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Chris Bell

Bank blasted over ‘3-minute loans’ as household debt rockets



The online bank First Direct has been accused of “trivialising” debt with a mailshot offering the chance to secure a loan in just three minutes.

The letters sent to the bank’s customers say that sums of up to £25,000 can be obtained in just three minutes for an online application.

“If you had three minutes to spare, what’s the most useful thing you could do?” the mailshot reads. “How about getting a loan from us?”

The financial crash in 2008 made consumers more wary of taking on loans but household debt is now rising at a rapid rate.

A report published by the TUC last week said that ­consumer credit had risen from £184bn in 2012 to £212bn by the end of 2015 and was growing at an annual rate of more than 10%, the highest for a decade.

The offer from First Direct, a division of HSBC, admits that in reality the loan application is likely to take longer than three minutes. It says customers would also need to read the pre-contract document and terms and conditions.

In a jocular tone, the mailshot says that during the 90 seconds it takes to read half the letter — which includes “rambling on about pink ­elephants” and “the weather up here in Leeds” — a customer could be “over halfway to ­getting a loan”.

The offer is available only to customers with a “1st account” with the bank.

It says the interest rate depends on the amount offered, individual circumstances and credit checks. Banks and credit card companies are engaged in a fierce battle for business which has been criticised for luring families into a debt binge.

Customers are bombarded with offers, encouraging them to take on more debt with an initial 0% interest on credit cards and low interest rates for loans.

Peter Tutton, head of policy at the StepChange debt charity, said the First Direct promotion could “trivialise taking out credit” by presenting a serious commitment as a “fast and easy” option. He added: “When anyone takes out credit, they need to think carefully about whether they need it and if they can afford it, ­particularly if their income were to drop. Marketing credit based on how long it takes to apply for it could appeal to people who are desperate.”

While First Direct is promoting its loans to customers, it announced this month that it was cutting interest rates for savers. The rate on its cash Isa (individual savings account) will fall from 1.3% to 0.9% from October 18.

First Direct said: “We ­understand that finance [administration] isn’t fun and that customers value their time, which is why we ­guarantee we will give a decision on a personal loan within three minutes, so people can spend more time doing the things they enjoy.”

The British Bankers’ Association lending code requires that communications are “clear, fair and not misleading”.


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