Contents:

1. Introduction BACKGROUND DEFINITION 2. Strategic Overview ECONOMIC TRENDS Inflation Table 1: UK Rate of Inflation (%), 2001-2005 Unemployment Table 2: Actual Number of Unemployed Persons in the UK (million), 2001-2005 Household Size Table 3: Households in Great Britain by Size (%, million and number), 1971, 1981, 1991, 2001 and 2005 Population Table 4: UK Resident Population Estimates by Sex (000), Mid-Years 2001-2005 Gross Domestic Product Table 5: UK Gross Domestic Product at Current and Annual Prices (£m), 2001-2005 Household Disposable Income Table 6: UK Household Disposable Income per Capita (£), 2001-2005 MARKET DYNAMICS AND SEGMENTATION Introduction Market Trends Table 7: UK Consumer Credit by Gross Lending by Sector (£m), 2001-2006 Market Size Table 8: UK Consumer Credit by Amount Outstanding by Sector (£m), Year End 2001-2006 DISTRIBUTION COMPETITIVE STRUCTURE Debt THE CONSUMER MARKET FORECASTS Regulation The Consumer Credit Act 1974 The Consumer Credit Act 2006 Advertising Regulation and the Financial Services Authority 3. Banks BACKGROUND MARKET TRENDS Table 9: UK Consumer Credit by Gross Lending by Banks (£m and index 2001=100), 2001-2006 Market SIZE Table 10: UK Consumer Credit by Amount Outstanding with Banks (£m and index 2001=100), Year End 2001-2006 MARKET SHARE Table 11: UK Banks' Individual Group Balances by Loans and Advances to Customers (£m), 2005 CONSUMER DYNAMICS Loan Repayment Fees Overdrafts Online Banking Key Note's Consumer Research 4. Building Societies BACKGROUND MARKET TRENDS Table 12: UK Consumer Credit by Gross Lending by Building Societies (£m and index 2001=100), 2001-2006 MARKET SIZE Table 13: UK Consumer Credit by Amount Outstanding with Building Societies (£m and index 2001=100), Year End 2001-2006 MARKET SHARE Table 14: The Top Ten Building Societies in the UK by Assets (£m), 2005 DISTRIBUTION 5. Other Specialist Lenders BACKGROUND MARKET TRENDS Table 15: UK Consumer Credit by Gross Lending by Other Specialist Lenders (£m and index 2001=100), 2001-2006 MARKET SIZE Table 16: UK Consumer Credit by Amount Outstanding with Other Specialist Lenders (£m and index 2001=100), Year End 2001-2006 DISTRIBUTION CONSUMER DYNAMICS Motor Finance The Cost of Credit Key Note's Consumer Research ADVERTISING Table 17: Main Media Advertising Expenditure on Motor Car Personal Loans (£000), Year Ending June 2006 6. Retailers BACKGROUND MARKET TRENDS Table 18: UK Consumer Credit by Gross Lending by Retailers (£m and index 2001=100), 2001-2006 MARKET SIZE Table 19: UK Consumer Credit by Amount Outstanding with Retailers (£m and index 2001=100), Year End 2001-2006 STORE CARDS 7. Insurance Companies and Other Lenders INSURANCE COMPANIES Background Market Trends Table 20: UK Consumer Credit by Gross Lending by Insurance Companies (£m and index 2001=100), 2001-2006 Market Size Table 21: UK Consumer Credit by Amount Outstanding with Insurance Companies (£m and index 2001=100), Year End 2001-2006 OTHER LENDERS Supermarkets The Post Office CONSUMER DYNAMICS Key Note's Consumer Research Borrowing from a Supermarket Borrowing at the Post Office Borrowing through a Club or Professional Association Borrowing from a Credit Union 8. Personal Loans CONSUMER CREDIT Credit Scores UNSECURED LENDING Market Trends Table 22: 12-Month Growth Rate for Unsecured Lending (%), 31st July 2001-2006 Advertising Table 23: Main Media Advertising Expenditure on General Personal Loans (£000), Year Ending June 2006 Table 24: Main Media Advertising Expenditure on Unsecured Personal Loans (£000), Years Ending June 2006 Suppliers Cattles Group PLC Payment-Protection Insurance ONLINE PERSONAL LOANS Comparison Websites Advertising Consumer Dynamics Key Note's Consumer Research Comparing Lenders' Interest Rates Before