On 10 May 2021, Provident Financial Group (PFG) announced that it was closing its home credit operation, also known as doorstep lending.
Doorstep lending has been at the heart of Provident’s business for most of its 140-year history. Agents would visit customers at home, giving loans and collecting weekly repayments.
Now Provident says:
In light of the changing industry and regulatory dynamics in the home credit sector, as well as shifting customer preferences, it is with deepest regret that we have decided to withdraw from the home credit market …
As a result, PFG will no longer offer any ‘high-cost’ products and we will not be issuing any high-cost or home collected credit products from any CCD entity in future.
In March 2020 Provident proposed a Scheme to cap refunds to customers making affordability complaints.
I have looked at the background to the Scheme here.
provident says the Scheme could give people about 10% of their “full refund”, but looking at the numbers I think this may be less than 2%.
The Financial Conduct Authority (FCA) has said:
the FCA does not believe that the Scheme is the fairest compromise that could have been offered to customers with valid redress claims by the Group.
The Scheme was approved on 4 August and is now live. See Provident Scheme – 4 million people can now claim a refund for details about how it works and how to make a claim.
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Why doorstep lending no longer works
At the end of 2019, Provident was already struggling with affordability complaints. Then several claims companies started putting through much larger numbers of complaints and this trend continued throughout 2020.
August 2020 was probably the point of no return for doorstep lending.
On 5 August in a case against the payday lender Sunny, the Kerrigan judgment found that breaching the FCA’s CONC rules on affordability checking was an unfair relationship under the Consumer Credit Act and that interest should be refunded. And when a customer borrows repeatedly from a lender, the lender has to take that history into account and not just make the same simple check it would make for a first loan.
This judgment is in line with how the Financial Ombudsman (FOS) had been assessing Provident affordability complaints.
The next day, the FCA published a report on Relending by high-cost lenders. which found that:
We have significant concerns that repeat borrowing could be a strong indicator of a pattern of dependency on high-cost credit and levels of debt that are harmful to the customer.
This is a major problem for any doorstep lending operation, not just Provident’s.
Sending a collector round is expensive and inefficient compared to digital lending and collection. It is only profitable when a large number of customers borrow repeatedly, paying high interest for years. This is exactly the sort of lending where FOS is ordering large refunds and the FCA says is harmful.
It’s not the fault of the claims companies
Bad credit lenders have blamed claims companies for the number of affordability complaints and putting them out of business.
Claims companies only look for business where firms have been lending irresponsibly and cases are being won at FOS. FOS has been upholding 75% of Provident complaints.
If claims companies were bringing a lot of frivolous or weak complaints, as many lenders have suggested, then their uphold rates would be low. But my article Do claims companies get good results at the Ombudsman? has FOS data showing that claim companies have the same uphold rate in doorstep lending cases that customers going direct to FOS have.
In their own words – what Provident customers have said
It seems right to end with what customers have said about their experiences of borrowing from Provident. Here are some of the thousands of comments made on Debt Camel’s doorstep lending affordability complaints page.
Lily
Me and my other half had some provident loans about 5 years ago. for the first couple years we were meeting all the repayments but we just kept borrowing and borrowing more and in the end we couldn’t afford the repayments and amounts are still outstanding.
Kelly
Between 2008 and 2014 I had 22 loans from them. This started of with £200 shopping vouchers which were cleared then went on to a cash loan. That was paid off early by another loan for a higher amount. It then begins to escalate to 2-3 or 4 loans running at anytime.
My collecter continually texts me to see if I want another loan. I have clearly stated I CANNOT AFFORD IT but she comes back with max amounts available. In 2016 I was made redundant.. Although I walked straight into another job I was working 15 hours less. I told my collector and she offered me another loan but said she would keep my old employer on it.
Alex
My wife and i have paid over £5000 since 2012 to provident we have turned over loans to pay off other loans , were free of provident im 2012 when the manager visited our house to say he was looking to encourage previous customers back and offered us a £100 loan each , this started us on a downward spiral with them.
Amy
My Nan passed away in March 2018 and we found that at 84 years old she’s had 33 loans.
