51% receive headline rate?

Shakin_Steve

I sometimes wonder about this oft quoted figure. I really can't see how it would work. Over what period are the figures collected? Surely, if the financial position of most applicants was very similar, it would be almost impossible to decide which received the headline rate. Is the figure checked by an outside agency at any point?

I do hope someone on here knows.

BoGoF

Seeing as it is a FCA requirement to display representative rates I can only assume they conduct some sort of audit.

[Deleted User]

Yes. It part of the audit, as well any spot checks by the FCA.

The figures are collected in an ongoing basis, as the 51% rule applies not just overall, but on a campaign by campaign basis. If you mis judge your audience and the rate you're offering, you end up having to give low rates to high risk customers, which is obviously a problem.

foxy-stoat

Its just marketing and what they have to say.

Suppose they only applications the lender receives in a 2 year period are from 18-21 year olds with £15,000 income that all have terrible credit history - I bet 51% of them dont get the headline rate.

BoGoF

foxy-stoat wrote: »

Its just marketing and what they have to say.

Suppose they only applications the lender receives in a 2 year period are from 18-21 year olds with £15,000 income that all have terrible credit history - I bet 51% of them dont get the headline rate.

I would imagine they would be rejections. I believe the 51% relates to successful applications.

Shakin_Steve

BoGoF wrote: »

I would imagine they would be rejections. I believe the 51% relates to successful applications.

Ahhhhhhh......I see.

So...even if from, say, 10,000 applicants, 9000 were rejected, then from the remaining 1000, 510 at the headline rate would be 51% of successful applicants.

Thank you. :T:T

PRAISETHESUN

Shakin_Steve wrote: »

Ahhhhhhh......I see.

So...even if from, say, 10,000 applicants, 9000 were rejected, then from the remaining 1000, 510 at the headline rate would be 51% of successful applicants.

Thank you. :T:T

It's amazing what you can do with statistics when you remove most of the [STRIKE]applicants[/STRIKE] data from the pool...

Clive_Woody

PRAISETHESUN wrote: »

It's amazing what you can do with statistics when you remove most of the [STRIKE]applicants[/STRIKE] data from the pool...

If you wish to include unsuccessful applicants in the calculation and still maintain the 51% getting the representative rate then I suspect banks would need to increase the representative rate massively to stay in business.

It makes no sense including applications who don't get an offer.