MP wants Vanquis Bank owner Provident investigated

Wednesday 9th January 2019 17:45 GMT

Rachel Reeves, chair of the business select committee, has written to the Financial Conduct Authority asking for an investigation into what she called a "cynical" marketing tactic to target financially vulnerable customers during the Christmas period.

Over the festive period, the doorstep lender advertised loans with interest rates up to an APR of 535.3%.

Provident's accompanying 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.

Writing to FCA chief executive Andrew Bailey, 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".

She added: "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 ruled that Provident's mailshot ad was "irresponsible" after receiving complaints from members of the public.

The ASA said: "The ad must not appear again in the form complained of.

"We told Provident Personal Credit Ltd t/a Provident to ensure future ads did not send an irresponsible message about debt to consumers by, for example, putting emotional pressure on them to take out a short-term loan."

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".

If the FCA obliges with an investigation against Provident, it will mark the third time the company has been censured by the City watchdog in just under two years.

In February 2018, the FCA fined Provident almost £2m and ordered it to repay £169m interest charges back to customers.

The compensation covered charges from June 2003 to 31 March 2014 paid by 1.2 million of its 1.7 million customers.

In December 2017 the FCA launched another investigation into Provident's car loan company Moneybarn to examine affordability assessments for car finance and the treatment of consumers in financial difficulties.

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.

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