Salad Money Credit Where Its Due Report WEB SINGLES - Flipbook - Page 3
A fit-for-purpose credit
information market should
represent all consumers,
including those financially
under-served, vulnerable or
with low financial resilience.
But, as the Financial Conduct
Authority has acknowledged,
the traditional approach to
credit information fails many
consumers. At a time when more
and more people are excluded from
mainstream financial services,
can we be confident that Credit
Reference Agencies’ (CRAs’) data
is accurate? Does it present a fair
picture of whether an applicant
for credit can afford it? Or does it
exacerbate the ‘poverty premium’,
lock people out of affordable
options and contribute to cycles of
indebtedness?
The Salad Projects Oversight Body
exists to work in the interests of all
applicants to Salad Money, a social
enterprise fighting financial exclusion
and exploitation of NHS and public
sector workers by providing an
alternative to high-cost lending.
As its joint chairs we campaign for
policy and industry changes that
will protect consumer credit users,
and applicants who are declined for
credit because they are financially
vulnerable.
This report is based on a retrospective
analysis by one of the UK’s three main
credit reference agencies into 50,000
Salad Money applicants’ loan records.
It sought to establish any value to
be gained by using CRA data – but
demonstrates how a fundamental
weakness in CRA data is contributing
to poor outcomes for people who are
financially under-served, vulnerable or
have low financial resilience.
Lord McNicol
Baroness Evans
Salad Money Oversight Body
July 2023
ABOUT THIS REPORT
Salad Money is a social purpose
lender. Our customers work in the
NHS and public sector, can afford to
repay credit, but cannot access it on
fair terms elsewhere. We use Open
Banking rather than credit scores to
assess affordability for a loan. We are
a social enterprise and Responsible
Finance member. We have built a
powerful and fair credit affordability
process using Open Banking data.
On average each applicant has 1,600
individual transactions spanning
the previous 12 months which we
categorise and can analyse not only
to make an approval decision but
to generate unique insights into
applicants’ financial health.
Comparing the value of Credit Reference Agency data with Open Banking when serving financially excluded people
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