Time for change?
The benefits of a Fair Banking Act

Published 18 July 2023

The music fan in me is tempted to say that the release of The Clash’s eponymous debut album was the best thing to happen in 1977. But putting my professional hat on, I must note another significant release that year: the Community Reinvestment Act, by the US Congress. A near half-century later, this federal law has inspired a new campaign designed to improve financial inclusion in the UK. Fair for You, the social lender I lead, is pleased to have added its signature to the Fair Banking for All Campaign, alongside credit union body ABCUL, CDFI network Responsible Finance and others. The coalition is calling for a Fair Banking Act, mirroring much of that US law. This would respond to the financial exclusion with which CCTA members will be familiar. Right now, banks’ refusal to provide services such as loans, overdrafts or even basic bank accounts to customers it considers ‘high risk’ is driving people towards loan sharks and other hardships. Public polling for this Campaign confirms that most Britons see this as unfair, and that the majority would support a law tackling this. The Community Reinvestment Act compels American banks to invest in community, non-profit or good cause organisations, including affordable credit. Initially seen by the banks as a simple ‘regulatory must-do’, they have since realised that it provides various reputational, customer and financial benefits. A Fair Banking Act would require mainstream banks in the UK to report on their performance on financial exclusion, through a transparent, publicly available, framework. It would institute a system for clear ratings, showing which banks are doing well and which need to improve on this front. Investment in affordable credit providers would be one way for it to improve these ratings. The Campaign is pleased that it has already attracted interest from various politicians and representatives from the banking sector. Momentum is building. If enacted, the legislation should create opportunities for some CCTA members, such as Fair for You, to receive investment from banks, or to partner with or launch joint ventures with them. It would also create changes in the credit market, altering the volume or profile of customers coming to CCTA members. I am aware that some CCTA members will raise their eyebrows at these potential developments, and my door is very much open to anyone wanting to discuss this campaign, and why we are part of it. But I make no apology for our overarching mission of ensuring affordable, ethical credit is as widespread as possible. And ultimately, I hope that all CCTA members would agree that a diverse, thriving credit market in which there is a healthy mix of different providers is good for consumers, society as a whole, and the credit industry itself. And this is exactly what a Fair Banking Act hopes to encourage.

Revving up efficiency
unlocking operational success for car finance intermediaries

Published 18 July 2023

The UK car finance industry faces several challenges impacting business performance and profitability. One of the biggest challenges is the increasing competition within the market. With a rising number of companies entering the market, it is becoming increasingly difficult for car finance intermediaries to stand out and attract customers. Another challenge is the rising cost of borrowing. Interest rates have steadily increased over the past few years, making it more expensive for consumers to finance car purchases. This is particularly difficult for those with lower credit scores, who may be charged higher interest rates. Within the industry, there are also issues with flawed processes and sales efficiencies. Many companies still use outdated methods and systems, which can be slow and cumbersome. Sales efficiencies are also an issue, as many companies need help to target, reach, and convert their potential customers effectively. On average, car finance companies typically have a conversion rate of around 5% to 15% on loan applications. Car finance companies must invest in modern, efficient processes and systems to address challenges. This includes adopting new technologies such as artificial intelligence and automation, which can help streamline operations and improve efficiency. HOW TO IMPROVE EFFICIENCIES WITHIN YOUR BUSINESS • Automation: Automating manual tasks can help reduce errors and improve efficiency. For example, car finance companies can use automation tools to streamline the application process, handle customer queries, and manage loan payments. • Digitalisation: Adopting digital technologies can help car finance intermediaries reduce paper usage, speed up processes, and improve customer experience. For example, they can use online platforms to allow customers to apply for loans, make payments, and track their loan status. • Data analytics: Using data analytics, car finance intermediaries can gain insights into customer behaviour and preferences, which can help them tailor their products and services to meet customer needs better. This can help improve customer retention and increase conversions. • Collaboration: Collaborating with partners such as car dealerships, lenders, and banks can help car finance intermediaries access a wider pool of products and expand their reach. This can also help them offer a broader range of products and services, improving customer satisfaction. THE BENEFITS OF IMPLEMENTING THESE STRATEGIES • Automation: Intermediaries can save time and reduce costs by reducing the need for manual labour. • Digitalisation: Digitalisation can help intermediaries reach more customers, offer more products, and improve efficiency. • Data analytics: Data analytics can help car finance intermediaries make informed decisions based on real-time data, leading to improved efficiency and better customer targeting. • Collaboration: Collaboration can help car finance intermediaries expand their reach and access a wider pool of customers whilst offering a broader range of products and services, increasing customer satisfaction.

