Two Students Who Created Lending Company Achieve FCA Status
Student lender Smart-Pig.com has been confirmed as the first trading short term loan company to be authorised by the FCA
When Wonga and other short term pay-day loans were branded “morally offensive” in 2012 for targeting students with a generic payday loan, Shreiff Benaziza found himself a victim of the high APR% with a company that was not treating him fairly.
And thus, Smart-Pig was created. Based in Leamington Spa, it was created by two students, Tom Parks and Shreiff Benaziza from their university bedrooms as a means to be a safer alternative against payday lending for students.
“Because students have low incomes, they are often having few options in time-sensitive emergency such as a change in the student finance awarded, or withheld rent deposits.”
“We've been able to succeed because our technology has put us at the forefront of student lending, where lack of credit data is traditionally an issue. We have a unique approach to this, gained over 4 years of trading with real results, and have built robust platform that will let us take on the largest lenders in the very near future.”
However, due to the moral grey area when it comes to giving loans to students, Smart-Pig came under criticism from the NUS and Martin Lewis of Money Saving Expert for lending to students.
These complaints were overturned due to the company running the FCA guidelines that payday lenders, such as Wonga were not.
“When Shreiff had a terrible experience with a payday loan at university, we realised that besides the unavoidable high APR1, loan providers were not treating customers fairly. We built Smart-Pig as a safe alternative to other short term loans that was designed especially for students' unique financial circumstances. To date we estimate we have saved students over £1m in late payment fees and other charges" said a spokesperson from Smart-Pig.
Fortunately, following protracted campaigns and regulation, the demand for student payday loans has shrunk considerably. A recent NUS survey puts the proportion of undergraduates using Payday loans at 1% - compared to 10% who had applied for loans at the height of payday loan advertising, according to Smart-Pig's own research.