select Committee (May 2019) have stated that the “financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority”. Pawnbrokers and those undertaking money service businesses continue to support those people who could potentially become financially vulnerable, by helping them with short-term finance to smooth cashflow, where other lenders have failed to help them. The concern must always be that potentially vulnerable customers without access to regulated credit services, will find their only option to be the hands of the illegal money lenders - the loan sharks. The NPA wishes to ensure that its members can operate to provide much needed, safe, secure and affordable short-term loans for individuals and families that benefit from our vital regulated lending source."


Unfortunately, pawnbrokers continue to be under attack themselves from banks closing NPA members accounts. In that regard NPA are pleased to see that Kevin Hollinrake MP, Chair of the APPG for Fair Business banking has confirmed the group has accepted its place on UK Finance’s Dispute Resolution Service (DRS) Implementation Steering Group (ISG) 

Banks continue to cause significant harm to the industry for pawnbrokers and in particular to members undertaking money service business (MSBs). In a period of less than four years more than half of NPA members’ accounts have closed. In nearly all cases bank action has been against MSB pawnbrokers (97%). On separate occasions, different banks appear to have ‘purged’ NPA’s MSB members. Prior to 2015 HSBC and Lloyds seem to have carried out large scale de-risking programmes targeting the industry. From 2015 onwards Barclays, the largest player, closed 65% of accounts. Currently the most aggressive bank is Nat West who put 8 members at risk of account closure during 2018. This included most of the MSB pawnbroker accounts and some of the other pawnbrokers’ accounts. The challenger banks have failed to rise to the challenge of supporting pawnbroker MSBs with no increase in the number of MSB accounts opened. Nearly 75% of members now have only one account and are therefore more vulnerable, compared to just 25% in 2015. 

The research report can be viewed in the Report section of our website