Plend calls for interest rate transparency
Peer-to-peer lending platform Plend has called on the consumer lending sector to be more transparent when it comes to interest rates.
It follows the publication earlier last year of Plend’s Financial Inclusion report, which found that one fifth of people in the UK feel excluded from the financial services market, with this figure rising to a third among ethnic minority groups.
“We’re calling for an industry-wide commitment to transparent interest rates,” said a platform spokesperson in a social media post.
Read more: Plend partners with Lendology to improve financial inclusion
“Access to affordable credit is a vital part of financial resilience, however, mainstream lenders are continually failing to serve a considerable portion of society.
“Millions of people are left with limited choices, paving the way for unregulated and predatory lending practices.”
Plend noted that at present, lenders determine what interest rate they charge a customer after conducting a risk assessment.
Read more: Consumer Duty could lead to stricter lending criteria
“This means that two customers, both advertised at the same interest rate, can end up paying drastically different rates for identical products” said the company.
“This lack of transparency lures customers into the application process, only to be met with a reality far from the advertised promise.”
Plend has proposed a new model whereby borrowers are either charged the rate of interest advertised, or given an accurate range of interest rates at the application stage. This would ensure that all customers are treated fairly, the platform added.
Plend’s comments come just days after the new Consumer Duty was introduced, requiring all financial services firms to place customer wellbeing at the heart of their offering.
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