Cost of living biggest worry for IPF clients

THE rising cost of food, petrol and heating is the biggest worry for customers of doorstep lender International Personal Finance and the majority believe life is going to get worse.

Leeds-based IPF has commissioned new research by YouGov to highlight the concerns of its customers, who often feel they are ignored by society.

IPF, which lends to customers in Poland, Hungary, the Czech Republic, Romania, Slovakia and Mexico, said the majority of its customers are from socio-economic groups that are poorly served and often excluded from mainstream financial services.

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They tend to have lower levels of social influence, disposable income and political power and can feel marginalised and without a voice in society.

They use loans for a variety of purposes from funding a small business to paying for holidays or to cover emergencies.

IPF said it is keen to understand its customers’ views on important economic and financial issues and it wants to make decision makers aware of how they feel.

More than two thirds of IPF customers said the cost of living is their main concern.

Only its Mexican customers count crime in the neighbourhood and unemployment as more worrying than how to pay for everyday necessities.

The majority of IPF’s customers believe their household economic situation will get worse over the next 12 months.

They also believe their respective economies will see a further decline in the next year.

Mexicans and Romanians have the greatest confidence in their economies, possibly reflecting the labour market reforms recently announced by the Mexican Government and the recent rise in GDP in Romania.

The low cost of Mexican labour compared with Chinese labour is expected to lead to significant economic growth in Mexico. The country is forecast to become the largest economy in Latin America in the next decade.

While 67 per cent of IPF’s customers have access to a bank account, at least half of the people surveyed have no savings, with the notable exception of the Czech Republic and Slovakia.

IPF said this will decrease the chances of building household economic stability, especially as economic conditions across Europe are still difficult.

The group said the general perception across all its markets is it is becoming increasingly difficult to get credit.

Nine out of ten customers said they only use credit in an emergency.

When considering taking out a loan, most people said taking advice from the lender was the most important consideration.

A large minority use product literature and research the internet, highlighting the increase in internet access among the lower economic classes.

The majority of respondents said they are spending more cautiously than before, particularly in Hungary where over 90 per cent of people are more cautious with their spending.

Most have been put off making a major purchase in the last 12 months.

John Mitra, IPF’s group corporate affairs director, said: “The biggest out-take from this report is that a lot of our customers and many people in this lower socio-economic profile are worried about the cost of living.

“Fear of crime, public service cuts and even unemployment, ranked well below this issue.

“The high cost of living was also a contributing factor on the perception that household finances will be further stretched as we move into 2013.”

IPF said it is concerned that many people have no savings and struggle to raise money for an emergency or save for a major purchase.

Mr Mitra said he was encouraged that the vast majority of IPF’s customers never borrow more than they can repay without difficulty and that they think carefully before they borrow money.