Market share and competitors

The group specialises in serving the needs of the approximately 10-12 million people with a range of products from credit cards and car finance, to home credit and online unsecured and guarantor loans.

Non-standard credit customers typically have a poor credit history, or no credit history at all, or may have had past problems with credit, often due to periods of unemployment, family break-up, ill‑health or the use of inappropriate mainstream credit offers.

Firms wanting to serve this market sustainably require a tailored approach to credit, usually focusing on lower amounts of credit for shorter terms initially, higher levels of customer contact and the use of a security or asset in some form linked to the provision of credit. Firms also need to be more flexible in dealing with non-standard customers who are more likely to run into repayment issues and require forbearance.

Business models in this sector therefore usually incur higher costs than more standardised and less flexible prime credit offers, resulting in the need to charge higher prices in order to generate acceptable returns for the risk that shareholders and investors take.

The UK non-standard credit market is more diverse in the types of credit offer than the prime market, reflecting the wider variety of customer needs and situations, as well as business models aimed at profitably serving the higher credit risk customer.

Typically, larger amounts are only viable over longer periods and often in relation to a product or asset purchase in order to improve the chances of repayment. The main exception is guarantor lending, where the guarantor, typically a relative or friend of the borrower, agrees to repay the loan should the borrower default. 

The dynamics of the UK non-standard credit market