The volume of payday lending has decreased by more than 40 percent in the last three years, according to research from trade body the Consumer Finance Association (CFA).
The research was conducted in partnership with the Social Market Foundation (SMF), a research and events firm, with input from two YouGov surveys.
It has provided an assessment of how the high-cost short term credit market has changed since the introduction of the price cap regulation in 2015.
This comes at the same time the Financial Conduct Authority (FCA) released a statement to say it would review the price cap on payday loans.
The number of loans sold between January and April in 2013 to the same period this year have dropped by 42 percent.
Since the introduction of these changes the costs of borrowing has fallen and lenders have been using “tighter” affordability checks, according to the study.
Research also found that of the 1,200 consumers surveyed those buying loans in 2015 were on average coming from higher-income brackets than in 2013.
Almost a third of all consumers surveyed said if they were not able to access a loan they would have to go without essentials like, food, petrol or heating.
Nigel Keohane, research director of the SMF, said: “Policy makers should be vigilant about the potential risks to those who are excluded from the market.
“Effective regulation of affordability checks will also continue to be important, as will ensuring that over time the cap does not dampen competition.”
Credit Strategy’s upcoming F5 conference will feature a stream focusing on compliance in alternative lending.