Know your partner
Taking pride in client partnerships

Published 18 July 2023

You wouldn’t get married at first sight (unless of course you’re on the reality TV show of the same name), nor would you choose a builder to renovate your house, without first doing research. It’s important you knew about their background, their quality levels, their culture and moral compass – and that they are aligned with yours. They are all the same reasons for choosing a partner to look after your most important asset, your customers. With the impending Consumer Duty, it’s important to choose a partner you can trust, who will be transparent and supportive of your focus on ensuring customers have the right experience. GETTING TO KNOW YOU A good partner will spend time working with you and learning about your business and customer base. It matters that the customer doesn’t feel like they’ve had a disruptive journey, and that your selected partner understands what they have been through and what their current circumstances are. You should also be actively encouraged to ask questions; you have your area of expertise, and your partner has theirs. After all, that’s why you are working with them. Ask any questions you have and where possible make an onsite visit to get a feel for the business and the culture within it. A slide deck can paint any picture the creator wants, but a physical visit to meet a cross-section of people across the business really gives you a feel for what they’re about. CAN I WORK WITH THIS PERSON? As much as that might sound like going back to school and choosing your friends, it is important to build up a relationship of trust with your partner. Transactional is all very well, but it doesn’t help when things get sticky, or a collegiate approach is needed. Find a partner you like, and who you know you’ll be able to have honest conversations with around service and performance, without it jeopardising your future working relationship. GET FEEDBACK Do they have any case studies? Can you speak to any of their existing clients? Your partner needs to be transparent from the outset and should be delighted to share contacts across their existing client base, assuming they are delivering what they said they would. One point here though – once you’ve chosen your partner, please also support them in offering to be a reference if they need one. HOW ARE THEY GOING TO ACHIEVE THEIR RESULT? Potentially a contentious point, and pricing will always be an important factor, but you know the saying; “if something seems too good to be true, it probably is”. When you are getting low servicing rates or high sale prices, ask yourself, ‘how are they going to compliantly and fairly get their returns based on the valuation they’ve given?’, ‘what controls do I need to put in place to ensure my customer is protected and I’m continuing to follow the Consumer Duty rules and guidance?’ At Lantern Group we take great pride on our client partnerships. We are supportive …

