Lloyds Bank has come under fire for bulk-mailing an eye-catching car loan offer without credit checking customers first.
Since the credit crunch/financial crisis/global economic meltdown, the Bank of England has urged caution when it comes to lending.
Those warnings have become louder in the past few months, with the BoE fearing that financial institutions are paving the way for another financial crisis. Indeed, many have publicly wondered whether we learnt anything at all after the last recession.
As if to prove the Bank of England right, Lloyds has been caught out advertising their online car finance service to specific customers, declaring in letters that –
‘Nothing beats getting the car you want, does it? Especially when you get a good deal on it, too. That’s what our online car finance can offer you.’ The letter went on to claim that getting car finance was ‘just a few clicks away.’
To make matters worse, those receiving the mail were not told that the bank had already assessed their income, expenditure and account balance.
And since the recipient was already an account holder with the bank, they would not face any credit checks when applying for the loan.
However, Lloyds has since claimed that any applicant will still be required to engage in ‘in-depth affordability assessments.’
One faintly politicised customer who received the car loan letter said:
‘Lloyds are encouraging people to spend, even overspend, at a time when finance all over the country is supposed to be tight and debt is a huge issue. Why are Lloyds, who were bailed out with public money, encouraging people to take on more debt? It is intrusive. The bank is feeding off people’s sense of consumerist envy. Why do they assume that I think driving a BMW is the be-all and end-all? It’s quite offensive, really. That’s not the kind of service I want from my bank.’
While direct mail of this sort is nothing new – and targeted marketing of any kind in the internet age has only grown, as companies reap vast amounts of consumer data – the fact that a recognisable high street bank has done so in such a naked fashion has led to campaigners and politicians to liken Lloyds to a pay-day lender.
James Daley, who runs the consumer site Fairer Finance, said:
‘This has echoes of the payday loan market. Anything that entices customers into borrowing more is already crossing the line. The language implies this is an impulse buy but these are deals lasting years and there are serious consequences if you can’t keep up payments.’
Meanwhile, former pensioners minister and finance campaigner, Baroness Ros Altmann, said she believed the unsolicited offer was ‘very worrying.’
‘The lights are flashing red with car finance and we have to take notice. These unsolicited loan offers designed to entice customers are a real issue and I hope this problem is controlled before it gets out of hand.’
That echoes Alistair Darling’s recent economic warning. Lord Darling, who oversaw the bank bailouts during the financial crisis, claimed that the current growth in debt should ‘raise alarm bells.’
So, while Lloyds had no doubt ensured that they targeted only those customers who could – in theory – pay off the loan, advertising aspirational debt seems to proactively confront the warnings from the Bank of England and financial experts.
Lloyds, of course, has said they have no further plans to run the offer. Might they have finally learnt something, after all?
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