Sub-prime lenders have been criticised for not doing enough to get their clients back onto prime deals after putting them on credit repair products.Thomas Reeh, chief executive officer of blackandwhite.co.uk, says: “Lenders are not interested in credit repair as long as they have their customers on sub-prime deals. They rely on clients being lazy.” Reeh says there is no reason why customers should not be able to move to prime deals. He says lenders’ response to this criticism is often to say that the customers are not theirs, despite them being on lenders’ books, and the responsibility should lie with intermediaries. Reeh says this is ludicrous. But Paul Hunt, head of marketing at Platform, says: “We have the products to repair credit. We work in an intermediary market so we see intermediaries as the ones who should be getting their customers onto better deals. “Clients should be able to go to the high street and get a prime product after being on a credit repair deal.” Reeh also stresses that in blackandwhite.co.uk’s experience, borrowers do not turn to sub-prime because they have family troubles or become unemployed, but because they have too much credit card debt. He says: “We’ve found the sub-prime issue relates to consumer credit and spiralling levels of debt. I find it odd when GMAC-RFC says the trend toward sub-prime is down to things such as divorce and redundancy.” But Jeff Knight, director of marketing at GMAC-RFC, says: “The research we did was independent. We are not saying that consumer debt does not come into it, just that the big reasons are often life-changing events such as divorce and being made redundant.” Knight adds that GMAC-RFC does not offer advice so it cannot advise clients on how to get back onto near prime deals, but can create the products that allow them to do so. Reeh also says that credit companies such as MBNA that control a variety of credit cards often carry on lending even though they know a person has maxed out one of their cards. Reeh says: “This is going to be of great interest to the Financial Services Authority as one of its priorities is to make sure consumers are protected.”
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