Could this be the 'revolutionary' new way to access fair credit for everyone?
After its pilot launch, an online lending service has announced its growth plans, looking to revolutionise the way people access credit in the UK.
Set up by senior figures from the UK’s financial sector, including ex-Citibank executive Paul Salariya, FairQuid has confirmed that it hopes to bring an end to the high-interest predatory lending practices of high street lenders and Payday loan companies.
The online financial wellbeing platform - authorised and regulated by the Financial Conduct Authority - uses the length of service and performance of an employee as the core criteria of whether a person is eligible for a loan.
FairQuid’s CEO, Vishal Jain - a former Booking.com head - who comes with decades of experience in operational roles with global software and tech companies, explained: “Growing up in India, I experienced first hand the positive impact of micro-finance and ethical lending.
“We know that 46 per cent of UK employees struggle with their finances and the average UK household debt is £8,000.
“Over 16 million people have less than £100 in savings and this lack of savings keeps them in a cycle of debt which is hard to break. Employees bring this stress to the workplace which leads to lower productivity, decreased engagement and higher attrition. We want to do something about that.”
By partnering with some of the UK’s leading credit unions, FairQuid offers people low-interest loans with ethical rates provided directly from a person’s employer with fixed, affordable, monthly payments taken directly from their salaries, while also encouraging employees to save as they repay.
Since soft-launching in 2016, FairQuid has already struck up working relationships with HR departments within the legal and manufacturing sectors in the North West.
It is now pushing forward to offer its unique model to all businesses throughout the UK and will look to more than treble its workforce in tech, sales and customer support to meet the expected high demand for its services in the next 12 months.
Vishal Jain continued: “We asked the question. Why don’t we use employee history as a proxy for accessing finance and use this as their Credit Union membership history? Let’s change the product.
“We will use people’s length of service as a direct signal of their ability to to stay employed and make repayments. The longer you’ve been with an employer, the more you can borrow. This is the benchmark.
“From an employer’s point of view, you’re rewarding loyalty and from a Credit Union point of view, they have a new way of assessing risk. This will allow them to increase their penetration levels in the UK and potentially access millions of new members.
“We’re proud to have 85-97 per cent approval rates because we’re not focusing on credit scores and credit history.”