Provident Financial - Corporate Responsibility Report:

The role of the agent

The personal, face to face nature of our collection system marks us out from other lenders and is part of the unique service that home credit customers value.

Our licence to trade depends on the way we conduct ourselves in the communities in which we operate. We therefore attach great importance to the role of the agent, the need for fair lending practices and making sure our staff and agents behave in an ethical manner.

We have 11,755 agents in the UK and 23,840 overseas. In the UK, our agents visit one in 25 of the nation’s homes, delivering small, unsecured loans, collecting payments every week and responding to requests for further loans. The personal, face to face nature of our collection system marks us out from other lenders and is part of the unique service that home credit customers value. In most cases, agents live within the communities they serve and develop understanding relationships with their customers. This in turn creates loyalty and enables the agent to respond sympathetically to the financial circumstances and challenges of each customer.

How are agents selected?

Agents are carefully selected through three main channels. Those who wish to be made aware of agent vacancies within their communities are contacted directly. Others – the majority – come to us as former customers. We also have a large number of agents who were originally recommended by other agents or who have responded to adverts in the local media.

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How are agents supported?

We have a rigorous support programme for new agents. This ensures that agents lend responsibly and also provides extensive guidance on personal safety. We also inform agents and prospective agents of our expectations in terms of CR and reinforce the message with regular reviews and a structured communications programme. The agent manual, for example, includes opportunities for taking part in community support programmes and offers practical advice on environmental stewardship.

How do agents lend?

Agents are given a great deal of support and guidance on how to determine what is an appropriate amount of credit to lend to a customer. Existing customers are classed according to their level of risk or vulnerability and some cases require a second level of authorisation. Agents are not permitted to provide additional loans to customers within their first six months, until a payment history has been established. In this way, we ensure we lend the right amount at the right time and avoid overburdening customers who may have a problem.

We have clear guidelines for determining a customer’s level of risk. This includes a Customer Details Form completed against a comprehensive checklist. In some cases we also request proof of income. Agents are informed to be particularly careful when lending to potentially vulnerable customers such as pensioners. These are referred to development managers, specially trained in assessing their suitability for a home credit loan.

A major benefit of home credit is that there are no financial surprises. Every pound repaid is a pound off the total, so the loan can never increase. Even so, it’s important that our customers do not over-commit themselves. Each one is given a full explanation of all charges and repayment requirements before credit is issued.

How are agents incentivised?

Commission paid to agents is based on what they collect, not on what they lend, so they have no incentive whatsoever to lend more than a customer can afford to repay.

Our managers’ bonuses are also based, not just on revenue, but also on the number of good customers and low levels of bad debt/impairment.

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