Borrowing Borrowing over the Internet Taking Out Payment-Protection Insurance Borrowing over the Telephone HOME CREDIT The Competition Commission's Investigation Market Size Market Share Pricing — Annual Percentage Rate and Total Charge for Credit Provident Financial 9. Secured Lending BACKGROUND MARKET TRENDS MARKET SIZE Table 25: Loans Secured on Dwellings by Amount Outstanding (£m and index 2001=100), Year End 2001-2006 ADVERTISING Table 26: Main Media Advertising Expenditure on Secured Personal Loans (£000), Year Ending June 2006 SUPPLIERS CONSUMER DYNAMICS Key Note's Consumer Research Taking Out Secured Loans Difficulties Getting a Loan due to Self-Employment Difficulties Getting a Loan due to Credit Record 10. Credit Cards BACKGROUND MARKET TRENDS Table 27: UK Consumer Credit on Credit Cards by Gross Lending (£m and index 2001=100), 2001-2006 MARKET SIZE Table 28: UK Consumer Credit on Credit Cards by Amount Outstanding (£m and index 2001=100), Year End 2001-2006 Store-Branded Credit Cards Table 29: Store-Branded Credit Cards by Total Balances (£m), Year End 2001-2006 Market Share ADVERTISING Table 30: Main Media Advertising Expenditure on Credit Cards and Store Cards (£000), Year Ending June 2006 CONSUMER DYNAMICS Credit-Card Loan Repayment Fees The Cost of Borrowing Regulation Key Note's Consumer Research Borrowing on Credit Card 11. Debt OVERINDEBTEDNESS Table 31: Insolvencies in England and Wales (number and index Q2 2005=100), Second Quarter 2005 to Second Quarter 2006 Advertising Suppliers CREDIT-CARD DEBT GOVERNMENT ACTION National Strategy for Financial Capability Impairment Charges CONSUMER DYNAMICS Key Note's Consumer Research Saving to Avoid Debt Ease of Getting a Loan Borrowing from Multiple Lenders Loan Repayment Concerns 12. An International Perspective INTRODUCTION CREDIT CARDS IN THE EU FRANCE ASIA NORTH AMERICA SOUTH AMERICA 13. PEST Analysis POLITICAL FACTORS ECONOMIC FACTORS SOCIAL FACTORS TECHNOLOGICAL FACTORS 14. Consumer Dynamics OVERVIEW Table 32: Summary of Attitudes Towards Borrowing (% of respondents), 2006 AVOIDING DEBT "I Save Up in Advance to Avoid Debt" Table 33: Saving in Advance to Avoid Debt (% of respondents), 2006 "Instead of a Loan, I Use My Combined Current/Savings Account" Table 34: Using a Combined Current/Savings Account Instead of a Loan (% of respondents), 2006 BORROWING "I Borrow on My Credit Card" Table 35: Borrowing on a Credit Card (% of respondents), 2006 "If I Have Reached My Limit with One Lender, I Can Always Borrow from Another" Table 36: Attitudes Towards Borrowing from Multiple Lenders (% of respondents), 2006 "I Take Out a Loan Based on Security such as Property" Table 37: Taking Out Secured Loans (% of respondents), 2006 "I Look at Several Lenders' Interest Rates Before Borrowing" Table 38: Comparing Interest Rates Before Borrowing (% of respondents), 2006 "I Think it is Too Easy to Get a Loan Nowadays" Table 39: Attitudes Towards the Ease of Obtaining Loans (% of respondents), 2006 "I Worry About Repaying My Loan" Table 40: Worries About Loan Repayments (% of respondents), 2006 "I Have Difficulty Getting a Loan Because I Am Self-Employed" Table 41: Difficulties Obtaining a Loan Due to Self-Employment (% of respondents), 2006 "I Have Difficulty Getting a Loan Because of My Credit Record" Table 42: Difficulties Obtaining a Loan Due to Credit Record (% of respondents), 2006 "I Think Interest Rates Should Be Capped" Table 43: Attitudes Towards Capping Interest Rates (% of respondents), 2006 "I Choose a Lender Based on its Reputation" Table 44: Selecting a Lender Based on Reputation (% of respondents), 2006 "I Take Out Payment-Protection Insurance on My Personal Loans" Table 45: Taking Out Payment-Protection Insurance (% of respondents), 2006 "I Am Happy