Data disclosure and geographies of UK personal lending markets

1. Context
2. The study
3. Key findings
4. Points to consider

• Context
• The study
• Key findings
• Points to consider
• Full report

Context

In July 2013 the UK Government announced that seven of the nation’s largest banks had agreed to publish their lending data at the local level across Great Britain, a move welcomed by consumer advocacy groups at the time. Subsequently, the British Bankers’ Association (BBA) published lending data by postcode for Great Britain drawn voluntarily from participating lenders for unsecured personal loans (excluding credit cards). The participating lenders were: Barclays, Lloyds Banking Group, HSBC, RBS Group, Santander UK, Clydesdale and Yorkshire Banks, and Nationwide Building Society, representing the lenders of an estimated 60 per cent of all personal loans, though only 30 per cent of the total national unsecured credit market in Great Britain.

The study

• The paper, drawing on contemporary literature on access to affordable credit and financial exclusion, does four things:
  • Discusses local lending data in the context of the UK Government’s announcement in July 2013 to publish the data of seven main financial institutions
  • Describes the methodology of that data release, including some of the limitations the data have
  • Generates an area-based perspective of personal lending trends in Great Britain to show local patterns of credit use
  • Uses this information as a springboard to discuss related issues such as financial inclusion, indebtedness, and economic marginalisation.
• The paper achieves this by doing the following:
  • Provides a new analysis of the personal lending data made available by the British Bankers’ Association (BBA) subsequent to the UK Government’s 2013 announcement (the data covered Quarters 2, 3 and 4 of 2013 and the almost 11,000 postcode sectors available in the UK, though the analysis in this paper used the data released for Quarter 4 2013)
  • Uses this data to provide a geographical perspective of personal lending patterns across Great Britain
  • Provides an analysis that raises questions about open data sources being used to address the relationship between access to finance and economic marginalisation.

Key findings

• This paper finds:
  • Total lending figures varied greatly across postcode sectors: at one end of the scale lending ranges from almost thirteen million pounds in some postcodes including in South East London, Glasgow, Edinburgh and Reading to less than fifty thousand pounds in other postcode areas in Glasgow and Edinburgh, as well as Liverpool (though authors mention that areas differ in population size which will affect this finding).
  • The average figure for lending per adult across all areas was £602. The area with the largest average borrowing figure per adult was Glasgow (£13,405) while the area with the lowest was Liverpool (£33) – though the paper discusses the weaknesses of the data when assessing these figures.
• This paper demonstrates that any subsequent analysis of area-based lending patterns using BBA data is constrained. This view is based on three supporting factors:
  • The way the data is presented by the BBA differs among each postcode. To this end, the authors of the paper have called for the data to be quality assured in such a way that ensures like-for-like comparability
  • The way the data is presented isn’t easily comparable with most other socio-economic datasets available. For example while this data is presented at a postcode level most other comparable datasets are presented regionally
  • Key parts of the datasets are left out which affects researchers’ ability to use them, such as the total lending figure for a particular postcode area.
• Another key finding of this paper is that the data released by the BBA is not comprehensive among different lenders. The authors say that in order to gain comprehensive coverage of lending activity in any area, additional voluntary agreements between lenders or regulatory compulsion is required so all finance providers release data.

Points to consider

• Relevance:
  • This paper is relevant to all stakeholders and policymakers with an interest in access to credit and issues relating to high cost credit, financial exclusion (particularly exclusion in different geographic locations) and how data informs public policy.
• Methodological considerations:
  • While this paper addresses themes many stakeholders will be familiar with, it is based very specifically on a dataset published by another organisation. Familiarity with that dataset is useful when approaching the paper considered here.

Full report

Data disclosure and geographies of UK personal lending markets - full report