Headline rate 'scam' - M&S Loans

regency_man

How is the advertising over 'headline' loan rates regulated and which consumer body should handle complaints regarding these?

Currently in this situation:

• Was about to apply for a loan with my long-term bank with an advertised rate of 3.6% but at the last minute see an offer from M&S Loans at 3.3%.
• So I applied for the loan at 3.3% with M&S.
• Read all the small print - yes it said the 3.3% rate was 'dependent on circumstances'. Checked my credit score/rating - all looks great (998 on the Experian system).
• Apply, and get the loan decision back immediately - Accepted, but at 6.3% APR.
• Call M&S to ask why the rate is so far from the headline rate. They said it's all down to their rating system and they cannot change the rate, full-stop. Starts giving me some clearly scripted sales pitch about how it's "only £20 extra per month, surely that is still affordable for you" I reply that £20 a month over 3 years is a lot of money. He says "well if you're going to look at it like that then perhaps this loan isn't for you"!!!
• I keep pushing him on it, stating false advertising of rates, and he puts me through to their 'underwriting team'.
• The underwriting team rep reviews my file and says it's probably not actually down to my credit history because he can't see anything negative, but more down to the details on my application. Specifically says that because I have not lived at my current address for more than 2 years, and because I put 'Miscellaneous' under the loan purpose this will adversely affect the rate offered.
• I thank him for the feedback and tell him I am probably not going to proceed with the loan based on this and will shop around. He says he will send the documents through anyway and I have 30 days to decide.
• 2 working days later I get an Alert from Experian, M&S Finance have made another search of my credit file listed, like the original search, as 'Loan Application' - now there are warnings all over my file saying that I have 'a significant number of recent searches' and my credit score has plummeted.
• I call M&S to find out what on earth is going on. I ask for it to be put through to the fraud department as I did not make the second application, but they seemed to have dealt with this sort of thing before, they said it's not fraud because the second 'phantom' application had the exact same details as the first. They 'escalate it' within their customer services team.
• Get a call back a few hours later from someone, she says they've reviewed it, decided it was not fraudulent, but they don't know why it happened - she says "probably just a glitch in our system". I said if it's a glitch, I want the second search removed from my credit file. She says she will ask for this to be done, but to be aware it will take "around 30 days" for this to be processed.

Hmmm, how convenient, the second credit search will stay on there, negatively impacting my credit file and ability to get a loan offer from elsewhere for exactly the same period that their loan offer is valid for....


So.. I ask.. :

• If answers given on their application form are directly impacting the rate - surely they should be required to publish this up front? Consumers are not playing with a full deck if simply not having lived at an address for over 2 years and putting 'Miscellaneous' in the 'Reason' field automatically means you don't get the advertised rate. How is this not covered under false advertising rules? If car dealership advertised a car for £5,000 under RRP but then when you got to the dealership they said "ah, because you have told us you want to use this car to take your kids to school, you have to pay an extra £5,000" that would be completely unacceptable right?
• Who regulated these offers - and decides what is acceptable for loan companies to advertise at vs. acceptance ratio? What's to stop a loan company advertising at 3.3% but having such restrictive criteria that it actually amounts to false advertising?
  "why sure, you would have got the headline rate if you were a 18 year old female divorcee, living in a post-code with a 7 in it and told us you were using the money to buy a boat".
• I seriously suspect the extremely dodgy 'second search' appearing on my file and can't be removed for 30 days is a sales tactic by M&S to prevent me getting competitive offers. I'm not happy with the explanation that it was a 'glitch' in their system. Who do I report this to?

Thanks!!!

[Deleted User]

3 main points -


Lenders need to give the headline rate to 51% of successful applicants.

No one sees your credit score but you.

Lending criteria are confidential. Publishing them a) gives away competitive advantage and b) opens up applications to being massaged.

DCFC79

Well your score has no bearing on the loan offered.

Lenders wont publish the criteria to get the headline rate, would be a bit daft wouldn't it, lenders wouldn't make any money.

As to the 2nd search carried out by M&S yes it could well be a glitch but why don't you believe it ? Wait the 30 days as you were told and then complain.

foxy-stoat

You should of applied to your current bank, as 0.3% would not of saved you very much, but would they of given you that rate?

Headline rates are given to M&S's computer's "perfect customer(s)" but I guess you are not one of them.

The scores given out by Experian are meaningless as Experian are not the ones who lend out money.

Application remorse I think.

Clive_Woody

Please can you post a list of the "false advertising rules" I would very much like to read these?

regency_man

Seems like we have a lot of bankers on here :rotfl:

Does anyone want to comment about the genuine consumer issue that the market is not competitive if you can't directly compare products - and you CANNOT directly compare products when getting an actual quote from one company directly affects your ability (through credit search reporting) to get an actual quote from another company.

Maybe I was not M&S's 'ideal customer' but I might have been another bank's 'ideal customer', I have no way of knowing though. It's a pure gamble for the consumer that you pick the 'right' company first, and there is an element of being 'locked in' to the first company due to the immediate sharing of credit application searches (vs. 30 days to get incorrect information removed!!)

There is no competitive disadvantage in loan company's issuing guidance on who they offer their headline rate to. Your rather ugly assumption is that people will openly commit fraud to obtain a better rate, whereas I am suggesting people would use the information to get themselves a better deal for their own circumstances.

regency_man

Deleted_User wrote: »

Lenders need to give the headline rate to 51% of successful applicants.

Where does that 'fact' come from and who is the industry regulator who checks that? If a lender has a set of criteria programmed into their computer, and in a year 1000 people apply 999 of whom don't meet that criteria, how could they possibly give it to 51% of applicants?

regency_man

Deleted_User wrote: »

and b) opens up applications to being massaged.

You mean exactly the kind of 'massaging' that Money Saving Expert encourage you to do with your Job Title to get the best deal on your Car Insurance?

regency_man

Clive_Woody wrote: »

Please can you post a list of the "false advertising rules" I would very much like to read these?

Here you go: https://www.gov.uk/marketing-advertising-law/regulations-that-affect-advertising

The Consumer Protection from Unfair Trading Regulations mean you can’t mislead or harass consumers by, for example:

• including false or deceptive messages
• leaving out important information
• using aggressive sales techniques

Read ‘The consumer protection from unfair trading regulations’ for the rules on advertising legally.

shortcrust

regency_man wrote: »

Here you go: https://www.gov.uk/marketing-advertising-law/regulations-that-affect-advertising

The Consumer Protection from Unfair Trading Regulations mean you can’t mislead or harass consumers by, for example:

• including false or deceptive messages
• leaving out important information
• using aggressive sales techniques

Read ‘The consumer protection from unfair trading regulations’ for the rules on advertising legally.

As you said yourself, "Read all the small print - yes it said the 3.3% rate was 'dependent on circumstances"

OP - Really, get over it. They've done nothing wrong.

[Deleted User]

regency_man wrote: »

Where does that 'fact' come from and who is the industry regulator who checks that? If a lender has a set of criteria programmed into their computer, and in a year 1000 people apply 999 of whom don't meet that criteria, how could they possibly give it to 51% of applicants?

The FCA audit it. It also needs to be done by channel, not just by overall lending. Complain to the FOS if you feel they're not doing that.

If only one person was accepted, then they would get the headline rate.