Mapping the Slippery Slope:The Growth of Predatory Financial Services Markets across the UK

This study examines two-tier financial services markets. These markets are characterised by new alternative financial services providers (AFSPs) entering local financial services markets after bank branch closure and undertaking high levels of financial misconduct. We examine this description of local financial services markets using the regulatory status and location of the UK population of AFSPs between 2002-2015. We report significantly higher numbers of AFSPs undertake financial misconduct in areas of high bank branch closure, with the most severe offending occurring within urban and deprived areas. AFSPs operating in these areas are not just new entrants, they also include new and established firms. We propose that the current scope of regulation applied to assess bank branch closures in the UK is too narrow. By only considering the effect of bank branch closure on the access to cash, current UK regulation overlooks multiple outcomes arising from bank branch closure, not least the behaviour of AFSPs examined in this work.