Fortnightly financial five minutes #34 Tom Levitt

Please can you tell us about The Fair Credit Charity and your role there?

I chair the board of trustees at the Fair Credit Charity, where our principal role is to own and oversee the operation of Fair for You. Fair for You is a social enterprise which provides loans for purchasing household goods and essential items to people whose poverty excludes them from mainstream finance. Fair for You offers a range of products to customers, including interest-free Iceland Food Club loans, provided in partnership with the retailer Iceland.

It does so whilst providing first class customer care and treating customers with dignity in line with our charity's ethos. Over recent years, Fair for You has helped more than 80,000 households to change their lives for the better, and avoid payday lenders and loan sharks, and has delivered total social impact valued at over £250m.

The Fair Credit Charity believes that society has a responsibility to lend better, can you explain more around what you mean by this?

There is a longstanding poverty premium in Britain: a (high) cost to being poor. Nowhere is this better seen than in access to loan finance, where the real cost of borrowing for people on low incomes is so much more than it is to those with higher or more reliable incomes.

Such premiums ensure that people in poverty remain in poverty! Better lending means helping people gain the experience that will improve their credit ratings, which the current system doesn’t do. One person in every eight in Britain turns to credit to meet everyday expenses, a statistic which shows that poverty is both endemic and getting worse.

Some are driven to use illegal lenders, at astronomical interest rates, possibly putting their physical safety at risk. Until we get the economy sorted to address this it needs people like Fair for You to provide an alternative and Fair Credit Charity to campaign for a better system.

At FSCS we believe financial education is an important part of reducing harm suffered by consumers, what educational activities are The Fair Credit Charity involved in?

We support measures to improve financial inclusion, and financial education is a key part of that. We don’t want to reinvent the wheel and we support those that are already providing such courses and opportunities.

But most people who are in poverty are not in poverty because they can’t add up; people on low incomes generally are very good at managing their finances (and if they aren't, they soon learn). They just don’t have enough money to meet household essentials for them and their children: not just rent, energy, water and food but also clothing, shoes, school equipment and other requirements. 

Your charity has been involved in some specific campaigns, can you tell us more about those and why you consider them so important?

One campaign we have actively supported is the call to see Buy Now Pay Later (BNPL) companies regulated by the FCA in the same way as other lenders. When someone on a low income applies for a loan, it is very important that the loan company has accurate information about their finances - especially any existing loan they may have - in order to agree what a fair loan looks like.

A fair loan has a manageable interest rate and is on terms which the loanee is likely to be able to repay. Banks, building societies, credit unions and other reputable lenders, like Fair for You, share that data so we can all make an accurate assessment of affordability.

BNPL is a massive, relatively new form of lending, and BNPL companies have no obligation to share data because they are not regulated in the same way as other lenders. That’s just wrong, and unfair to smaller, more ethical lending organisations like Fair for You, which undertakes proper affordability checks, but especially unfair to customers for whom accurate assessments by lenders can’t be made.

And finally, on a more personal note, a question we ask most of our guests: if £10,000 landed in your lap tomorrow, what would you do with it?

Personally speaking, I’m ‘comfortable’ right now and don’t have an urgent need to spend £10,000! But that doesn’t mean that my daughter, my grandchildren and my now ageing body won’t need help soon.

So, what I would do with a £10,000 (theoretical!) windfall is to put it into an ethical savings vehicle that will look after my money by investing in ethical companies doing good for the environment and the community.

Fair for You itself recently launched a bond on the ethical investing platform Ethex, and it was great to see that last week, it exceeded its £500,000 target.

Thanks so much for that range of insights Tom.

For more information on what FSCS protects, see our What we cover page.

The content of any discussions shouldn't be taken as an indication of future FSCS policy positions. The views expressed by guests are their own and don't reflect the views of FSCS.