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A new Centre for Responsible Credit (‘CfRC’) report released today (8th September, 2020) highlights how the affordable credit provider, Fair for You, is making a dramatic difference to the lives of its low-income customers, and calls for more help to scale up its operations across the UK.
The CfRC research included a survey of more than 3,500 customers and analysis of over 50,000 loan records.
It finds that by providing fair, decent, and flexible loans to help low income families obtain essential household items including beds, cookers, fridges, and washing machines, Fair for You has not only eased their financial burdens but also had hugely positive impacts for their health and well-being, including that of their children.
Headline findings
- Fair for You has generated at least £50.5 million of social value for 33,500 customers since starting its operations in 2015.
- Most of the financial savings have been made because customers would otherwise have had to go without cookers, fridge-freezers, and washing machines for considerable periods. This would have resulted in significant additional living costs. On average, providing affordable loans for essential items saves Fair for You customers just under £30 per week.
- 60% of Fair for You customers are now better able to pay their rent, Council Tax and other household bills as a result.
- Fair for You has helped an estimated 71% of its customers move away from high cost credit, realising just under £9 million of financial savings
- Over £2 million saved from reduced use of NHS services, due to the positive health benefits of having essential home items
These impacts are the ‘tip of the iceberg’. CfRC’s research found more than twenty different types of immediate benefits and intermediate outcomes for customers.
For example, customers had better diets, felt better about themselves and their homes, and were able to spend more on their children, including on educational activities. These benefits and outcomes contribute towards long-term improvements in health and wellbeing but could not be translated into monetary estimates.
Sacha Romanovitch, CEO of Fair4All Finance said:
“We’re pleased to have been able to support Fair for You in further tracking their social impact. This report provides a compelling assessment of the impressive and far reaching benefits they have created. Benefits that are realised by the very customers who need them most.”
More needed to address material deprivation
The report indicates that Fair for You is providing a lifeline to people who would otherwise have no options but to either borrow from high cost door to door lenders, rent-to-own stores, or payday lenders or be forced to live without essential household items.
The report therefore welcomes the investments that have been made in Fair for You to date, with Fair4All Finance investing £5m and working with existing social investors on the recent recapitalisation of the business to provide it with firm foundations for future growth.
However, CfRC Director, Damon Gibbons, warned that too many low-income families are currently living in material deprivation and called for more to be done:
“Far too many homes lack the items most of us take for granted. In 2020 Britain it is truly shocking that many low-income families are living without cookers, fridges and washing machines, a table to eat their meals from, and decent beds.
This report shows how providing low income families with access to essential items not only improves their lives but also has positive impacts on the payment of rent and Council Tax and reduces the demand on health services.
We need a clear strategy, including investment, to end material deprivation as a matter of urgency. We are therefore calling for local authorities, housing associations and utility companies to join forces with Government and social investors to help scale up Fair for You as part of a wider strategy to end material deprivation in the UK.”
Lessons for credit regulation
The report also highlights the importance of good lending practice. Fair for You’s customers praised the way in which they were encouraged to work out how much they could afford to borrow, as well as the fact that no late payment charges were levied if they experienced repayment problems. Unlike high cost lenders, Fair for You also never re-lends to people whilst they are in arrears with their payments.
We have identified these best practices as ‘the bedrock’ on which future lending to low income borrowers should be conducted and called on the Financial Conduct Authority to ensure these become embedded throughout the consumer credit market moving forwards.