Reconnecting with customers in arrears
Why we need a data driven approach

Published 18 July 2023

In the current economic climate, with all of its complexities, a ‘one size fits all’ approach to consumer debt recovery isn’t effective for businesses, their customers and clients. However, a fully tailored approach to each and every customer isn’t possible – or at least not without access to quality data. With the FCA’s Consumer Duty bringing a focus on enhancing the customer journey, ensuring collections processes are as joined-up and consistent as possible to deliver fair outcomes, is key. Delivering this doesn’t just serve the interests of the consumer; it also benefits creditors to work with partners who can offer a data-driven, end-to-end service. THE WHOLE DEBT LIFECYCLE With more and more focus on the cost of living, it’s inevitable customers will be faced with prioritising different types of debt from credit cards, loans and mortgages to utilities and council tax, and it’s crucial they are supported across the whole debt lifecycle, regardless of who is supporting their circumstance. That journey is becoming more and more complex for many. When it comes to reconnecting with customers who creditors have lost touch with, we mustn’t treat it like a starting point. All that has gone before should be taken into account to inform the approach and verify any information that is available before reaching out, especially with when considering potential vulnerability which continues to be prevalent and can take many forms. THE BENEFIT OF INSIGHT Insight is a wonderful thing. Using high quality, comprehensive data to track the whole customer journey and inform appropriate action and next steps results in better, fairer customer outcomes and saves all involved time and resource. It’s a win win. This has become a ‘given’ in mainstream collections but field-based services are largely still traditional and there often isn’t a joined-up approach. Reconnection and verification rarely needs to start with a blank sheet of paper. Analysing all the data available will significantly improve decisioning, effectiveness and appropriateness to determine the right channel to be deployed. OMNI-PRESENT OMNI-CHANNEL An end-to-end solution isn’t just about the linear customer journey from debt purchase and collections to litigation and reconnection, using different forms of communication and different datasets for different stages in the process. Customer journeys are not always linear and every customer is different. Just because something is escalated, doesn’t mean there shouldn’t still be an omni-channel approach which may include a combination of field visits, telephone support, letters, email and online chat, in any order. In fact, face-to-face interaction is often the best ‘door opener’ (pardon the pun) for follow up engagement and resolution via other means, as well as being a great way to gather in-depth insight, including vulnerabilities, that can then be fed into existing digital data sources. CUSTOMER-CENTRICITY IS STILL KING Most importantly of all is how we take a data-driven approach to deliver the right outcomes and at the forefront of that is treating customers as humans. In fact, good quality data gathering is about building up as clearer a picture as possible about …

News from Scotland
Some new changes and some tidying up of the old

Published 18 July 2023

The Bankruptcy and Diligence (Scotland) Bill introduces a number of measures which modify current diligence (judgment enforcement) measures, to either improve them or clarify some of their provisions. However, perhaps of greatest impact to the credit industry will be the introduction of a mental health moratorium on debt recovery action should an individual have a mental illness. The precise details will be introduced by regulations, although the Bill provides a non-exhaustive non-mandatory list detailing what those regulations may provide including The individual’s eligibility criteria for the moratorium to apply The type of debts to which the moratorium will apply and the process for establishing the eligibility criteria The moratorium’s timeframe, what creditors can do during its currency, including the ramifications for creditors should creditors breach the moratorium The debtor’s obligations during the moratorium How information can be recorded to establish whether a moratorium is in place. Once the Bill is enacted, Scotland will be closely aligned the English Mental Health Statutory Breathing Space. Such UK-wide consistency should be welcomed. Other provisions of the Bill include the following: Clarifying the process for applying for a bankruptcy to be recalled should a debtor pay or about to pay their debts in full Where a debtor makes an application to the Accountant in Bankruptcy (as opposed to a court petition) either through the Minimal Asset Process or through the full administration process then bankruptcy should be awarded without delay. A corrective provision which confirms that where a debtor makes a gratuitous alienation of an asset a purchaser in good faith and for value will retain a good title to it. If a creditor carries out an arrestment currently a third party, such as a bank, in whose hands the arrestment is carried out, is not obliged to advise the creditor if the arrestment has been unsuccessful and not attached any funds. Arrestees will now be required to inform the creditor within three weeks if nothing has been attached. Following an earning’s arrestment the debtor’s employer is obliged to advise the arresting creditor should the debtor leave their employment. It will now be a requirement that a specific form should be used to provide this notification. Should the employer then fail to provide the information on a creditor’s application to the court a sheriff may order the employer to pay the creditor twice the amount which the creditor would have received had the arrestment be operational. The Bill states the amount should not exceed £500. If a creditor makes an application for diligence on the dependence (which may include an arrestment or inhibition) there may be a hearing prior to the provisional measure being granted. If there is a hearing and the debtor is an individual then the debtor must be provided with a “debt advice and information package” in advance of the hearing. Failure to do so will mean that the creditor’s application will not be granted. Where an exceptional attachment order has been granted (removing non-essential assets from an individual debtor’s home) …

