Occasional Paper No. 59: Sitting on a gold mine: Getting what’s owed to pawnbroking customers

In 2018, the FCA found that pawnbroking customers are not always collecting the surplus money owed to them. In this paper, we share the results of a first intervention designed to address this.

Occasional Paper No. 59 (PDF)[1]

Summary

We partnered with one of the UK’s largest pawnbroking lenders, using a novel behavioural design approach to try to increase surplus collection. A first intervention, a new reminder letter for customers, is reported in this paper and found to increase surplus collection rates significantly. A second experiment, focused more on interventions on pawnbroker store processes, is currently in the field.

Authors

Paul Adams, Chris Burke, Alex Chesterfield, Bhavini Parmar, Laura Smart and Anna Whicher

Disclaimer

Occasional papers contribute to our work by providing rigorous research results and stimulating debate. While they may not necessarily represent our position, they are one source of evidence that we may use while discharging its functions and to inform its views. We endeavour to ensure that research outputs are correct, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that Occasional Papers contain any errors or omissions, they should be attributed to the individual authors, rather than to the FCA.

25/01/2022 : Document update Changed from ‘pawnbroking loans are considered high cost credit’ to ‘pawnbrokers are providers of high cost credit’ on page 8

17/01/2022 : Document update Improved accuracy of OP59. Changed references to pawnbroking from ‘high cost short term credit’ to ‘high cost credit’. Removed reference to a pawnbroker’s lending rate’s being higher than high street banks, as the lending rate would depend on the product.

First published: 20/01/2021 Last updated: 25/01/2022 See all updates