Credit Awareness Week

"Credit is the biggest thing you will ever buy in your life, that you never knew you bought."

It’s a statement I like to make at the start of any training session I take with new employees. It is, admittedly, only arguably true – dependent on what interest rates have been doing during your lifetime, and fails to exclude the very rich, the very prudent, or those that don’t buy houses.

It does, however, highlight the crux of the problem that is credit; namely – what is it? Other people’s money doesn’t feel like a product, especially when we’re more focussed on the product we really desire and credit is just the facilitator. And then there’s a bewildering array of mysteriously described credit products available, including personal contract purchase plans, logbook loans, guarantor loans, point-of-sale, rent-to-own and equity release. Is it any wonder consumers are stumped?

Credit Strategy will take on the mantle of credit awareness by launching a consumer campaign at the start of Credit Week on March 28.

The campaign will focus on affordability, credit scoring – including how the industry deals with customers at the point of refusal, and debtor rehabilitation.

All three bring the industry and consumers together at critical junctures in the credit cycle where information is vital but often lacking. This information, if it was available, would enable more responsible lending and make borrowing a more seamless, more helpful process for the consumer.

Affordability is a timely issue. The Money Advice Service (MAS) has chosen March as the launch date for the adoption of the Standard Financial Statement (SFS), which itself will herald a consistent approach to assessing income and expenditure. This will be the first time that all major debt advice providers, creditors and other debt bodies will use the same format to assess income and expenditure for over indebted people.

There has now also been an early day motion tabled in the House of Commons to encourage government departments to integrate the SFS in its debt collection practices.

As part of the campaign we will be launching another campaign with Registry Trust to encourage creditors to file CCJ satisfactions on behalf of debtors. Registry Trust believes the average customer doesn’t do this and it would make sense for the industry to help consumers.

Registry Trust is also looking at a redefinition of the term ‘satisfaction’ to include those that have made a payment to the creditor’s satisfaction even where it is not a payment in full. A parallel list redefined as ‘payments that satisfy creditors’ would then be produced. Malcolm Hurlston, chair of the trust, believes both measures could enable hundreds of thousands of individuals with impaired records, to borrow more cheaply.

Debtor rehabilitation is still controversial. Society has long pondered how it should deal with those members that get into financial difficulties. The Credit Awareness Week campaign will help borrowers prevent any unintended punishment, all by themselves.

If you wish to contribute to the Credit Awareness Week campaign email KPanday@shardmediagroup.com