I’m not suggesting that their wish to help customers overcome the disadvantages they face is not genuine. But firms are so quick to squawk about their good deeds that you sometimes can’t help wondering why they set up a particular customer programme – was it to help customers or to boost sales figures?
I feel a lot more comfortable about companies’ good work when there is a degree or two of separation from their business operation. Large donations to charity with no strings attached or employees volunteering at local projects which have no obvious payback for the firms involved would be good examples.
But increasingly, companies want to align what they do for charity with the type of business they do. So when financial services companies look for suitable projects to support, or assess the ones that come asking for help, they try to find a financial tie-in that makes strategic sense.
This way of working has resulted in some excellent partnerships. Several banks help fund the free financial advice offered by Citizens Advice Bureau. Others offer support to credit unions and other organisations that help the financially excluded get access to basic banking services.
Where it starts to get murky is when companies help disadvantaged customers get access to their products. And it gets grubbier still when firms help customers get access to debt – possibly a lot of it and for a long time.
Charcol.co.uk recently announced an initiative to offer borrowers with poor credit histories the chance to get free mortgage advice tailored to their needs. The press release squawks: “In a market that is awash with brokers who charge exorbitant fees, charcol.co.uk is determined to break what it sees as the vicious circle of debt.”
According to Charcol.co.uk, annual lending in the sub-prime sector is around £30bn – about 8% of the market. And people with poor credit histories account for 70% of repossessions so there is no doubt these consumers need extra help.
But my question is – is this the help they need? Obviously, free advice is better than ripping off customers with exorbitant fees but in some cases, best advice must be that they shouldn’t have mortgages at all. Will Charcol.co.uk be telling them that or just helping itself to a slightly bigger slice of the sub-prime sector?