Plend chief: Skyrocketing credit demand raises ethical concerns
Worsening economic conditions have led to skyrocketing demand for credit, but Plend chief executive Rob Pasco has warned that not everyone should be borrowing at this time.
Speaking on the Fintech Walkabout podcast, Pasco said the peer-to-peer consumer lending platform has to walk a fine line between wanting to provide low cost credit to people and making sure that those who are already in debt are not just piling on additional borrowing.
“We’re seeing enormous demand for products probably for the wrong reasons,” he said. “A lot of people are trying to cut back on monthly costs, they want to cut back on energy, household bills and credit is one of the few obligations they can refinance.”
“You get some good cases and people who probably don’t need the credit as well, there isn’t much else they can do other than go on a credit management plan with a debt charity to restructure their debt, as opposed to putting on more debt,” he added.
He pointed out that the Financial Conduct Authority is also currently putting pressure on lenders to be far more careful about who they are lending to.
“We’re seeing a lot of credit demand,” he said. “Commercially it’s great but from an ethical standpoint, we have to be very careful.”
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Plend, which has positioned itself as an ethical lender and is the UK’s first B Corp consumer lender, is having regular internal meetings to work out the details, Pasco said. He pointed out that the group is trying to be as forward focused as much as possible and not just relying on credit scores to make lending decisions.
For this, open banking can be useful, Pasco said. It helps the team identify people who may have poor data points but a great income, meeting payment obligations, looking like a stable person. On the other hand it can also reveal people who are potentially hiding something.
“You might have a very good credit score, but you might have data points on your banking information which are not quite as reliable as we’d like…Gambling debts for example you can’t get from a credit score, but it is really valuable for us,” he said. “If someone has a perfect credit score we have a filtering rule where someone has a manual look at it.”
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Plend became regulated by the Financial Conduct Authority in April 2022, after a two-year approval process. The open banking-backed P2P platform revealed in August that it had delivered more than £500,000 in consumer loans since launching in beta mode in mid-May.