Quarter of Brits want more financial understanding
More than a quarter (27 per cent) of Brits believe that if their finances were better understood they would have been offered a more suitable financial product from their lender.
According to new research from Moneyhub, one in 10 Brits who have experienced financial difficulties in the last year do not believe that they had been offered the most suitable financial product.
A further 18 per cent said that they were unsure whether the product they were on was suitable for their financial situation. When asked why their product was unsuitable, more than a third (35 per cent) said their lender was more concerned about the selling of the product than the product’s suitability for their individual needs.
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Suzanne Homewood, managing director at Moneyhub, said that the research showed how important it is for lenders to operate in compliance with the recently-introduced Consumer Duty, especially as borrowing activity rises.
“The pressures and financial strains of the current cost-of-living crisis is understandably causing more people to turn to borrowing to make ends meet,” said Homewood.
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“However, whilst these products may help in the short-term, they are by no means suitable without detailed understanding and evaluation of their ability to repay.
“Too often, the lender doesn’t have access to a full picture of their customer’s current financial situation, and may use outdated bias and buffers to make a decision. This can and does lead to customers being unable to afford repayments, particularly as interest rates continue to rise.”
Of the 10 per cent who claimed that their product was unsuitable, 33 per cent said their income was not sufficient to afford their repayments, 29 per cent said their income could not account for interest rate rises, and 16 per cent said they had a history of defaults.
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