Co-manufacturing – Consumer Duty
Co-manufacturing under the Consumer Duty

Published 18 July 2023

In this article we provide an overview of co-manufacturing under Consumer Duty and some of the primary considerations for consumer credit firms. WHY IS IT IMPORTANT? Where parties are co-manufacturing a product within the scope of the Duty they are required by PRIN 2A to agree in writing between them how they will jointly discharge their obligations under the Duty in respect of that product. This must include, but may not be limited to, their respective responsibilities in relation to product governance and price and value assessments. Failure to do so will amount to a breach of the FCA’s rules. The overriding purpose of the requirement is to enable the FCA to identify the parties’ respective responsibilities for the product design, approval and fair value, particularly in cases where issues or harm is identified. WHY IS IT CHALLENGING? The FCA has defined the concept of manufacturing broadly. As a result, it can be challenging to draw the line between merely distributing products and having a hand in manufacturing them. Intermediaries, particularly those whose main business activities are not regulated, may not have considered whether they are co-manufacturers of consumer credit products that they distribute. There is no one-size-fits-all answer; it is impossible to provide a definitive guide to every scenario and the classification of individual arrangements will turn on their facts. Firms should work with the other parties in their distribution chains to reach a shared view on how their respective activities should be classified. While daunting, this exercise provides an opportunity to clearly define and delineate roles and responsibilities within distribution chains and to update contracts, governance, and oversight practices accordingly. KEY DEFINITIONS AND CONCEPT OF CO-MANUFACTURING Under the Duty a “manufacturer” is essentially defined as a firm which created, developed, designed, issues, manages, operates, carries out, or underwrites a product. A “distributor” is a firm which offers, sells, recommends, advises on, arranges, deals, proposes or provides a product. The term “co-manufacturer” is not defined, but FCA commentary in FG22/5 clarifies: “A firm would be considered a co-manufacturer where they can determine or materially influence the manufacture of a product or service. This would include a firm that can determine the essential features and main elements of a product or service, including its target market.” In its March 2023 Dear CEO Letters about Consumer Duty to the motor finance providers portfolio and the credit brokers portfolio, the FCA stated that it expects firms to be clear about their roles in the distribution chain. Reiterating its comments in FG22/5 (above) about co-manufacturing, the FCA highlighted this example: “If a lender negotiates an APR price-point with a dealer or broker firm, the firms may need to consider whether the lender is making the pricing decisions or if the dealer or broker has a material influence on this”. TOP TIPS: FACTORS TO FOCUS ON Firms should focus on the materiality of the influence a distributor exerts over the main components of the product, how it is delivered and to whom. In most …

Brach of contract
What is a material breach?

Published 18 July 2023

Whether a breach of contract is ‘material’ (or ‘substantial’ – in this context, the terms are generally interchangeable) can be difficult to ascertain. But the answer can have a major impact on the consequences flowing from such a breach. The issue crops up often in commercial disputes. In this briefing, we explain how the approach adopted by the courts can offer practical assistance for contract negotiators and commercial parties. BREACH OF CONTRACT: BACK TO BASICS The basic, common law position is that a contract can only be terminated if the actions of a breaching party go right to the core of the contract and substantially deprive the innocent party of the benefit the contract was intended to confer. Such a breach is also known as a repudiation, or a repudiatory breach. To allow termination, as opposed to just financial compensation, for breaches which are less drastic than repudiatory breaches, but that nevertheless still have a significant impact, parties often agree express terms providing for termination in the event of a material breach of contract. But what constitutes a ‘material’ breach? BREACH OF CONTRACT AND MATERIALITY: KEY PRINCIPLES There is no universal legal definition for material breach of contract. Meaning will therefore be a question of interpretation. Over time, the courts have adopted a varied approach to interpreting materiality: • In National Power Plc v United Gas Co Ltd (1998), the court held that a material breach of contract was a breach that has a serious effect on the benefit that the innocent party would have otherwise derived from the contract. • In Crosstown Music Company 1, LLC v Rive Droite Music Ltd (2009) the court considered that the concept of materiality, as opposed to triviality, has to be measured in the context in which the question arises – that is, the total factual matrix, covering the terms of the contract and the circumstances of the case. • In Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust (2013) LJ Jackson stated the phrase ‘material breach’ “connotes a breach of contract which is more than trivial, but need not be repudiatory … Having regard to the context of this provision, I think that ‘material breach’ means a breach which is substantial. The breach must be a serious matter, rather than of little consequence”. • Along similar lines, in Mears Ltd v Costplan Services (South East) Ltd (2018), material breach was held to be somewhere between not trivial and sufficiently serious to be repudiatory. • In the recent case of Stobart v Esken (2022), it was held that there had been no material breach because the sorts of breaches committed could have been put right in the future. • The same principle was applied in the recent case of RiverRock European Capital Partners LLP v Harnack (2022). Dissolution of a company was found not to constitute a material breach of contract since the company could be restored to the register. ASCERTAINING MATERIALITY: THE CORRECT APPROACH How can a …