Izzy
I paid fine and then in later years got behind so bad my credit rating fell badly,they offered me more to try pay of these ones,as well. I was robbing Peter to pay Paul, almost 150 pounds per week,my husband never knew about these loans, and I always paid regularly so he wouldn’t find out,and those last few years of payments took a lot out of me, worry was my middle name, I got help and cleared them, and then got more offers from them, by this time I was 67 yrs old how did I even get accepted for these loans at that age.
I never once signed in my own home I was in friends, collectors cars, in the street, sometimes I never even signed for them,the ones I did were already filled in so I only had sign my name,I still don’t know what they said.
Fay
Only my partner was working and we have 3 small children top up with tax credits
Each loan shows on my credit report that I was in arrears when issued a new loan … also have found an old provident book where it shows my partner had a big loan and couldn’t keep up repayments And in 2010 they amended his payments to a lower amount as it was in arrears the same day they gave me a loan.
Louie
I’ve had six loans with a value of £5,170, and £5,317 worth of interest, since 2015, but last year I borrowed £2,500 (as two loans) with £3,480 interest, however I returned the money and cancelled the agreement from a family intervention. Despite the intervention I took out a smaller loan, from being in a really bad place and having been bombarded without pause by text, email and post (You sure you want to cancel? / Can give you that money? / You can have a loan).
Adam
Question, on behalf of my Nan if i may, she has been using provident loans continually from the mid 80s, up until 2017, is there anything in the way of the unaffordable loans she can claim back?
Alison
My agent would sit outside in her car with her husband if I wasn’t in the previous day and wait for me to get home from work. She said her commission was based on what she collected each week – not how many loans she got people to take out. I was embarrassed when she came more than once a week as Im sure my neighbours knew why she was calling :(…… I was so uncomfortable seeing her sometimes I left the money & book under the mat and just text her & told her to post back. The thought of her hounding me for money more than once a week used to scare me :(
Ann
I have been With Provident for 20 Years Last Loan I had Was for £500. intrest was 600 0dd. 2018. ask for Loan not long ago and got turned down, Made a Complaint no Reply. thats What You get for being a good Customer.
Paul
I have 3 loans with Provident at the moment which I have referred to the Financial Ombudsman for a number of reasons. Following a complaint to Provident they have stated historically that between 2008-2015 I had 22 loans from them. With all of the interest added this totals over £27,000.
Toni
I am a single mum and have been on income support and jsa and at one point I had so many loans out I was paying £80 a week! I got to this stage as I would struggle to pay so would either refinance or get a new loan then would be ok for a few mths then would get in that circle again.
I don’t understand how they would let someone on benefits get so high?
Mike_p says
It’s surprising is taken this long really. It’s hard to see how manually going to collect payments could be worth it in a world where even an 11 year old can get a debit card.
Julian O says
Long overdue. I have supported many over the years that have got into the cycle of loan after loan. Many times, just before Christmas usually if the person had children, the agent would arrive and tell them they were entitled to another loan and so the cycle would go on.
J says
Not defending them, I’ve had a number of loans over the years but was lucky enough to get a claim through them (supported by the Financial Ombudsman) before they started talks about a cap on repayments…
However, I get the feeling that people lending habits changed too? I remember my mum used to take out a loan in November when I was a kid for £100 and that paid for everything from food to presents (ok, life was cheaper back then too) but only because she was in a savings club which paid out a week before Christmas so she’d use that to repay the Provident loan back and interest was negligible.
Now, I know people (myself included) would borrow perhaps £1000 for no other reason than they want to treat themselves and then struggle because it’s a big chunk of take home and that ‘I want to treat myself’ mentality is still there.
Again, this isn’t excusing Provident but I think that high cost lending mixed with expensive consumer tastes is a really bad mix.
Sara (Debt Camel) says
Another big change is that so many people have got so much worse off in the last 5-10 years because of the cuts to benefits that so many provident customers rely on.
Kerry Lebbon says
I’m still paying off a loan which I took out in November 2020 can i claim,
This is not my 1st loan
Dean Russell says
I am going to go against the grain a little bit, i actually believe that Provident offered a service to enable people to have small loans to help them buy essential items. Usually Provident customers were unable to get a loan from the bank or extend an overdraft (unauthorised overdraft fees make Provident interest look small in comparison). It not the fault of Provident if its customers kept on taking extra loans. Plus when the customers came to us seeking assistance the Provident accepted £1 monthly token payments all day long. Yes there are the downsides to all borrowing, but the borrower has to take responsibility.
