First investigated by Money Saving Expert, the broker said that it had several customers and families that had asked about paying off student loans, given uncertainty of tuition fees, so it created a test page on its website to “gather some user insights and speak to some potential customers as part of a market research exercise”.
The test ran for around three weeks and some of the adverts suggested that people could pay off their loan with a remortgage and save £20,000 in interest. The broker said that the remortgage could be taken out against the borrowers or a family member’s property.
Undergraduate tuition fees are currently £9,250, with government plans to freeze them until 2024 to 2025. However, student loan interest rates for upcoming loans this autumn are expected to sit at around 12 per cent, which has raised concerns around how or if they will be repaid in full.
Richard Dana (pictured), chief executive of Tembo, said: “This was the first test we’ve run in this way, and unfortunately there was a breakdown in our usual compliance process which meant the test went live without formal approval.”
He added that in light of the error it had “re-evaluated” its internal processes so it could not happen again and future user research and tests would be “subject to our usual stringent compliance checks”.
Dana said that around 25 per cent of graduates were expected to repay their student loans during their lifetime and that people who would benefit from considering early repayment would be “higher earners with a stable income and a property”.
“It’s not for everyone, but for certain people there is the potential for significant interest savings,” he said.
He continued that student financing was not a core focus at Tembo and to finish the test it was collating all of its feedback and user insights.
Dana added that Tembo had informed the Financial Conduct Authority on the oversight.
