If you haven’t been active borrowing money recently, you may be surprised by changes to the credit landscape. Conditions continually evolve and financial companies are always willing to put-forth creative finance solutions. But is the current suite of financial products serving citizens’ interest?
According to recent figures, credit consumers are not always happy with lending outcomes. In fact, the Financial Conduct Authority (FCA) is busy processing a high volume of complaints against financial companies.
Ire Remains Against British Financial Companies
The FCA recently retooled its methods for counting complaints. Under the old system, quickly resolved consumer objections were not included in the FCA reported totals. The process would seem to indicate easy-to-solve problems were dealt with swiftly and left out of the totals. Under the new reporting scheme, more of these short-term issues are included in data shared by the group. The distinction is important, because it may help explain why FCA logged a near-record number of complaints during the second half of last year.
According to new tallies, the FCA recorded 3 million complaints against financial companies in the second six months of 2016. Even if padded somewhat by the new reporting rules, the number illustrates high levels of dissatisfaction among credit consumers. According to the FCA head of strategy, the new data will give them even more detailed information about how the banking industry is failing consumers – particularly how products fall short.
PPI Scandal Still Sorting-Out
One of the chief concerns shared by complainants relates to PPI, or payment protection insurance. Although there has been a steady decline in PPI objections, the long-running scandal associated with the form of credit insurance is still impacting public perception about the industry.
A June 2019 cut-off has been set for customers seeking to file claims for the mis-selling of payment protection insurance. The coverage has been sold alongside loans and other forms of consumer credit since the 1990’s, ostensibly protecting borrowers’ payments in the event of job loss or illness. It was subsequently revealed banks were profiting from the practice, creating opportunistic profits from a “protection racket”. Administering and settling claims has racked-up industry expenses totaling more than £35bn, so financial companies are eager to draw a line under the scandal and move forward. The number of PPI complaints registered in the latter half of 2016 illustrates the persistence of the scandal. In one example, the regulator shared the math behind one PPI policy costing the buyer £20,000, even though the protection had a maximum benefit of £31,000.
Other Issues Under Scrutiny
In addition to tamping-down PPI problems, the regulator is also looking at the ways banks make money on current accounts. Credit card practices are also receiving attention, addressing more than 300,000 complaints registered during the second half of 2016. The FCA has recently made clear banks will have to make concessions in order to assist more than 3m Britons plagued by persistent debt. It is thought banks may be prompted to waive fees and penalties, in some cases.
Prudent monetary policy and regulatory oversight are vital to a healthy UK economy, but inconsistencies within the financial industry underscore the importance of doing due diligence – before making costly credit commitments. Various types of financing serve diverse calls for funding, so learning the landscape can help guide you to the best loan for your finance need. Even bad-credit borrowers have options, highlighted for review on readies and other sites. Credit card customers are urged to explore similar resources, comparing credit contract conditions prior to signing-up. And when shopping for a mortgage, up-to-date online listings provide an opportunity to evaluate multiple options side-by-side.
Irrespective of what the money’s for, it is up to each borrower to compare rates, terms, and lenders for themselves. The FCA can step-in after the fact, helping stabilise the industry and promote consistent practices among lenders. But there is no substitute for protecting your personal interests with advance research and responsible borrowing.