Christmas always pulls on the purse strings with the cost of presents and higher utility bills to combat the cold making it even harder to make ends meet.
For many of the 15 million adults who can’t access mainstream credit due to a low, fluctuating or benefit-based income, that could mean turning to high-cost lenders.
With hire purchase giant BrightHouse ordered to repay customers £14.8million in October after the Financial Conduct Authority ruled that the firm failed to act as a “responsible lender”, Fair For You is leading the challenge against these lenders and received a £1m loan from Big Issue Invest in November to support them in their fight.
We believe that having to purchase a fridge, cooker, cot or bunk beds on credit should not mean you pay several times what other people do just because they can pay outright
The Big Issue’s social investment arm made the loan to the not-for-profit ethical lender from the Big Issue Invest Social Enterprise Investment Fund II (SEIF II), a £23.8m investment fund that has already seen £8m invested into 21 social enterprises.
The capital will help Fair For You offer flexible responsive payment plans and encourage customer feedback to improve the way services are delivered, providing access to affordable credit. The lender aims to offer a viable alternative by avoiding hidden fees and championing transparency and a respectful approach to all of their customers.
The Centre for Responsible Credit recently found that each time Fair for You provided a loan, the customer saved over £500 in comparison with using other pay weekly stores. They estimate that to date they have reduced the poverty premium by over £6m.
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Angela Clements, Fair For You chief executive officer, said: “Fair for You has been designed based on extensive research among mums who were using weekly payment stores to purchase important items for their home.
“We believe that having to purchase a fridge, cooker, cot or bunk beds on credit should not mean you pay several times what other people do just because they can pay outright. These households operate on very tight margins, and paying over £1,000 for a washing machine takes money directly away from essential bills and groceries.
“We believe we can completely remove the poverty premium attached to all of the important items that our customers need. This funding will help us to expand our service right across the UK.”
Here at Big Issue Invest, the fair treatment of consumers, particularly those facing financial difficulties or who are vulnerable in any way, is a priority for us
Big Issue Invest’s SEIF II invests in social enterprises and charities that are working to tackle tough social problems such as homelessness, social and financial exclusion, and youth unemployment.
James Salmon, Investment at Big Issue Invest director, says: “Here at Big Issue Invest, the fair treatment of consumers, particularly those facing financial difficulties or who are vulnerable in any way, is a priority for us.
“We have supported the growth of ethical alternatives to mainstream credit providers and Big Issue Invest has helped finance organisations aiming to remove barriers to financial inclusion, and serve people finding it hard to access affordable credit.
“So we are so pleased to be able to support Fair for You to be there as a welcome alternative to the exploitative organisations we have heard so much about in recent weeks.”
SEIF II provides a range of loans and investments, including secured and unsecured loans, equity, and loans with performance-related repayment terms. For more information, visit the Big Issue Invest website.
More information on Fair For You is available here.