- Fair For You is a loan company that specialises in household essential goods, such as fridges, heaters, washing machines, and vacuum cleaners.
- It tailors its flexible products towards people who would not be granted mainstream credit – the so-called subprime market.
- Its model is customer first and not designed to generate a profit from other people’s financial struggles, measuring success in social value not profits.
- The company recently launched a Food Club with Iceland supermarkets, providing interest-free £75 loans to help customers with the cost of living crisis.
Currently, in the UK there are 5.8 million people who are ‘not creditworthy’, due to having a thin or non-existent credit file. On top of this, more than 1.5 million adults don’t have a bank account and 13 million people lack any savings. Accessing credit for people on low incomes is a real issue in the UK. It can mean these often more vulnerable people become susceptible to dangerous illegal loan sharks, incredibly high-interest payday loans or unregulated ‘Buy Now Pay Later’ companies, such as Klarna and Clearpay.
Fair For You is a company that offers family households on lower incomes manageable loans to purchase household items, such as furniture and white goods. The loans are fairer and more flexible, with options to pay back quicker that will reduce the interest on the loan. Loans are also adaptable, with options to pay weekly, fortnightly, four-weekly, or monthly over as short or long a time as the customer needs.
The company is owned by The Fair Credit Charity, with the objective to reduce poverty through improved credit solutions for families with lower household incomes. The charity also seeks to influence how lending takes place in society for these families. Because Fair For You is a social enterprise owned by a charity, the aim of the company is completely different from most of its competitors. The approach to its services and products is about the customer first, not about generating huge amounts of profit for CEOs and shareholders. The company was set up to address a social injustice, not to just profit off of a gap in the market. As a result, Fair For You has seen great success, with 15,100 reviews and a 4.7-star rating on Trustpilot.
By comparison, BrightHouse, the high street rent-to-buy brand, went into administration in 2020. It offered a high-interest model to customers who would struggle to outright buy a sofa or white goods. BrightHouse charged interest of up to 69.9% and then further hidden fees, such as insurance and service fees, which meant that customers could pay six times the amount the item would cost to buy outright. BrightHouse going bust shows that a profit first, people second approach to lending, doesn’t always end in success.
Tom Levitt, chair of Fair Credit Charity, says; “Our aim from the beginning was to disrupt the high-cost credit market for essential household goods – previously dominated by companies like BrightHouse – and we have arguably succeeded in doing that. We have survived for six years using a completely different financial model, one not primarily designed to maximise profit. Neither BrightHouse nor Provident, for example, survived that period. We do this by keeping costs down, operating online only and keeping no stock.
“The Fair For You model is very different from that of high-cost credit. When we started, a £250 washing machine would typically have cost £1,500 through BrightHouse (£10/week over three years) but only £350 from us (£7/week over one year). We don’t apply penalties for late and missed payments, and we don’t include compulsory elements like insurance or warranties. We allow breaks in payment or modified payments on request, with no penalty.
“BrightHouse repossessed a third of the washing machines it sold, and by comparison, we have not repossessed a single item. If we turn down a loan application, we refer applicants to sources of charitable funding. And we won’t lend to people that we think are not capable of repayment, where taking on a modest loan could be against their interests. Our customers may not be technically ‘creditworthy’, but we back them, and it works.
“Essentially, we trust our customers and support them. BrightHouse didn’t, it exploited them, and it paid the price.”
One benefit of this approach is that customers of Fair For You see their creditworthiness improve, making them more likely to be able to access mainstream credit in the future. The organisation measures its success in terms of social value, such as reduced stress of customers, better health, and better school attendance for customers’ children. In the first three years that Fair For You was active, it estimates that it created £50 million worth of social value.
In August 2022, Iceland supermarkets launched a Food Club in partnership with Fair for You. This product seeks to lessen the impact of the cost-of-living crisis which has seen inflation go up dramatically for everyday food items. Since its launch, the Iceland Food Club has seen a dramatic reduction in users who visit foodbanks when they were given their £75 interest-free loan. The loan is then repayable at £10 a week with more flexible options available.
Fair For You is creating a vital bridge for people with low incomes when it comes to accessing credit and having a decent standard of living. It also proves that valuing customers, rather than viewing them as cash cows, can lead to a sustainable business model which creates real-world value, not just for those at the top or its customers, but for wider society as well.