Tired of high interest lenders and high cost retailers targeting low income consumers on the High Street, some authorities, social enterprises and credit unions are fighting back
“Good morning all. I've had an American style fridge-freezer and a beautiful red Indesit oven off Fair for You. I'm paying a monthly amount which is affordable for me as I'm on benefits,” comments Caroline on Facebook. “I wouldn't dream of going to BrightHouse as they are way too expensive and you end up paying triple the price back.”
There’s a quiet revolution underway. Led by consumers and facilitated by social enterprises, credit unions and local authorities, it’s taking on unscrupulous lenders and retailers blighting High Streets and targeting low income households with goods they do not need or cannot afford.
Earlier this month, a BBC investigation found people with mental health issues or learning disabilities were drowning in debt after purchasing from pay-to-own giant BrightHouse. In a report aired on the Victoria Derbyshire programme, former Labour leader Ed Miliband called for tighter regulation: “It seems to me that too often rent-to-own companies are taking advantage of people who feel they have nowhere else to go. The regulator needs to stop the most vulnerable people in our society, like those with learning difficulties, being taken advantage of.”
The Financial Ombudsman is one body overseeing fair play on the High Street, specifically around financial services designed to reel customers in. The independent service assesses complaints on a range of issues from PPI to store cards, payday lenders, hire purchase and pawnbroking.
One customer complained to the Ombudsman about BrightHouse for failing to replace a faulty laptop. Not only was her case upheld but the company was ordered to pay £250 compensation, £220 for a replacement and £70.75 against payments taken after her initial grievance was raised. Another customer, Miss S, reported the company for breaching data protection, (telling her sister she was in financial difficulty), and ‘acting unreasonably’ towards her. The Ombudsman considers what is ‘fair and reasonable’ in each case and while it found in favour of Miss S, a complaint by another customer with mental health problems was not upheld where it felt BrightHouse had “acted positively and sympathetically”.
There’s a quiet revolution underway. Led by consumers and facilitated by social enterprises, credit unions and local authorities, it’s taking on unscrupulous lenders and retailers blighting High Streets and targeting low income households with goods they do not need or cannot afford.
Earlier this month, a BBC investigation found people with mental health issues or learning disabilities were drowning in debt after purchasing from pay-to-own giant BrightHouse. In a report aired on the Victoria Derbyshire programme, former Labour leader Ed Miliband called for tighter regulation: “It seems to me that too often rent-to-own companies are taking advantage of people who feel they have nowhere else to go. The regulator needs to stop the most vulnerable people in our society, like those with learning difficulties, being taken advantage of.”
The Financial Ombudsman is one body overseeing fair play on the High Street, specifically around financial services designed to reel customers in. The independent service assesses complaints on a range of issues from PPI to store cards, payday lenders, hire purchase and pawnbroking.
One customer complained to the Ombudsman about BrightHouse for failing to replace a faulty laptop. Not only was her case upheld but the company was ordered to pay £250 compensation, £220 for a replacement and £70.75 against payments taken after her initial grievance was raised. Another customer, Miss S, reported the company for breaching data protection, (telling her sister she was in financial difficulty), and ‘acting unreasonably’ towards her. The Ombudsman considers what is ‘fair and reasonable’ in each case and while it found in favour of Miss S, a complaint by another customer with mental health problems was not upheld where it felt BrightHouse had “acted positively and sympathetically”.
| In Leeds, the City Council is working in partnership with Leeds City Credit Union to promote affordable credit to consumers. Recognising shoppers will respond to accessible offers on the High Street, the council has strategically made use of high profile locations, one stop community centres, housing offices and schools to sell an ethical alternative to high interest lenders and weekly payment stores offering credit. Partners in the | Tackling Financial Exclusion in Leeds |
city are also looking at apps and back office systems so the speed of decision-making compares favourably with commercial outfits set up to close the deal before the shopper recognises the true expense of the goods they want – often over-priced and on terms where insurance and credit is higher than could be accessed elsewhere.
This builds on work originally undertaken to compete with PayDay loans companies, such as the high profile Loan Shop in the city. Run by Leeds Credit Union, the Loan Shop also has a website that looks familiar to anyone who may have used Wonga or similar ‘instant access’ services.
