Feb 26, 2014 Philip Burgess
Nearly anyone in the United Kingdom and not living under a rock has likely heard in the past few years the undeserved criticism that has been lobbied against the short term lending industry. Recently, government and financial industry leaders have made public statements that seem to attempt to undermine all of the good the sector has done since the onset of the global recession.
If consumers listen to nothing but these often baseless claims, they could be led to think that alternative credit companies are run by swindlers who are just in it for the revenue and intentionally try to trick their clients. Moreover, they might start to believe that the average consumer isn't intelligent and is known for making poor economic decisions.
However, there are plenty of experts who have come out in support of the sector, despite the harsh criticism. In fact, recent information from the Competition Commission revealed the truth - the majority of people pay their loans back on time and have no problems.
People are following best practices
Though, many times, those positioned against the lending sector will say that people who take out loans drive themselves further into debt, this new information shows that's often not the truth at all.
Citing the research, Press Association reported that about two-thirds of all loans are paid back both in full and on time - or even early. Moreover, the news provider explained that use of products from alternative finance companies is set to become more common in the near future.
However, some of the information from the Competition Commission did take on a negative connotation. For instance, the source noted, the organization pointed out that seven in 10 borrowers didn't price-compare for their latest loan - but why would they if they're already loyal customers or get rave reviews from friends or family?
Flies in the face of claims
As Mortgage Introducer noted, the common sentiment within the government is that short term loans drive consumers into debt.
For instance, as Wilkins Kennedy Insolvency Partner Louise Brittain told the source, "We know that massive and highly targeted marketing campaigns are attracting more and more individuals into using debt management plans" and taking out loans.
She added that this is a direct cause of consumer debt, but, again, that flies in the face of the Competition Commission data. Perhaps before speaking out against the entire industry, leaders should consider working with the sector to yield the best results and disseminate the correct information.