Keeping up with the times
The impending review of the Consumer Credit Act

Published 18 July 2023

“Modernise, modernise, modernise!” seems to be the Government agenda for reform of the Consumer Credit Act 1974 (CCA). It is widely agreed that the existing regime is outdated, complex and restrictive for both lenders and consumers alike and reform is needed to bring in legislation that is forward thinking and in line with the operation of today’s financial services market. Since the CCA’s implementation over 50 years ago, we have seen significant changes in consumer habits, such as the introduction of buy now pay later credit, the creation of new payment technologies and a surge in online ordering. The market has long complained that the current rules are no longer fit for purpose and need to be dragged into the modern world of ApplePay, Klarna and Amazon delivery. The opportunity for reform is widely welcomed and industry reports seem to agree with the principles which are directing the review. So what are the principles that lie behind the Government’s thinking? FLEXIBILITY AND ADAPTABILITY To keep pace with market changes, one of the primary goals of the Government’s CCA reform is to transfer regulation from statute to the FCA Handbook. There were enforced changes to the CCA in 2014 when the FCA took responsibility of the market from the OFT and as part of this, certain provisions were moved to the FCA’s remit. However, the reform was piecemeal and many agree unsatisfactory. The rationale for extending this exercise is to modernise and streamline regulation for the benefit of consumers and business and allow for quick amendment to move with market demands and trends. However, this is a double-edged sword. There is a compliance cost for rule changes and upkeep, and this is placed at the door of funders. Funders have already seen hikes in their annual fees and levies and it will be of great importance to them that this doesn’t become a default position. Although a full overhaul is a great opportunity to review and update some of the pre-existing CCA rules, we are also cautious if greater power is given to the FCA, will this require additional oversight? Will there be an increased cost to lenders? As always there is a balance to be struck between protecting consumers and ensuring that the market functions properly and competitively. CONSUMER HABITS AND ENTERPRISE Consumer habits and requirements are changing. There has been a move to subscription services rather than traditional borrowing, with less importance placed on “ownership”. There is a real complaint that “it takes credit to get credit” and that the Gen Z percentage of the market are barred from credit products due to income and tight algorithms regarding ability to repay. This end of the market are more incentivised to explore more digital and creative markets and expect their funders to be as agile and big thinking as them. To combat this, the Government is seeking views on whether the existing business lending scope needs to be changed to reflect these social changes. Currently, sole traders and small partnerships …

