A survey carried out by the Financial Regulator has found that consumers who borrow from licensed moneylenders are happy with the service despite the higher interest rates charged.
The regulator found that although borrowers were aware of the weekly amount they had to pay to a moneylender, they were less aware of the interest rates being charged and the potential savings from shopping around.
The regulator said it planned to review the current interim code of practice for the sector with a view to increasing transparency. But it said imposing an interest rate ceiling 'may not achieve the objective of lowering the cost of credit'.
Most consumers surveyed felt they had access to other forms of credit, but 23% said that they would not know where to go for a loan if a moneylender were to stop operating in their area. 19% of customers felt that they would be rejected if they applied for a credit card.
The regulator said a 'significant majority' of customers do not have problems making repayments. People using moneylenders are most likely to borrow for family events or personal items.
