Free debt advice provider PayPlan is encouraging loan and mortgage intermediaries to do more when it comes to consumers who have previously been declined credit.
PayPlan believes that consumers who are declined credit due to affordability reasons following the application of a loan or mortgage to consolidate their debts should be signposted to independent debt advice to ensure they have the correct means to manage their financial situation.
Recent research by the Financial Conduct Authority (FCA) into the Short Term High-Cost credit industry showed that 52% of consumers who have been declined a loan were at least still in the same financial position 12 months later and only 1 in 5 had sought professional debt counselling services*.
Andrew Alder, Head of Partnerships at PayPlan, said “Intermediaries are well placed to identify the signs of individuals struggling with money problems and should provide awareness of where they can get free independent debt advice when unable to secure the lending needed to consolidate their unsecured debts. We regularly see these types of consumers contacting PayPlan months after they have been declined for this type of lending. If the intermediary and debt advice industry had closer links, it could enable the prevention of debt problems before a consumer hits crisis point.
“Lenders are already providing an effective debt management pathway for clients who are struggling financially and it’s important that the intermediary market follows suit in their responsibility. Customers are now able to access free debt advice through a number of methods including hotkey, text message, email, web form and by phone – helping to reduce the stigma and fear previously associated with having to make a physical phone call to help. It’s therefore crucial that those individuals who could take advantage of free advice are signposted in the right direction.”