Business committee head calls for probe into Provident Financial
Labour MP Rachel Reeves has written to the FCA asking it to investigate the doorstep lender’s advertisements over Christmas.
The chairwoman of the Business Select Committee has called for a probe into Provident Financial after the embattled doorstep lender advertised loans with a hefty interest rate over Christmas.
Labour MP Rachel Reeves has written to the City watchdog asking it to investigate Provident’s “cynical” marketing tactic to target customers who are financially vulnerable with loans advertised with an APR of 535.3%.
Provident’s mailshot adverts depicted a smiling child wearing a Christmas cracker hat, children decorating their grandfather with tinsel, and people hugging with the words: “It wouldn’t be Christmas without … the look on her face … decorating grandad … and visiting loved ones.”
The 139-year-old company sells high-cost credit through its Vanquis Bank, Moneybarn and consumer credit business.
In a letter to Andrew Bailey, chief executive of the Financial Conduct Authority, Ms Reeves said she was concerned “about the behaviour of credit provider Provident which cynically used the intense pressure on household finances over Christmas to target vulnerable customers”.
“I believe this was a cynical tactic to exploit vulnerable people who struggle financially at the best of times, let alone over the festive season. Provident tried to tug on the people’s heartstrings with a deliberately emotionally-loaded message to urge them to take out a loan at a tip-off rate of interest.”
Last week, the Advertising Standards Authority (ASA), which investigated Provident’s mailshot after receiving complaints, ruled that the ad was irresponsible and should not be used again.
Ms Reeves said she welcomed the ASA’s ruling but that it “goes nowhere near far enough in tackling this kind of grossly irresponsible behaviour when it comes to offering loans”.
A representative from Provident said: “The ASA informed us of a complaint made about the advertisement and we subsequently removed it from circulation, prior to the ASA’s final ruling.
“Provident also provided assurances to the ASA that such content will not be used in any further marketing materials.”
Provident Financial recently said it has turned a corner following a botched restructuring in 2017 and a string of regulatory sanctions and profit warnings.
The company has lost more than 70% of its market value after two profit warnings in 2017, which prompted the resignation of former chief executive Peter Crook.