Personal credit business as the growth driver

Business performance within Consumer Finance was mixed in 2015: the personal credit business grew significantly and once again gained market shares. However, the leasing business was curbed by the scrapping of the euro/franc floor and the strong competition from the manu­facturers’ own leasing companies.

cashgate’s dual-price model once again provided impetus for growth in the private credit business in the reporting year. In a shrinking overall market, cashgate succeeded in increasing the volume of new business by 11.2 per cent. The price model is based on two fixed interest rates of 7.9 and 11.9 per cent. Customers are informed clearly of the interest rate that applies to their individual risk profile. Thanks to the low interest rates and transparent loan approval criteria, the model continued to meet with a positive response from borrowers and partner banks.

Regulatory intervention into market structures

cashgate will be obliged to amend the successful model as of mid-2016 when according to a federal ordinance a maximum interest rate of ten per cent will apply to personal loans. While the lower interest rate of 7.9 per cent will not be affected, cashgate will have to lower the higher interest rate of 11.9 per cent. cashgate nevertheless aims to continue expanding its market position and to offset falling prices with higher volumes under the changed conditions.

The fact that the legislator considers it necessary to regulate the market is generally to be regretted, as first of all Switzerland already had one of the strictest laws in the personal credit business with the Consumer Credit Act, and secondly, the market is functioning well as reflected in the different price structures and the number of competitors.

Further regulatory changes already came into force on 1 January 2016: owing to the new Money Laundering Ordinance of the Swiss Financial Market Supervisory Authority (FINMA), significantly enhanced customer authentication is required in the personal credit and leasing business. In addition, the self-regulating solution for advertising in the personal credit business has entered into force. The credit institutions participating in the convention agree to refrain from aggressive advertising and advertising targeted directly at young adults and to support debt prevention programmes. In addition, the right to revoke for telephone sales has been extended from seven to 14 days. This extended period of revocation also applies to both consumer credit and leasing agreements.

New products and cooperation programmes

cashgate launched an innovative product that meets a genuine need over the past financial year with the cashgateCAREER study loan. More detailed information on this can be found in the “Strategic projects” section.

The network of partner banks was also expanded in 2015 through exclusive collaboration agreements with Fribourg Cantonal Bank and, the online bank of Berne Cantonal Bank.

Joining forces to combat risks of overindebtedness

Together with Caritas, Pro Juventute and Alphapay, the Aduno Group is a member of the Plan B association founded in 2010. The objective of the association is to promote a responsible approach to money and consumerism by society and to help people who have got into debt difficulties. Seven financial skills programmes based on both prevention and anonymous personal debt counselling have been established to date. Plan B is one of the largest corporate citizenship programmes of the Swiss financial industry.