Why did you set up Fair for You?
In 2009 I took over the running of a city centre credit union, and in the 5 years I ran it, I watched high cost credit providers expand rapidly across Birmingham. We found our own members going to them despite knowing they could come to us and the stories we were hearing were not complaints about the cost but about how they treated their customers. We tried to compete but it requires investment and focus to challenge something like that.
Originally our plan was to look just like the leading rent-to-own store but to be cheaper. I thought if they can do it, we could do it – cheaper and better. Having run a credit union, I believed strongly that if there was a better alternative people would use it. So in March 2014, I left my CEO role and with support of lots of other people, we began a journey – not really knowing where it would lead.
We had some grant limited funding from The Esmee Fairbairn Foundation that allowed us to conduct some research among mums with younger children and income under £25k in the household. What we found changed our plans entirely. We found that almost without exception they 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. We shared the research widely, including to the All Party Parliamentary Group for Affordable Credit Review into the rent-to-own sector and presented on what we saw as the modern borrowing needs for lower income households.
What did you set out to achieve?
Our research made it clear what customers needed from us:
- Create efficient and easy to use service – they didn’t have much time, often single mums who were working
- Keep pricing clear and transparent – trust of financial services was very low and they resented unexpected fees that would throw out their whole budget
- Develop an on line high street, offering quality, branded and useful items – they wanted quality, new items they didn’t have to replace again quickly
- Provide structured loans, with flexibility – customers knew they were likely to miss payments when signing up over 3 years and they would end up paying extra fees. They wanted to clear the debt more quickly, they wanted to pay ahead, and a defaulted payment was regularly a timing issue or a banking issue, not a decision not to pay
How has it been going?
It’s been a very tough year, more so that I ever expected. The structure is that we are a CIC wholly owned by a registered charity, so there is no likelihood of any takeover or change of mission or direction. That was important but complicated to establish, and we have two boards that run separately, with the Trustee board having oversight and a Non Exec Board working with the Senior Exec Team.
We have a lending licence under the FCA, and unlike the rent to own stores who operate still on interim licences, ours is a full authorised permission. We decided that we would be solely a lender, we are good at lending and we were committed to doing the lending well. All of our loans are to buy essential items for a modern home and family, and we would develop an online high street working with great manufacturers and suppliers like Whirlpool Group.
How have customers found it?
From day one, we had amazing feedback and we have listened and improved continually. They love the service, the products and the loans and pricing. Every day we get more reviews left on Trustpilot from customers – almost all are 5 stars, and we have never had a review below 3 stars. Most customers find our service easy and efficient. Everything is very clear and they are treated with dignity and respect throughout, and we are available through weekends and evenings, when they need us. They rate the products, which arrive 2-3 days after they complete their loan and they are quality, branded and fit for purpose – we get lots of pictures! We organise installation and packaging removal. 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.
We have a few things in the pipeline including a Pay Now option, so organisations can buy from us paying upfront, and the Good Payers Club, which will mean good customers will have extra benefits, like cheaper loans, and more on offer, such as TVs, entertainment and IT products. We add more products every week, and more product lines are planned through the next year.
Our vision for Fair for You is to be more than a competitor to the worst practices of high cost credit. We believe we can demonstrate that there is a sustainable way to offer better credit solutions for lower income families. We are breaking myths that have grown up over recent years. Our customers don’t want 65 inch TVs or £5k sofas, and over 40% of customers choose to overpay their loan and are credit averse.
We saw you at the launch of the FCA’s paper on Financial Exclusion, why were you there?
It's not our customers that have a financial education requirement – they know this is a better solution and they budget very carefully. It is other lenders who need educating on the modern borrowing needs of lower income families. Financial exclusion is not the customers fault, if you create better credit solutions that people will find them and use them, increasing their financial confidence, credit ratings and moving them away from the painful credit options and debt that arises from using it.
There are many of us that really believe in a future in which our high streets, our towns, our cities do not have high cost credit providers sat next to each other in long rows. We want communities to flourish instead of the high cost credit providers that extract millions every week through the poorest households, funding global brands.
I am so often surprised that being a woman of mature years, and having had a well-paid career as a banker, I might sound controversial and disruptive, and even a little revolutionary. But every day I am inspired by customers that have to choose how they spend their money, not like the stories you see on the TV – just ordinary people doing the best they can to get by. Juggling and struggling.
Simply, we don’t sell loans of £300, though its our average loan. We don’t sell washing machines – though its our most popular product. We don’t save our customers £750 per item, though on average that is the saving. What we do is transform household finances and provide an escape from having to use high cost credit providers again.