How do you fancy paying back your debts by watching television? Well around 100,000 people do just that through a firm known as Buy-As-You-View (BAYV) which has its head office in South Wales.
Established in 1972 it now employs 750 staff. It does no high profile advertising and relies on business generated by word of mouth and its virtually unknown outside the mainly deprived communities it operates in.
The slot machine on the television
“Pay-as-you-view" borrowing is when customers repay their debt by putting coins into a meter installed by the loan company, which is connected to their TV.
This method then dictates how much viewing time the customer receives. To stop their TV being switched off they have to regularly feed coins into the meter.
BAYV has recently attracted attention from anti-poverty campaigners because of concerns about its tactics. It is claimed that these expensive meter-based loans, which charge average APRs close to 40%, are targeted directly at low-income groups - those that are more desperate and vulnerable.
These people have little or no access to high street credit and debt campaigners are calling for this type of lending to be more closely scrutinised by regulators.
Insurance fees and service agreements
This method of ‘borrowing’ is not widespread and is limited to less well off areas of the community. While anti-poverty campaigners accept these lenders are preferable to alternatives such as loan sharks, there are concerns that once interest, insurance fees and service agreements are added, some borrowers can find themselves paying almost three-and-a-half times the high-street cash price of goods they have obtained.
There are currently 290 items available to purchase, either through the BAYV’s catalogue or online, ranging from mobile phones, bedroom furniture and baby equipment to mobility scooters.
I looked at a Sharp LC32LE600E TV it had for sale at £699. But the repayment plan is over 156 weeks at £5.50 per week, which adds up to £1,170.
If the customer took BAYV's ‘All Sorted’ maintenance policy then the total cost of this TV climbs to £1,521. I could get the same TV today on the internet for £388.
Is it legal?
The business model of lenders such as BAYV is entirely legal and subject to statutory regulation and the company says it is committed to offering customers value for money and to being clear and upfront about all costs.
It emphasises that it doesn't do door-to-door sales, just debt collection from meters and says collecting payments directly from homes means that many customers save money by not having to travel to a retailer to make their payments.
It stated that a quarter of its new business comes from customer referrals, which was evidence of satisfaction with its products.
The alternative lender
Many will argue that those on low incomes would be better off going to a credit union as they offer cheaper interest rates ranging from 12% to 24%, which enables the borrower to make cash purchases at far more competitive prices.
Credit unions are not that widely advertised so perhaps more needs to be done to highlight their existence and promote the help they offer to those more vulnerable in our society thus preventing them from having to pay a very high price for credit.