According to one recent report almost half of the adult UK population are having financial difficulty of one sort, or another. The reasons are many: reckless spending when house prices were spiralling upwards; credit card companies upping limits as soon as you got to within three figures of your existing threshold; in times gone by, and no that far back, financial institutes were literally throwing money at anyone who had a mortgage.
How times have changed. As the survey goes on to suggest, the newer finance companies, such as those online offering short term loans, realise that, with so many individuals now struggling to repay those past excesses and traditional credit companies shutting up shop for anyone whose credit history is anything but impeccable, there is a whole new lending market.
And it’s a huge pool of customers, some 23 million individuals, if the figures are accurate, having problems making ends meet from one payday to the next. And as not everyone is glued to the Internet 24/7 these instant cash loan firms need to reach out to those who don’t flick the laptop on before they’re sat comfortably after tea in time for Emmerdale.
The marketing tactic in this scenario is for quick cash advance lenders to cold call households who they believe will benefit from their services. As soon as that individual starts to get engaged with the caller, the promise of a no credit check loan, when the heating’s on low even though it’s a bit brass monkeys, can be too much of a temptation for someone in financial difficulty who really does know better but circumstances (and a really good sales pitch) have him/her agreeing to the loan in principal over the phone.
And with instant short term loans, there really is no cooling off period. By the time the new customer has had time to boil the kettle to sit and ponder if they’ve made the right decision over a cup of tea (the British answer to every unsolvable problem) the cash is already in their account. Oops, too late.
However, these tactics are being looked at by the Registry Trust, they who monitor and administrate ccj’s, in conjunction with formulating a register that allows individuals who think they may be vulnerable to this type of short term loan tactic, to have their name entered onto a register which will be circulated to all banks and credit firms with a ‘do not contact’ stamp next to their name. If individuals agree, they have a two week window to change their mind, otherwise they should no longer be contacted by registered finance firms trying to sell them money over the phone. It is not clear, yet, whether this bill will incorporate e- and snail-mail.
The penalty for any instant cash loan company or other financier who ignores the rubber stamp will have a red tick by their name and be sent to the back of the line for being naughty lenders.
It’s early days and there is some confusion as to what the entry point of the market will be. Individuals with mental health issues have been prey to no credit check loans being offered to them, as well as those of sound body and mind. It may be that the register is adopted in stages, addressing those facing mental challenges first, then those with simple financial challenges thereafter.
Needless to say, the Debt Support Trust have labelled it a ‘fantastic idea’. What’s your opinion?