This builds on work originally undertaken to compete with PayDay loans companies, such as the high profile Loan Shop in the city. Run by Leeds Credit Union, the Loan Shop also has a website that looks familiar to anyone who may have used Wonga or similar ‘instant access’ services.
For low income households, the core offer of Fair for You is saving low income customers hundreds of thousands of pounds, reportedly £518,000 in its first six months of trading when compared to purchases customers would alternatively have made with rent-to-own stores like BrightHouse. In addition to offering cheaper credit terms, the company assesses affordability and recommends alternative goods where necessary. It also exposes the over-inflated costs of ‘add-ons’ like insurance and even delivery costs, charging, for example, £8 compared to £55 by competitors.
CEO Angela Clements told QIPN: "Our research found that [low income mums] that had used high cost credit, including the weekly payment stores. They knew they had been ‘ripped off’ but without exception they also said, if they need to, they would still use them again. When faced with a broken washing machine they felt huge levels of stress, which often saw them making poorer decisions.
"When our mums spoke about their experience with the rent-to-own stores, they talked about feeling pressured to buy more expensive items and treated very badly when missing payments, and the additional charges when they did. They resented having to wait for decisions when applying for a loan and said their stress levels grew through the whole process.
"Everything we do is clear and customers are treated with dignity and respect throughout. They rate the products, which arrive 2-3 days after they complete their loan – we get lots of pictures! They really love our loans and pricing but also that we are flexible and supportive. We are a small team very committed to what we do. That comes across." (See Angela's full Q&A here.)
Fair for You has been endorsed by the Centre for Responsible Credit, whose Director Damon Gibbons said: “At last, low to middle income households across Britain have a real alternative to the rip off lenders. We’ve interviewed Fair for You customers and know that the money they are saving by using Fair for You is vital to the health and well-being of themselves and their children.”
Sharp practice by retailers, however, is not limited to the High Street. Low income shoppers are also often targeted with seemingly affordable weekly payment terms offered by catalogues and Christmas savings clubs, unaware that they are paying over the odds for goods. Park Christmas Savings offers a budgeting club to help shoppers spread the financial burden through the year but their catalogue advertises some goods at 63% more than other retailers. (The 25-disk complete box set of Only Fools and Horses – Park: £89.99 over 22 weeks; Amazon: £54.95.)
For advisers working with vulnerable people or consumers who feel they have been mistreated over the finance element of a purchase, the Financial Ombudsman offers online advice. Its Consumer Credit resource includes technical information and helpful links to guide clients through the process of raising a complaint
CEO Angela Clements told QIPN: "Our research found that [low income mums] that had used high cost credit, including the weekly payment stores. They knew they had been ‘ripped off’ but without exception they also said, if they need to, they would still use them again. When faced with a broken washing machine they felt huge levels of stress, which often saw them making poorer decisions.
"When our mums spoke about their experience with the rent-to-own stores, they talked about feeling pressured to buy more expensive items and treated very badly when missing payments, and the additional charges when they did. They resented having to wait for decisions when applying for a loan and said their stress levels grew through the whole process.
"Everything we do is clear and customers are treated with dignity and respect throughout. They rate the products, which arrive 2-3 days after they complete their loan – we get lots of pictures! They really love our loans and pricing but also that we are flexible and supportive. We are a small team very committed to what we do. That comes across." (See Angela's full Q&A here.)
Fair for You has been endorsed by the Centre for Responsible Credit, whose Director Damon Gibbons said: “At last, low to middle income households across Britain have a real alternative to the rip off lenders. We’ve interviewed Fair for You customers and know that the money they are saving by using Fair for You is vital to the health and well-being of themselves and their children.”
Sharp practice by retailers, however, is not limited to the High Street. Low income shoppers are also often targeted with seemingly affordable weekly payment terms offered by catalogues and Christmas savings clubs, unaware that they are paying over the odds for goods. Park Christmas Savings offers a budgeting club to help shoppers spread the financial burden through the year but their catalogue advertises some goods at 63% more than other retailers. (The 25-disk complete box set of Only Fools and Horses – Park: £89.99 over 22 weeks; Amazon: £54.95.)
For advisers working with vulnerable people or consumers who feel they have been mistreated over the finance element of a purchase, the Financial Ombudsman offers online advice. Its Consumer Credit resource includes technical information and helpful links to guide clients through the process of raising a complaint
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