A debt victim’s painful verdict on Provident Financial

0
9


Peter Crook, who has luxuriated for years in the vast wealth made off the backs of his poor customers, is well cushioned financially against his downfall.

But vulnerable borrowers, such as Maxine Scott, a disabled single mother from Maidstone, Kent, have been left anxious and angry.

Maxine, 25, the stay-at-home mother of three-year-old Freddie, uses a wheelchair because she suffers from Friedreich’s Ataxia, an inherited disease of the nervous system. She survives on Disability Living Allowance.

Despite her straitened financial circumstances, Provident Financial was happy to lend her £500 for decoration and a removal lorry when she moved house two years ago – at a price. 

Bewildered: Maxine Scott, with son Freddie, must pay almost double what she borrowed

Bewildered: Maxine Scott, with son Freddie, must pay almost double what she borrowed

Bewildered: Maxine Scott, with son Freddie, must pay almost double what she borrowed

For this, she must pay £18 a week over a year, or £936 by the time her loan ends – nearly double what she borrowed.

‘The interest rate is extortionate,’ she said. ‘But I think they target the vulnerable and people who don’t earn much, and are desperate for the money. It is out of order that the bosses earn so much money from those people.’

For Maxine, and other customers like her, it is a bewildering situation. She is in arrears and is concerned that defaulting on her debt could affect her credit rating. 

The agent who usually calls to collect repayments lost her job in June, and since then a representative has been visiting only intermittently, and her instalments have fallen further behind.

She said: ‘I have been keeping the money to one side, but I’m quite bad at spending and the temptation is to spend the payments in between visits. It’s been two weeks since they last came. I don’t think I should have to be the one chasing them and calling to find where they are.’

Her experience is being replicated at thousands of homes up and down the country. After replacing thousands of loyal self-employed agents with a smaller number of ‘customer experience managers’, a huge part of Provident Financial’s debt is not being repaid on time. 

Claims: Crook said customers live in a perpetual ‘mini-recession’

Claims: Crook said customers live in a perpetual ‘mini-recession’

Claims: Crook said customers live in a perpetual ‘mini-recession’

It said last week it was collecting just 57 per cent of sums owed, down from the usual 90 per cent.

The company’s usurious interest rates and lavishly rewarded chief executive could not be further removed from the principles of its Methodist founder, Joshua Waddilove, who set up the business in 1880s Bradford as an ethical alternative to the ‘tallymen’ who preyed on poor townsfolk.

Today it is Provident levying exorbitant rates – including those on 13-week, £100 loans that incur at an equivalent annual percentage rate of 1557.7 per cent. 

The firm’s documents reveal their main customers are women, mostly middle-aged, working part-time and earning less than £15,000 a year.

Crook appears to have no qualms about the business, arguing that other lenders charged even more.

‘One of the things about our customers is that, to a degree, they are perpetually in a mini-recession of their own,’ he once remarked.

It has also emerged that Provident Financial, which is under investigation by the City regulator over its so-called Repayment Option Plans or ROPs, carried on selling the controversial product after warnings by the Financial Conduct Authority.

The plans were sold to credit card customers at its Vanquis banking arm. For a charge of £1.29 for every £100 borrowed, cardholders could freeze the payments and interest on their accounts for up to two years if they fell into difficulty.

The Mail on Sunday understands that the lender continued to sell ROPs for more than a year after the watchdog wrote to loan company bosses – including Provident Financial – saying that it disapproved of such products. In a letter sent to chief executives in January 2015, it signalled its disapproval of these insurance-style plans.

The watchdog took over the regulation of consumer credit in April 2014 and its rules insist firms offer help to customers in difficulty such as payment holidays and freezing their interest free of charge.

Sources said that since all customers are entitled to help under the regulations ‘there is no point their paying for it’ – in other words Provident had been selling a worthless product.

The FCA finally told Vanquis to stop making new sales of the product in April 2016. 

NOW THE FIRM FACES DEMOTION FROM THE FTSE 

Provident Financial is set to be dumped out of the FTSE 100 this week in a reshuffle of the elite share index after the doorstep lender lost two-thirds of its value since May.

The group’s broker, JP Morgan Cazenove, said last week that Provident’s home credit division was valueless after it sacked many of its payment collectors, and following the botched upgrade of the IT system that was meant to replace them.

Provident’s banking subsidiary Vanquis is also under investigation by regulators for selling add-ons that let borrowers skip payments if they got into difficulty.

 If the product is found to have been mis-sold, the compensation bill could come to £240 million – plus fines.

Gary Greenwood, at broker Shore Capital, said in a worst case scenario the firm might have to cancel all the contracts and compensate customers for any premiums paid since April 2014, plus interest.

 



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here