Sustainable Management Futures:
You work for a large finance organisation that operates in the global markets. In order to survive they have decided to increase business by extending their services to those who are not in a position to pay back loans, ‘sub-prime clients’ also known as ‘bad risks’. Nevertheless, they are being offered loans because your organisation has seen an opportunity to charge higher interest rates for loans taken out by these clients (because they are seen as bad risks – 7.5% APR as opposed to 1.5% that is normally charged by your organisation). These clients are afraid of going to loan sharks who will charge 50% APR.
You have been asked to be a financial advisor to those seeking high interest loans; they contact your organisation to set up a loan – they do this via a call centre and the loans can be set up with a ‘no questions asked’ 5 minute interview.
Your organisation has told you it is strict company policy not to tell clients taking out these loans that if they default it will be sold onto a debt collection company who will pursue them for any outstanding amounts at 25% APR.
Your organisation has also told you not to offer extended re-payment periods and if clients ask about this you should tell them ‘we will cross this bridge when we come to it – repaying £X amount per month should be no problem even on your limited and fixed income – lots of people do it’.
If a client asks why they are being charged a higher interest rate you are to reply that your organisation says they are justified in charging 7.5% APR because they see it as ‘doing a social good’ by lending to those who need money but cannot get it at cheaper interest rates, and also keeping them from the clutches of loan sharks – you are in fact here to help – doing them a favour’. A client contacts you who has taken out such a loan and is now finding it difficult to make re-payments. They tell you they may go to a loan shark because of the difficulties they now find themselves in.
You have to follow company procedure when dealing with clients by not allowing them to default on loans or make arrangements to make repayments over a longer period of time in order to spread their outstanding debt, because if you do not you will be sacked. You must not tell them about the debt collection company either if they want to default.
Task:
Using TWO of the ethical categories in Fisher, Lovell, and Valero-Silva (2013:196-201) apply and evaluate to what extent these are appropriate for dealing with the issues described in Scenario.
(1500 words)