Lending just enough for what is needed
06 Mar 2020
We work hard to make sure we don’t lend too much – sounds counter-intuitive but we believe firmly in lending just enough for what is needed, that means there is a greater legacy value left in the household rather than a higher debt burden.
Guest post by Angela Clements, CEO of Fair For You Enterprise
In 2015, we announced the outcome of the intensive market research carried out as part of scoping the fair for you offering and service. We identified these components that customers wanted from their credit provision:
- Clarity of cost
- No hidden fees
- No obligatory added sales
- Holistic solutions
- High visibility
- Reliable and consistent
Less than five years later, we have issued well over 60,000 loans, over £20m of lending, over £30m of poverty premium saved, and over 5000 trustpilot 5* ratings, numerous awards including Firm of the Year two years running at the Consumer Credit Awards – we feel our research was well worth every penny. Fair for You has also developed a sizeable and growing good payers club of customers who return to use us time after time providing the foundation for our sustainability. So much has changed in that time. We have seen a stronger FCA clamping down more firmly on the aspects of high cost credit that cause most damage to lower income households. Many of the big names are now either exiting the market, or being hit with large claims for redress.
There is a clear movement happening away from the credit organisations that have dominated the last decade since the banking collapse. The risk of comparison of the affordable credit sector to the aggressive and destructive high cost credit sector is that the affordable credit looks poorer and weaker on almost all comparison – on paper. We don’t oversell or create the need for our credit solution, so volumes will never run at the same level or grow on the same trajectory. It’s consumer driven so actually we work hard to make sure we don’t lend too much – sounds counter intuitive but we believe firmly in lending just enough for what is needed, that means there is a greater legacy value left in the household rather than a higher debt burden. We try not to fund where there is addiction and especially gambling – and where we see signs of pressure.
I wonder whether the growth in online gambling could have ever happened to the extent it has without the symbiotic relationship with the growth of high cost credit and how different the lives of many would be had that not been the case. On so many levels, our numbers don’t really tell the story of what we do. For most of our customers, we remove pressure when they least need it, so they can buy essential items for their homes. We don’t demand loyalty, and we work hard to make sure our customers can and want to return to us.
Putting the customer in control
Essentially, that respect is most evident and the difference to the high cost credit sector is most striking when our customers struggle to make a payment. Our lending policy is to try to keep customers on a payment plan, any payment plan that works for them and repays the loan. so we understand that we have customers that may run in arrears and catch up payments, or pay ahead to be able to miss payments. We try to keep this efficient and straightforward for us and the customers. we don’t add on fees and the only outcome we want to achieve is the loan to be repaid.
It is astonishing how important and valuable that is to our customers. They use us as the flex in their budget and we get that, we know they may have a bad week every now and then, and they don’t need us turning it into a bad month. We have thousands of loyal customers who return not because we hold them to ransom or sell our credit aggressively, but because we offer a service that really makes a difference. We take a longer term view on the value of that customer, we don’t have a profit objective, so that certainly helps us to be able to be more reasonable.
Fair for You is sustainable, and with consistent growth. I think we have come a long way in five years but we have barely started. Against a run of consumer credit companies being hit with claims of not lending affordably, we allow the customer to choose their repayments, we have a call with the customer that is only to check the loan is affordable and they understand the credit they are taking on. It’s time for change and there isn’t a place for high cost credit that does not respect the financial lives of our customers.
Commercially, the ability to retain customer loyalty, to have customers willing to recommend your services and to want to come back on payment plan to be able to use your services again – is really clear. I believe that, finally, many high cost credit companies are seeing the changes ring out, and understanding that they now have to stop railing against the regulators and listening to their customers. There is an alternative provider and a growing sector that are ready to take their place and while we will never be the same size, we can be mighty none the less.