The Rent-to-Own Sector
So, is it now the right time for these high cost credit companies to focus on the customer first? After all, the rest of the financial services industry has faced a deeper level of scrutiny for a much longer period of time.
The number of consumers accessing high cost credit in the UK
“In the UK, up to 400,000 people use rent-to-own firms to buy household appliances, paying the money back over three years.” Source BBC News
With such high numbers of people accessing these lines of consumer credit, it’s essential for compliance and arrears teams at these firms to take a pro-active approach in support of the customer.
If the high cost credit industry is to continue unrestricted, avoiding enforced price caps, then those supplying short term credit to consumers through lease agreements or rentals need to have a more inward looking philosophy.
Date Source: Citizens Advice Bureau
Providing clear communication on consumer credit
It’s time for the sector to be more diligent with customer communications, whether that’s transparency on contract terms, clarity on the overall cost of credit or termination fees. Helping customers to have a clear understanding of the product offer and the costs of purchase ensures that companies sell in a way which is clear, fair and not misleading.
Staff play by far the biggest part in the way consumers interpret the information given. They are also the highest risk area when it comes to the consumer failing to understand what they are committing to. Making sure the correct affordability checks are conducted and that the customer has all the required information to make an informed decision should be standard.
Areas of customer risk for consumer credit providers
- Clarity of Payment Terms
- Termination Fees and right to cancel
- Transparency of overall cost
- Affordability checking
- Contract Terms and the small print
- Treatment when payments are missed
Taking the right approach
By doing things in the right way, the benefits gained are not only for the consumer, they are also for the company. Making sure that complaints and arrears figures for consumer credit don’t form a bigger part of the business means that companies can avoid ratings downgrades, damaging newspaper articles and greater regulation from the FCA.
There will always be a demand for short term higher cost credit however it’s in everybody’s interest to make sure the customer doesn’t become distressed when gaining access to it.
Mystery Shop Research for Consumer Credit Companies
Tern provide second line of defence mystery shop research to some of the biggest financial companies in the UK. We provide our clients with evidence based research in the form of digital mystery shop reports . These reports are feature rich and can include embedded audio, video and survey scoring.
For more information on how we can support your compliance and operations teams call us on 01939 235555