In December 2015, Fair for You Enterprise CIC launched with its initial offering of affordable, unsecured, loans to help people on low to middle incomes purchase essential household goods. Fair for You Enterprise CIC is a Community Interest Company wholly owned by Fair for You Ltd, a registered charity which has as its aims: the advancement of education in relation to money and debt management, and the relief of financial hardship and distress through the advancement, provision and facilitation of affordable sources of credit. The lending subsidiary is run on a not for profit basis and has the ambition of changing the way that lending is conducted for lower income households – providing them with loans that are flexible, supportive, highly visible and transparent and meet the borrowing needs identified, as well as treating customers with respect.
Both the charity and its lending subsidiary have been created in order to provide a real alternative to the high cost credit sector. Although credit unions and other forms of community finance lenders exist, these are often only available to people living within defined local areas and have struggled to gain a national profile. In contrast, Fair for You has a national on-line presence and is open for business throughout the UK.
The initial Fair for You offering of loans to support the purchase of white goods represents the first national not for profit challenge to the high cost Rent to Own (RTO) sector, which is currently dominated by BrightHouse. Problems in that sector are long standing and include the extremely high cost of goods, the selling of additional warranties and insurances, and levying of default fees, and poor customer service. These have been highlighted by the All Party Parliamentary Group on Debt and Personal Finance.
We conducted qualitative interviews with Fair for You customers, who report that Fair for You is:
- Much cheaper than RTO firms, with total costs as much as half the price of similar models sold by BrightHouse. Customers are therefore able to pay for their items much more quickly and so do not need extended warranties;
- Helping customers to avoid additional costs that would be incurred if they went without the items. For example, we heard how dilapidated and broken machines meant that people could not cook or store food properly, which meant they relied on expensive takeaways and could not buy in bulk;
- Reducing stress and anxiety and restoring pride. Customers, particularly those with young children or a family member with long term illness or disability reported that the break down of cookers, fridges, and washing machines constituted an emergency. They were proud to be able to ‘cook a proper meal’ for their family and have a ‘normal standard of living’;
- Friendly, easy to use, and ‘treats people with respect’. All of the customers we spoke to had previous experience of using RTO firms and were amazed at the difference in how they were treated, including when they had payment difficulties. The customer service provided by Fair for You is building customer loyalty and ensuring that people who are in financial difficulties maintain contact and reschedule their payments.
The report goes on to recommend that local authorities, housing providers, and the wider voluntary sector seize the opportunity that Fair for You provides to get an affordable alternative to scale as quickly as possible. In particular, local agencies should actively raise awareness of Fair for You through their communications with tenants and service users.
“Having campaigned on affordable credit for many years I am well aware of the need for a responsible lending in the rent to own space and I am delighted that Fair for You has begun to provide this much needed alternative…Thanks to the Centre for Responsible Credit we are now beginning to see the scope of that impact.”
Robin Walker MP
“Until recently people on low incomes had little real alternative but to go to Rent to Own stores, and accept inflated prices, high interest rates and compulsory warranties and insurance. That is if they wanted a new washing machine, sofas or TV. But Fair for You has changed this. By giving peoplem access to essential goods at a price they can truly afford, they are helping to break the stranglehold of firms such as BrightHouse.”
Yvonne Fovargue MP