to Borrow at My Supermarket" Table 46: Attitudes Towards Borrowing from a Supermarket (% of respondents), 2006 "I Am Happy to Borrow at the Post Office" Table 47: Attitudes Towards Borrowing from the Post Office (% of respondents), 2006 "I Am Happy to Borrow Over the Telephone" Table 48: Attitudes Towards Borrowing Over the Telephone (% of respondents), 2006 "I Am Happy to Borrow Over the Internet" Table 49: Attitudes Towards Borrowing Over the Internet (% of respondents), 2006 "I am Happy to Borrow Through My Club or Professional Association" Table 50: Attitudes Towards Borrowing Through a Club or Professional Association (% of respondents), 2006 "I Would Be Interested in Borrowing from a Credit Union" Table 51: Attitudes Towards Borrowing from a Credit Union (% of respondents), 2006 "I Am Happy to Borrow to Pay for a Car Through the Retailer's Finance Facility" Table 52: Attitudes Towards Borrowing Through a Car Dealer (% of respondents), 2006 15. Company Profiles ALLIANCE & LEICESTER PLC Corporate Strategy New Product and Brand Developments Distribution Advertising Profitability Table 53: Financial Results for Alliance & Leicester PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments BARCLAYS PLC Corporate Strategy New Product and Brand Development Distribution Advertising Profitability Table 54: Financial Results for Barclays PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments HBOS PLC Corporate Strategy New Product and Brand Development Distribution Advertising Profitability Table 55: Financial Results for HBOS PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments HSBC BANK PLC Corporate Strategy New Product and Brand Development Distribution Advertising Profitability Table 56: Financial Results for HSBC Bank PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments LLOYDS TSB GROUP PLC Corporate Strategy New Product and Brand Development Distribution Advertising Profitability Table 57: Financial Results for Lloyds TSB Group PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments The ROYAL BANK OF SCOTLAND GROUP PLC Corporate Strategy New Product and Brand Development Distribution Advertising Profitability Table 58: Financial Results for The Royal Bank of Scotland Group PLC (£000, number, % and £), Years Ending 31st December 2003-2005 Future Company Developments 16. The Future ECONOMIC FORECASTS Population Table 59: Forecast UK Resident Population by Sex (000), Mid-Years 2006-2010 Gross Domestic Product Table 60: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2006-2010 Inflation Table 61: Forecast UK Rate of Inflation (%), 2006-2010 Unemployment Table 62: Forecast Actual Number of Unemployed Persons in the UK (million), 2006-2010 Household Disposable Income Table 63: Forecast UK Household Disposable Income per Capita (£), 2006-2010 MARKET FORECASTS Market Trends Table 64: Forecast UK Consumer Credit by Gross Lending by Sector (£m), 2007-2011 Figure 1: Forecast UK Consumer Credit by Gross Lending (£m), 2001-2011 Market Size Table 65: Forecast UK Consumer Credit by Amount Outstanding by Sector (£m), Year End 2007-2011 Figure 2: Forecast UK Consumer Credit by Amount Outstanding (£m), Year End 2007-2011 CONCLUSION 17. Consumer Confidence METHODOLOGY KEY FINDINGS THIS QUARTER THE WILLINGNESS TO BORROW Confidence Rebounds Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006 Fewer Adults Wish to Borrow Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), August 2005-2006 SPENDING FROM SAVINGS Strong Recovery in Spending from Savings Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006 Savings Grow in Relative Importance Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), August 2005-2006 18. Further Sources Associations Government Sources Other Sources Bisnode Sources