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Personally glad to see the Home Credit / doorstep element of the business gone. Onwards and upwards hopefully.
Thanks for corroborating the view in my first paragraph. The home credit arm of PFG has been closed and is in run-off. The remaining businesses are healthy, and the group is well-positioned to prosper when eventually freed of the outdated and loss-making home collected credit activities.
Thanks for corroborating the view in my first paragraph. The home credit arm of PFG has been closed and is in run-off. The remaining businesses are healthy, and the group is well-positioned to prosper when eventually freed of the outdated and loss-making home collected credit activities.
When I first read that Provident were in trouble, I cheered. For decades, my siblings and I had seen PFG as a predator, squeezing cash from unfortunate innocents like my mother.
Back in the 1960s/1970s, she was caught in the Provident Cheque trap. Get a £20 "cheque", pay it back at £1 a week for 21 weeks. The APR was large, but we couldn't talk Mum out of it. She normally had several on the go at once - every few weeks when one was paid off, she'd take out another. Then went on a buying spree to get things for her grandchildren. She could only buy a limited range of things, because a lot of shops didn't accept them. And sale discounts never applied, so the £20 didn't go as far as £20 cash would have done.
A couple of times we had to bail her out, as her income wouldn't cover the repayments. On one occasion we cornered the collector, found out her total debt and paid the lot, asking him not to call at the house again. A few weeks later, of course, she'd taken out another cheque. And then another. Her excuse was that the collector was such a lovely man, so polite and helpful. And he needed the business to support his home and family. We pointed out that he dressed very well ("has to look smart for his job"), drove a very nice car ("needs it for his work"), and lived in a large house in a good part of the town ("hasn't he done well! I said he was a good man.")
So we decided on Plan B. Mum was very naive about money, and it was very easy to slip a pound or two into her purse, or a few coins into the tea-tin on the kitchen shelf. She was very pleased with how she was managing her money, and was able to buy treats for the grandlings without taking out so many cheques. Problem mostly solved, for us.
Of course, the top brass didn't see any of this. As far as they could see, doorstep collection was expensive. They could collect by computer and threatening letter just as well - maybe better - as computers aren't influenced by "sob stories". They didn't see that many of the doorstep collectors were in fact very good salesmen. And so the business hit the buffers.
Well said … would love to see this printed in a National News Paper .
The home collected (sub-prime) credit industry is completely misunderstood by most people, be they lawmakers, regulators, market makers, analysts, financial advisors, private investors, claims management companies, social-interest groups, most of their own and management and the general public.
Corporate boards of directors and audit committees never get close enough to this business to understand it properly. Well-intentioned but naïve regulatory bodies have also taken many companies to near-collapse by over-protecting consumers at the expense of other stakeholders.
Taking the risk that unsecured loans won't be repaid is a very expensive pastime indeed. Combined with unwarranted regulatory interventions, fines and the upholding of dubious malpractice claims, companies have become much less sustainable as they are forced to employ business practices that leave them unable to at least break even.
Imagine lending your best friend £10 on a Wednesday until payday on Friday, and at the weekend, you get a pint in return for your help. Work out the APR on that deal and you get something close to 6,500%. APR is and always has been a completely inaccurate and misleading tool when applied to short-term commercial lending, yet it is used consistently to discredit the industry
Despite regulatory quangos, ambulance-chasers and bleeding-heart institutions trying to hound these companies out of existence, the high demand for unsecured loan credit is not going to disappear anytime soon. I can only hope that government ministers know where the supply of missing funding is going to come from, but I suspect that they don't have the remotest idea.
I'm not trying to take sides on this issue, merely stating facts after exposure at all levels in the industry for more than 40 years.