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Doorstep lender Provident Financial today denied accusations that it was charging poor families extortionate rates because they were unable to borrow from High Street banks.
Children's charity Barnardo's told the Office of Fair Trading yesterday that Provident, the biggest UK doorstep lender, was charging some clients up to 545% APR (annual percentage rate).
Peter Crook, chief executive of Provident, did not deny Barnardo's calculation but said: “There are very few customers on that product and they have generally borrowed less than £200. Some 95%-plus of our customers are happy with us and we believe that we actually improve their standard of living.”
Tight cost control, even tighter credit judgments on clients and bad debts rising more slowly than new business coming in helped Provident grow profits by 3.5% to £53.1 million in the six months to end-June. But Crook is cautious on the outlook believing the economy will not start to improve until well into 2010.
He said: “We call on one in 20 households in the UK every week and we are seeing very little in the way of a recovery in consumer confidence.”
He said the OFT inquiry is looking far wider than just the £3 billion door-to-door lending market in its investigation into the entire £35 billion-a-year consumer credit market.
“The Competition Commission looked specifically at our market for three years and we have only just completed the recommendations they made in 2006 when they said we provided a valuable role.”
Crook said despite the problems at rivals Cattles, which has virtually stopped new lending, the overall home credit market had changed little through the banking crisis.
Reader views (3)
These people have a proven record of not paying loans back. thats why high street banks will NOT lend to them. Do these banks FORCE them to borrow from them, I think not! These companys do not advertise like high street banks and are from word off mouth from other users, If they were that bad why would its books increase? As Crook says, alot of customers are happy that a company is willing to give them a last chance for a better life. These loans can give them a chance to do essentials like buy a new cooker thats broke as they dont have the money or get credit elsewhere! Also why is no one comlaining about high street revolving accts or credit cards that charge over 30% and hope for you to only make the min repayments, which in turn will take them a life time to only make a small dent in the debt! Normal people that dont need these places need to veiw the circumstances of the target market before making such accusations on these company's. Also these loans are not long term loans, they are usually less than 12 months thus a higher APR (standard even with high street banks) ontop off the increase rate for HIGH risk lending!
- Eddie, Northampton, 31/07/2009 10:29
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There is a difference between Cattles and Provident.
In fairness to Provident, they are transparent in their dealings. It is made clear to borrowers what they are borrowing, how much they have to pay and for how long. Even if the borrower misses the odd payment, no interest or charges are added to the original borrowed amount. No PPI or other 'arrangement fees' are added either. Provident don't move the goalposts and, whilst their rates are high, a lot of people do trust them on that basis.
Cattles, on the other hand, were notorious for adding fees, charges, unwanted insurance, rewriting agreements if a borrower ran into difficulty, not explaining interest rates or how they would apply to the account. The number of complaints about Cattles accounts tells it all. People don't trust them and feel they've been ripped off. You'll find very few Provident customers who will feel that way.
- William, London, 30/07/2009 10:59
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Its so ironic that the Chief Executive is peter 'Crooks' and his chief rival is 'Cattles'. Crooks and cattles together are robbing and having the poor mans offal. How do these people sleep at night making money out of poor peoples misery, don't they have a conscience or a heart the size of a mustard seed?
- Sandra, ealing, 28/07/2009 10:09
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