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28th January 2021

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Poor consumer lending practices short-change UK businesses by some 40% of sales

UK businesses are being unknowingly short-changed out of sales revenues - by as much as 40% - due to poor practices employed by consumer credit lenders, a new research report has found.

The study, compiled by specialist finance platform, Duologi, looked at the biggest frustrations consumers face when borrowing funds to purchase goods and services on credit. It revealed an array of barriers that could be having a hugely detrimental impact on sales across a range of consumer-facing business sectors.

Over half (56%) of people said they have experienced high interest (APR) rates when applying for credit, whilst 28% of consumers have not been provided with full transparency when it comes to their loan; experiencing hidden or unexpected charges during application or at repayment stage.

Many lenders are also falling short in terms of user experience, as 24% of people believe that their credit application process was too slow. One in five (20%) also stated that the lending decision took too long and a further 26% were unable to decipher their application as it was full of confusing financial jargon.

Crucially, these consumer frustrations are causing a high degree of shopping basket abandonment. If encountering any of the issues highlighted above, 40% of people would abandon their purchase. This increases to 49% amongst the 25 - 34 millennial age bracket, which now comprises more than a quarter of the UK's population, bringing with it considerable spending power.

The research also asked consumers exactly what they are calling out for when it comes to point-of-sale finance.

Interestingly, a third (33%) of people want to know that their finance is coming from a reputable place but are not concerned about whether this is a recognisable bank name. In fact, one in five (20%) people said they would no longer trust a loan from a bank, following revelations seen in the wake of the financial crisis.

Three quarters (75%) said that the option of 0% interest would be an important consideration when buying on credit. Interestingly, this figure increases to 81% of people who earn more than £40,000 - highlighting that credit options are not just a way to cater for low earners.

A further 40% of people said a quick and easy process would be top of their list of desirables, while 37% of people said low monthly repayments would be the most important factor.

Almost half (46%) of people think that POS finance should be available both online and instore, and one in five (21%) said that this flexibility of channel would be an important consideration when buying on credit. A further 28% of people think that getting an immediate decision on whether they can borrow would be very important to them.

"Borrowing on credit is often purported as a simple way to access funds," comments Duologi credit director, Rob Cottingham. "However, many lenders are clearly still getting the process wrong and this is leading to consumer frustrations which are potentially having a fatal knock-on effect for UK businesses.

"For merchants, whose sale of products and services rests on the ability of consumers to access additional cash, this is a huge problem. The retail industry in particular has seen its fair share of turmoil in recent months, with store closures and falling profits hitting the headlines on a near-daily basis. In these challenging times, it's more important than ever that merchants find ways to offer flexible, transparent and easily-accessible funds."

Backed by global investment firm, Oaktree Capital, Duologi offers merchants the chance to increase their sales, boost customer satisfaction and grow profitability through the delivery of tailored point-of-sale finance options.

For the full report visit www.duologi.com

Ends

Notes to editors
For additional details, please contact:

Brodie Hayward on 0161 871 9140 or email [email protected]
Or
Tom Opper-Cunnane on 0161 871 9140 or email: [email protected]

About Duologi

Duologi provides bespoke finance solutions for retailers across a wide range of sectors. It uses a point of sale technology-based platform that integrates with retailer's existing systems. Duologi is supported by Oaktree Capital, a leader among global investment managers specialising in alternative investments. For additional information, please visit Duologi's website at www.duologi.com.

Duologi is authorised and regulated by the Financial Conduct Authority.

About Oaktree

Oaktree is a leader among global investment managers specialising in alternative investments, with $99 billion in assets under management as of June 30, 2017. The firm emphasises an opportunistic, value-oriented and risk controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide. For additional information, please visit Oaktree's website at www.oaktreecapital.com

14th September 2018