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Credit company Provident Financial has announced it is withdrawing from doorstep lending after 140 years.
The company blamed “changing industry and regulatory dynamics” as well as “shifting customer preferences” for the move.
Its home credit business will either be sold or “run-off”, it said.
The move is part of plans to become a “broader banking group to the financially underserved customer,” said Malcolm Le May, chief executive.
The company reported a pre-tax loss of £113.5m for 2020, with the bulk of the losses – £74.9m – coming from its home credit division.
In future the company will focus on the Group’s profitable credit card and unsecured personal loan division Vanquis Bank, which made £38m last year, and its car finance business Moneybarn which brought in £10m.
“I am pleased to say that Vanquis Bank and Moneybarn remained profitable for 2020 as a whole and have started 2021 positively,” said Mr Mr Le May.
Provident has been lending and collecting repayments on the doorstep since the 1880s and, at the last count, this part of the business had about 379,000 customers. Loans are often for small amounts, but not always.
Its lending is legal and approved by the City regulator, but it has been controversial. Some campaigners regard such operations as “legal loan sharks”.
One 52-year-old, who borrowed with Provident for 30 years, said he had taken loans totalling £60,000 but it was a “vicious circle”.
“It was for basic spending, and Christmas, but was too convenient,” he said.
The company’s payday lending arm – called Satsuma – began operating in 2013 and had recently stopped lending to new customers.
Debt adviser Sara Williams, who runs the Debt Camel blog, said: “In August 2020 the Financial Conduct Authority said prolonged relending can be harmful to borrowers. And the Financial Ombudsman has been upholding 75% of affordability complaints against Provident – I estimate the average refund is about £5,000 and many are over £10,000.
“From this point, the doorstep lending model has looked dead in the water. There is no way to restructure doorstep lending to be profitable without a significant amount of relending.”
Provident has been lending money on the doorstep for about 140 years. Money-lending is a trade with many centuries more of history.
But this is a modern story of how professional claims companies have been blitzing firms with complaints about unaffordable lending, many of which have been justified.
Critics of Provident will say society is better off without a lender pushing doorstep loans to people who were unable to ever repay them.
Supporters say this now leaves a vacuum that illegal loan sharks will exploit.
The reality is that some people may now turn to family and friends for advances – creating a dynamic which will be more than just financial.

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