Jan 29, 2014 Philip Burgess
Despite nearly single-handedly keeping a number of consumers afloat during some of the most financially tough times households have seen in the past few years, the short term loan sector still has a number of critics. These are the companies that allowed individuals to take out loans when they were struggling to make ends meet during the recession, inflation was on the rise and people were being laid off, unlike the majority of their high street counterparts.
But, it seems that now that the economy is on the upswing once more, some lawmakers in the United Kingdom might have forgotten lenders' contributions. A number of these government leaders have got public with their criticisms, many times without all the facts. For instance, some representatives have said that they don't like the sector as a whole, assuming consumers drive themselves into debt as a result of shady tactics. The truth of the matter is that legitimate lenders are just like any other business - they want to make sure clients succeed just as much as the borrower, because otherwise they won't be paid back or make any money.
One way some companies in this sector across the globe have been able to ensure success is by making a database of borrowers. With a little collaboration and extra effort, loan repositories can be created, which is what a number of lenders in the U.K. seem to be interested in doing in the near future.
Lenders bank together to prove critics wrong
According to The Financial Times, big-name short term lenders Wonga, ThinkFinance, Quick Quid and Mr. Lender recently signed up to create a large database that will include client information. The source noted that this will allow employees to verify consumer data and make sure individuals haven't taken out loans with other providers in the recent past. If they have, lenders could speak with the clients about best practices, because the businesses have their interests in mind, thus proving to government representatives that the sector only has good intentions.
Very helpful in the future
This recent action taken by some of the nation's leading lenders might also be a way for such companies to protect themselves from the unwarranted actions of the government. The Financial Times noted that in November, representatives of the Treasury indicated that there would soon be caps on short term loans across the U.K., while December brought the suggestion from the Department for Business, Innovation and Skills that a database with client information would be needed.
Showing that they're more than willing to play ball, many lenders have already started rising to this challenge.