September 1, 2022

William Hogarth was no fan of pawnbroking. In his 1751 print Gin Lane, he portrayed a Mr Gripe seizing a saw from a carpenter and cooking pots from a housewife in exchange for cash they would fritter on cheap gin. In front of Gripe’s door, a dog and a starving boy gnaw on the same bone. “Of all the numerous receptacles for misery and distress with which the streets of London unhappily abound,” Charles Dickens wrote 84 years later, “there are, perhaps, none which present such striking scenes as the pawnbrokers’ shops.”

When Nathan Finch opened his first pawnbrokers in 2004, he named it after Dickens’s The Pickwick Papers to counter an image that, he insists, no longer haunts his industry. His branch in Dartford, Kent, is on the high street, not in the back alleys. Its red-curtained windows boast a pair of Louboutin stilettos and a Mulberry ostrich-leather handbag. The company – like every other in this industry – is regulated by the Financial Conduct Authority. And, says Finch, many customers are so grateful for its service in helping to “smooth their cashflow” that they come back with flowers and chocolates for the staff.

But, just as in the 18th century, economic calamity spells boom time for pawnbrokers. Shares in the UK’s largest, H&T, have risen 58% this year. And as inflation hits a 40-year high, the company has reported that “pledge lending” – loans secured against valuables, most commonly jewellery – has reached record levels.

Deidre first visited a pawnbroker four years ago, as all three generations of her family were struggling to make ends meet. She was forced into retirement after breaking her shoulder. Her daughter is a single mother; her son and grandson are both out of work. The 74-year-old bitterly regrets that she had already sold off a necklace — to get £80 to buy her grandson a suit for a job interview — before thinking of pawn. Every piece of jewellery bought by her husband is even more priceless to her since his death last year.

“It’s a bit of a stigma, isn’t it,” she tells me behind bulletproof glass in the Dartford shop’s “privacy booth”. “But when I come in, they really made me feel at ease. They make sure you understand how much, and I always say to them, a couple of times, ‘I want to buy it back! I want to buy it back!’” (At Pickwick, almost 90% of items are redeemed. For men who bring in their own watches, and women their own handbags, it is touching 100%.)

Today, the pensioner has come in to pawn a gold heart necklace and sapphire earrings, given to her by her late husband for Christmas. She received a loan of £60, and will repay £102 if she waits the full seven months before coming to reclaim it. In an effort to attract more customers, Pickwick adds an extra month on to the minimum statutory period a shop must retain items for before selling them. On a loan of up to £500, it charges a monthly interest of 10% (a representative APR of 149.3%).

“It is quite a high rate,” she says, but she is usually back here within a matter of weeks. “On Monday, when I get my little pension, I try to pay £10 or £20 off and then it’s not so bad.” In any case, she has no alternative. “It’s not enough for a bank loan. I wouldn’t be able to get one because it’s only me, and we’ve always had a bit of bad credit.”

Lorraine is visiting with her young son. She usually only comes in for small amounts — £30 to £60 — to cover the cost of a bit of shopping or the electricity bill. (The average loan here is about £300, paid off within three months; 55% of customers are women.) She works in retail and her husband is a lorry driver, but for the past three years that hasn’t been enough. “It is just for general day-to-day living,” she says wearily. “We haven’t had a holiday for eight or nine years because we don’t have savings.”

Her jewellery, stored in one of three time-locked safes, is so much more than the value of its precious metal. “I actually have my wedding ring and engagement ring in there at the moment,” she confides. How did that feel? “Really hard. But needs must,” she says haltingly, tears forming. “I know, obviously, we will get them back. But at that time, you just need it.”

The first lesson Finch teaches the employees at his eight branches across London and Kent is how much care they must take over each item that is pawned. He holds up a gold band on his ring finger. “I was midway through my A-levels when my mother committed suicide. This ring here is my great-grandmother’s wedding ring. And before my mother took her life, she took that off and left that on the side so that it didn’t disappear in the mortuary. So I use this ring as an example to my staff about how important it is to look after other people’s property. This is very, very important to me and way beyond its monetary value. We’re not buying pawned items; the ownership stays with the customer.”

If a possession is unclaimed, it has to be sold for its full market value. A pawner cannot be pursued if there is a deficit, while any profit must be returned. Finch describes the transaction as people “borrowing from themselves. If I borrow that same money on a credit card or a bank loan, that’s the bank’s money. I think, during the current difficult economic crisis, people are arming up with their finances. They’re keeping it all controlled so that they know what they’ve got when things get tough.”

There are almost 900 pawnbrokers in the UK, used by 350,000 people a year. One factor in their buoyancy is the demise of payday lenders, such as Wonga (which filed for administration in 2018), leaving few choices for those wanting to avoid a loan shark. Then there is the closure of high-street bank branches, which Finch claims used to start by finding a reason to refuse a loan anyway, while he does the opposite. No-one asks for your credit history or salary here, just ID. About 90% of customers live in a five-mile radius of the store. It is a local, easy-to-comprehend, on-the-day service, offered face to face — something most would struggle to say about their local Barclays or NatWest.

“I know all the staff by name,” says Barbara, who visits a couple of times a month to see her through until payday. “If you go to a bank, they just ask for too much paperwork. And I’d be so embarrassed because they’ve got a job that pays out a lot more than mine and I just assume that people that work in a bank have got money. Here, you’re not looked down on. I don’t even have to say anything. They just say, ‘Do you want your £50 or do you want your £30?’ It’s a way of life for me at the moment. I class them as my bank.”

The 52-year-old mother-of-two works on a supermarket checkout, where there is only one hot topic of conversation, the rising price of bread, milk — and everything else. She has stopped using her car because of the cost of petrol, and has little faith in politicians helping her out any time soon. “We just live every day as it comes. We don’t wait for anything to be gifted to us because it just doesn’t happen.” As for the chilling predictions of where energy prices will reach next year, Barbara says: “I just hope I still have the jewellery to pawn, so that I can still get by.”

Peek into Pickwick’s safes, however, and it becomes clear that pawning is not only for those on the breadline. One box contains an 18-carat gold African necklace, bracelet, ring and earring set worth £10,000 (typically, a shop will lend about 70% of an item’s value). There is a Rolex deposited for £4,615 by a builder waiting to be paid for a job. A kickboxer redeems his watch only to show off at a fight, before pledging it again. Finch, who wears a bright blue-faced Rolex himself, has loaned on everything from articulated trucks and a Hovercraft to sculptures and a full set of gold false teeth.

He takes pride in going beyond the legal requirements placed on him — sending texts when the loan is due to expire and printing out pink “Early settlement schedules” that give customers a breakdown of their repayments so they can see the amount they owe for any day within the more than 200 days of the loan period. But he believes the industry is over-regulated — blocking new entrants to the market — and would like to see changes, including a more flexible or even rolling contract.

For many, however, whether these changes take place is a moot point. After all, as Britain braces itself for potentially Hogarthian levels of penury, it is clear pawnbroking is the canary in the goldmine — a symptom rather than a cause. As Lorraine told me: “In the old days, if you had to pawn your jewellery just to get money, you were looked down upon because you weren’t financially stable. Obviously, that’s not the case today — now, half the country is not financially stable.”

*Customer names have been changed to protect identities.

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