Sara (Debt Camel) says
Like a lot of debt advisers, I too used to have a soft spot for Provident as they were always so very helpful when you needed a hold on an account or a low token payment to be accepted. in total contrast with payday lenders and Amigo.
However running the doorstep loan refunds page here and seeing all the stories has made me change my mind. Only a few of the stories are in the above article – there were many many more that were as bad.
The AVERAGE refund people were getting from FOS was £5000. Hundreds of thousands of people, many in receipt of benefits, have been kept in poverty for years by these loan repayments. Too few ever came forward for debt advice. When someone told their agent they were struggling, they were offered a new loan, not told they could make token payments with no more interest added.
Franky says
They have been ringing my wife 4-5 times a day. She owes them about 300-400. Paying 40 a week. We registered for the claim process. We dont answer phone. They are just looking their last commission on each payment. Is there no point in paying them? Prob wont get what we pay back.
Ek says
Been with Provident since 2009, I was pushed to take Loans out knowing I was getting into financial difficulties, there get friendly give you the loans. At the end off no was collecting each week
Sandra says
I used Provident mainly to up my credit rating but needed the money also. I was aware of the high interest. I was made aware of everything by my collector. We sat in my flat discusding whether I could afford it before she allowed me to sign. I have had 3 collectors each of which have been polite, friendly, professional and helpful. If I wanted another loan I asked my collector. If I didn’t I just ignored the offers on the emails Yes, vthis can be damaging for some people, I myself have had financial issues in the past but my Provident loans and collectors have helped me. I am sorry to see them go especially as so many people will be out of a job
I have no complaints about Provident or their staff.
Jayne says
Hi Sara, now that this is happening, will details that are on credit files be removed at all such as defaults? Or would they remain? Had a lending complaint which they would not upheld but guessing you can’t take these to the ombudsman now. Thanks
Sara (Debt Camel) says
You will be able to make a complaint to the Scheme if that is approved. If you win the complaint, any negative marks on your credit record should be removed.
Alan says
I am a oap disabled person who get to pay for a loan I think it is not right to charge my the high fee
Carmen says
Always take our loans from provident, And I always wondered why the interest was so high.
Mj says
I’m a single mum dont work my agent kept saying u can have another loan until not im paying nearly 70 a week I cant afford it he text mw at 7.30 every Monday saying u already to pay im nervous wreck then he’s offering another loan. Getting one.to pay off another and the interest is mental. He’s very abrupt so u get worried saying can I pay less this week.
Sara (Debt Camel) says
Can I ask if you have other debts as well or are behind with bills?
Andrew says
I just had a letter off the Complaints Department of Provident. Dated 10th May 2021.
I paid my complete debt to them on the 29th August 2017. I paid it by debit card over the phone to Vanquis as Provident had passed the account to them for collection.
I was told in a letter today that I still owe the £1028.60 as they cannot find the payment on their system!!!!!!!!!!!!
I found my receipt on my bank account. I also phone Vanquis who also found my old account and stated it was settled.
I have been treated by Provident like a criminal and spoken to on the phone & by letter like I was scum.
I asked if I owed the said money. Why hasn’t Provident chased me up in the past 4 years? They couldn’t answer. I asked why could they find my accounts from 2012/2013 etc. They had no answer.
They are a complete con of a company. Praying on the vulnerable & poor.
No wonder they stopped New Doorstep lending completely this week
Chris Clipstone says
What happens to customer refunds following Providents decision to stop lending?
Sara (Debt Camel) says
Provident is trying to set up a Scheme of arrangement, see https://debtcamel.co.uk/provident-satsuma-scheme/. If this goes ahead, you can make a claim to that, but you will only get back a tiny amount of the refund you should have had. Provident says 10%, I think it may be a lot less than that.
Do you still have an open loan balance?
Iram Ahmed says
i gave my Information regarding the provident refund but have had no information back so just waiting and thinking is it worth it or Not
Sara (Debt Camel) says
When Provident wrote to a lot of customers to explain about its proposed Scheme, many of them wrote back and said they wanted to get a refund – is this what you did?
If you did, then you have to wait as the Scheme hasn’t been approved yet and won’t start until about the end of July. At that point you can send in a Claim to the Scheme and Provident will decide whether to look at it. If they uphold your claim you will get back a very small amount of the interest you paid, provident think 10% I think it may be a lot less.
