Report: UK Personal Lending 2009: Competitive Dynamics in the UK Unsecured Personal Loan Market TOC

Unsecured personal lending levels contracted in 2008 as the market remained tough
- The unsecured personal lending market had five larger players and a fringe of smaller players in 2008
- Lloyds Banking Group was the market leader in terms of balances outstanding
Competitive pressures remain low as loan providers direct their focus internally
- The number of unsecured personal lenders has declined further over the last year
- Financial institutions are adopting a prudent approach to their lending policy
- For the largest lenders in particular, cross-selling to existing customers is a favored practice, used in order to avoid taking on more risk
- The average interest rate for a £5,000 loan has increased despite the plummeting base rates
- Advertising expenditure has also dropped as a result of the credit crunch
- Innovation in the UK personal lending market remains fairly minimal
High levels of bad debt and the new PPI ruling are hurdles that lenders need to overcome
- Bad debt levels remain high but are now at a manageable level
- The ban on the selling of single premium PPI will lead to lenders finding other ways to recoup their outlay
The current market conditions are impacting on the dynamics of other players in the market
- Aggregators have been an important player in the market but they are losing their influence under current market conditions
- The payday loan industry has taken advantage of the current market conditions

Table: Unsecured personal lenders in the UK, Moneyfacts June 2009
Table: Advertising spend for major providers, 2007 - 08
Table: Comparison of monthly interest rates on a £5,000 loan compared with the Bank of England base rate
Table: Write-offs on consumer lending from UK banks and building societies
Table: Average unsecured personal lending gross advances per person (over 18)
Table: Extent to which consumers trust financial services companies

Figure: The newly formed Lloyds Banking Group had a market leading share of the gross advances in 2008
Figure: Lloyds Banking Group has the largest share of balances outstanding
Figure: Personal lending interest rates have increased significantly since June 2008 despite sharp cuts in the Bank of England' s base rate
Figure: Across most banking groups, advertising expenditure shrank between 2007 and 2008
Figure: A fall in the level of write-offs in other unsecured lending counteracted the increase in write-offs for credit cards and secured loans
Figure: Despite strong performance in the credit card market, total unsecured lending dropped continuously between 2004 and 2008
Figure: Moneysupermarket.com lists all loans providers, but it does not link to products where the provider has not paid a fee
Figure: Online price comparison sites are more trusted than building societies and banks
Figure: The Wonga website emphasizes the convenience of the product

UK Personal Lending 2009: Competitive Dynamics in the UK Unsecured Personal Loan Market