Rising to the occasion
Steps to maximise your membership

Published 18 July 2023

The start of the year was a busy time for CCTA membership, as many of our members came up for renewal during the first few months. I want to thank all of those that have renewed, and also pick up on some ideas about how you can fully utilse your membership. Setting aside a few minutes to periodically carry out the following actions will ensure you get the most from CCTA. KEEP YOUR TEAM INFORMATION UP TO DATE As attitudes to job tenure continue to evolve, it is becoming increasingly important to ensure that your membership is managed by an active member of your team. Ask yourself: Do you have access to the Member Hub on our website? Do you know who is receiving information from CCTA? You can update your team information at any time from the Update your Details page within the Member Hub. This helps to ensure that key information such as important updates, publications, industry news, and CCTA event details are being sent to your current team. Most importantly, if the Principal Contact for your membership is leaving your firm it is essential that a new Principal is put in place. MAKE US AWARE OF YOUR LATEST PRODUCTS The Update your Details page also lists the products you are currently offering. Please update this information when you move away from a product or begin offering a new one. Keeping this data across the membership accurate allows us to allocate our resources in a proportionate manner. ENGAGE WITH OUR SURVEY REQUESTS It is hard to take any action now that doesn’t result in being asked to complete a survey shortly afterward. We understand that a survey request email will never be flagged as a high priority for members. However, I would implore you to provide us with your feedback. Our surveys are not a box-ticking exercise. The information we receive is considered when making decisions about various future plans and projects. As an example, the data gathered from the 2022 conference feedback survey has been used to adjust our 2023 conference plans accordingly. The most recent feedback request was actioned by 7.3% of the membership. This is encouraging but pushing this percentage up will help ensure that our data is more representative of the membership as a whole. RESPOND TO REQUESTS FOR INFORMATION Our member communications are grouped into categories, one of which is “Response”. A CCTA Response email is used to request opinions or feedback from members. As an example, this year we asked members to provide us with any issues, concerns or questions about the implementation of Consumer Duty. The responses were then discussed directly with the FCA (without naming individual firms). The reason for highlighting our Response emails in particular is that they feed directly into one of our key missions: advocating on behalf of our members. Our objective is to support the development of a sustainable, effective, and well-regulated market. Our work with policymakers, regulators, government, and stakeholders is guided by the feedback …

The moving parts
A political review

Published 18 July 2023

The summer parliamentary recess is a good moment to appraise where we are in national politics and consider what might be in store for CCTA members in the second half of the year. It has been a tumultuous six months for the Prime Minister. Following the calamitous Liz Truss interlude, Rishi Sunak delivered impressive early ‘wins’ that suggested his brand of brisk managerialism could chart a narrow path to victory for the Tories in 2024. He sought to capitalise by announcing Five Pledges – halving inflation, lowering waiting lists, cutting debt, growing the economy and, most controversially, stopping the small boats. The pledges were regarded as easy – designed to be hit so that, in time, he could come up with five harder ones. It now looks like he’ll score zero out of five. There might still be a path to victory, but it is vanishing. Sir Kier Starmer is enjoying more luck. It isn’t easy to get a hearing in opposition, but nor do you suffer the collateral damage caused by missed pledges. As one Labour insider put it, Starmer’s task is like carrying a Ming vase across a highly polished floor. In other words, he will win so long as he doesn’t screw up. As befits an opposition leader with a big poll lead, Starmer is light on policy. He too has made five pledges, or ‘national missions’, covering broadly the same ground minus the small boats. The priority for Starmer is projecting competence and professionalism. Expunging the negative brand associations of the Corbyn era is key, hence some heavy-handed side-lining of left-wing elements in his party. Labour strategists are laser-focussed on avoiding a rerun of 1992 when Labour led the polls but stumbled at the finishing line. Starmer is no Blair, but does that make him a Kinnock? Time will tell. In the realm of credit and debt there have been notable developments. The Financial Services and Markets Act has received Royal Assent. This is largely a post-Brexit, pro-City measure to repatriate regulatory powers and boost competition. It also boosts financial inclusion by safeguarding access-to-cash and enabling credit unions to offer more products. Opposition parties sought amendments to increase the FCA’s accountability to Parliament and oblige the regulator to ‘have regard to’ both financial inclusion and ‘net zero’ targets as part of its operational objectives. Ultimately, these amendments were defeated, but the debates gave an indication of FCA and Treasury priorities for the period to come. If further confirmation were needed, they showed that Consumer Duty will be the weapon of choice for the FCA. The call for a statutory financial inclusion objective was rejected because ‘the Consumer Duty will adequately cover the same ground’. Further safeguards on bank branch access were deemed unnecessary because ‘banks are bound by Consumer Duty’. You get the picture. The FCA is wielding the Duty in other areas too. The regulator is monitoring the speed of banks’ pass-through of interest rate rises to its savings customers. Its stick of choice? You …