Is this worth doing? If the Scheme goes ahead, why not?
The interesting question at the moment is whether the FCA, Provident’s regulator, will make them increase the amount of money they are putting into the Scheme for customers. Provident is not short of money as it owns the very profitable Vanquis credit card so it could give its old customers a fairer amount of compensation, but at the moment it thinks its shareholders are more important :(
Jade says
So will we have to keep repaying the loans At at £110 a month it’s a hell of a lot of money each month
Sara (Debt Camel) says
How many loans did you have before these?
What is the remaining balance?
jade says
i have three loans of them in total and i think my balance is about 600 and £110 is a hell of a lot of money a month
Sara (Debt Camel) says
So if the Scheme gets going (we won’t know for a couple of months) you can make a claim to the Scheme saying the loans were unaffordable and Provident didn’t check properly you could afford them.
The definition of “affordable” here is that you have to be able to make the payments and still be able to pay your other debts, your regular bills and living expenses. If paying Provident left you so short that you got deeper into debt or behind with bills, or you felt you had to refinace the provident loan as you couldn’t manage and needed more cash, then the loans were probably unaffordable.
For many people £110 a month is a huge amount. You can ask to make lower payments that will be more affordable – Provident won’t add on extra interest if you do this. It will harm your credit record, but if you then win your affordability claim, all the negative marks will be wiped clean.
Do you have other debts as well?
jade says
yes i have gas and electricity debts which are just over 300 for them both
Sara (Debt Camel) says
OK, so provident is the big one. If you would like to talk to a debt adviser, try National Debtline on 0808 808 4000. But if you feel happy just asking Provident if you can pay a more affordable amount, (how much could you manage?) then do tell Provident you are behind with your electric and gas and need to catch up as they are priority bills.
Alan says
I have 3 loan I do not no the balance amount is my brother have 2 loan s
Sara (Debt Camel) says
Hi Alan,
did you have a lot of loans from Provident from before these last three?
Kerry Lebbon says
I’d like to know that answer too, I’ve been using provident for the past 15 years, and i pay 102 a month with about 900 left I think as they haven’t been able to collect from me just taking payment over the phone
Sara (Debt Camel) says
If you have been borrowing for years then you have a good case for a refund that is bigger than your balance. For 15 years that is a VERY good case!
In this situation you should consider stopping paying them now. As you will only get repaid a small amount of any interest you have paid – Provident think 10%, I think it may be a lot less than that. So if you pay them £102 this month, you would later only get 310 or less back. but if you stop paying the balance will be cleared in full so you save the £102 pounds.
Stopping paying will harm your credit rating, but when you win a Claim in the Scheme (or in administration if the Scheme doesn’t go ahead), any negative marks will be removed from your credit records.
If you aren’t sure about stopping paying, it would be good to talk to a debt adviser about this. Do you have a lot of other debts as well?
Kerry Lebbon says
No only with this company, thank you this helps alot
Sara (Debt Camel) says
ok, National Debtline would be good to talk to on 0808 808 4000 if you are unsure about stopping payments.
Mj says
How do u claim against them pls
Sara (Debt Camel) says
Provident is trying to set up a Scheme of Arrangement, see https://debtcamel.co.uk/provident-satsuma-scheme/.
If this goes ahead, you can make a claim to that for a refund of the interest you have paid on your Provident loans, but you will only get back a tiny amount of the refund you should have had. Provident says 10%, I think it may be less than 2% :(
You can’t make a claim now – we won’t know for months if the Scheme will be going ahead.
Do you still have an open loan balance?
Hugo says
Hi Sara. Trans union does not delete off your credit file, my wage day advance loans fully paid up, and refunded £50, all three of them still show.
Sara (Debt Camel) says
Read https://debtcamel.co.uk/correct-credit-records-lender-administration/ and contact TransUnion and ask for the records to be suppressed if they are still showing but you were told they would be deleted.
(This only works when administration has finished or is so far through the administrators won’t reply to the credit reference agencies.)
denise says
I worked for provident and took out loans myself for a number of years – i was self employed and my round was taken off of me because and i quote I was too nice! I’m glad they are shutting down they took away my employment and left me owing them thousands of pounds as i had just taken out another loan with them, they are/were a horrible company and deserve all they get