Many consumers, already sceptical in the wake of recession, are now even less likely to trust the banks, with a recent YouGov poll showing that only 53% have faith in their building society or bank. So it begs the question: Are they doing enough to be transparent and win that consumer trust back?
The payday loan sector is one financial services sector seemingly never out of the media spotlight. High interest rates are under constant scrutiny, but lenders are determined to highlight that this is done for transparency and that the rates are only higher when compared to a like-for-like long term loan product.
Payday loans are structured differently to ordinary bank loans and are intended to be short term. The reported interest rates are calculated over a year, when ordinarily the payday loan will be paid off after one month, meaning the published rates are many times what any borrower will ever pay. The result? Lenders going the extra mile in making it as clear as possible exactly how much the customer will pay back on any given loan.
In an effort to highlight their determination to achieve transparency in their marketing and customer communications, Early Pay Day Loans has installed a slider tool on their website homepage. The tool (shown below) allows the user to select the amount the wish to borrow, and the total repayment amount is shown immediately. Interest rates are clearly stated throughout the website and the entire borrowing process.
Tahir Noor from Early Pay Day Loans is keen to learn from the hurdles the wider banking sector now faces when it comes to earning consumer trust. “All lenders must adhere to a comprehensive set of rules under the conditions of our Consumer Credit License, but we want to do more than just satisfy those requirements. The more information we give, the more transparent the sector will become, and we owe it to consumers to be upfront about what they are signing up to. We sincerely hope the rest of the sector will respond in this way and that this will be a turning point in borrowers’ faith in lending institutions.”