A helping hand
The CCTA Advice Line for members

Published 18 July 2023

As many of you know, I am the Head of Policy and Advice at the CCTA and much of my role entails support and guidance for our members. The publication of our magazine gives me the opportunity to update you all on key developments, not only within my role but across the CCTA as your trade association. I have previously talked about training and development and, whilst this has been progressing in the background, we aim to provide further details of the launch of CCTA Academy at our Annual Conference in September. However, I wanted to take this opportunity to talk about another one of our key services – Advice Line. The Advice Line service is key tool as it allows members to utilise CCTA knowledge and experience of all matters that affect our sector. We recommend members to use CCTA as a sounding board on a wide variety of topics and subjects. Part of my role is to manage the Advice Line service and, based on your feedback, I know that this is a very valuable service to many of you. For the benefit of new members and those that have not yet used the service, Advice Line is free and only available to members. It can be used to ask for CCTA views, support or guidance on any issues or topics affecting members. This can include business specific matters such as internal policies and procedures, as well as regulatory, legislative and economic matters. Accessed through our Member Hub, members can put forward any questions, comments or concerns and we look to provide the appropriate support and guidance where possible. To provide some context, in 2022, we received 59 requests from our members for support or guidance. These requests included questions, queries or concerns in relation to a range of matters including CMCs, affordability, Consumer Duty, agreements, FCA Handbooks, the Consumer Credit Act and member-specific business questions i.e. policies, procedures and processes. Prior to 2022, CCTA were able to provide the requested support or guidance within four or five days. For 2022, we set a timeframe of a three day response time. I am happy to announce that we were able to respond to 98% of requests within three days last year. Given the positive feedback on prompt responses, we maintained a target timeframe for responses of three days for 2023. We also improved on the level of insight and detail provided in our responses which members have found very useful. This has had a significant positive impact on the use of our Advice Line service. For the first six months of 2023, we have already received 46 requests for support. Again, these have been in relation to a wide variety of matters and topical issues. Of course, some matters are more complex and ongoing than others but, I am pleased to confirm that we have managed to provide an initial response within three days to 100% of these requests. We are here to support you, as and when …

A seat at the table
A call for unity in fostering financial inclusion

Published 18 July 2023

Some allege we, at GAIN Credit, are the biggest villains in the UK. We have, in Lending Stream, one of the biggest high-cost lending books in the country. At least once a month someone, maybe a politician, maybe a charity spokesperson, calls us ‘loan sharks’ and demands our immediate banishment from the lending ecosystem. I don’t accept that portrayal. Instead, I believe our existence is not only justified but also crucial in providing accessible financial solutions. June saw some welcome research. Fair4All Finance and We Fight Fraud highlighted how ‘illegal lenders are flourishing in the credit vacuum left by the departure of high cost yet regulated lenders’ and that ‘The unintended consequence is that millions of people who can well afford to repay a fair loan are left with fewer safe options.’ Further research from IPSOS suggested over three million people in Great Britain may have borrowed from an illegal moneylender in the last three years. Together, this research highlights the magnitude of illegal lending and throws light on the real ‘loan sharks’ lurking in the financial depths. It is time for politicians, commentators, NGOs, and industry to make a decision. Should a substantial demographic be denied access to credit, even when they can afford it? This isn’t about people spiraling into debt or living beyond their means, but rather about offering solutions to ordinary individuals faced with unanticipated expense. Are we to exclude individuals for lacking a credit history, for past difficulties or for borrowing more frequently than others deem acceptable? The House of Lords obviously think financial inclusion is important, maybe they are right. If we truly care about empowering individuals and enhancing their financial stability, credit must be accessible to as many as possible. Credit unions and Community Development Financial Institutions (CDFIs) have a role to play, but so do regulated commercial offerings. If we foster an environment hostile to regulated lenders, then the doors are thrown wide open for illegal lending – the true loan sharks – that thrive on intimidation, a lack of consumer protection and no interest rate caps. It’s time for critics to replace blanket condemnation with productive dialogue. Together we can craft lending models that are fair, affordable, and inclusive. To do that, we need to be offered a seat at the table. I am proud of what we do as a firm – we help people that are often overlooked by others. I believe as a sector we can also be proud. We may never get classed as heroes but maybe, just maybe, we might be invited to form part of the solution.