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In a year which has seen the wider financial services sector experience continued turbulence and uncertainty, corporate responsibility (CR) remains a fundamental part of our business strategy and will play a key role in our long-term success. By ensuring that we continue to manage material, environmental and societal impacts, we will be able to demonstrate to our stakeholders that we are a responsible, well managed provider of credit operating in a sustainable manner.
Peter Crook
Chief Executive
Rob Lawson
Corporate Responsibility
Manager
Our approach to CR management has developed over the past nine years and is at the heart of our mission to be the leading non-standard lender in the UK, acting responsibly in all our relationships and playing a positive role in the communities we serve.
Through our CR programme we are able to manage effectively and understand the social, environmental and economic impacts of our operations, as well as maintain our relationships with the people that matter to the business – whether they are customers, employees, suppliers, local communities or investors.
By proactively managing our CR impacts, we are able to differentiate ourselves from other companies in our sector, secure business advantage, deliver long-term value to our shareholders, and contribute to the sustainability of our businesses.
We recognise that by conducting our business in a sustainable and socially responsible manner, we can grow the long-term value of the company. To ensure that we focus on the social, environmental and economic issues that are material to our activities, our approach to CR management is guided by the feedback we receive from both internal and external stakeholders. We do this by making regular use of employee opinion surveys, focus groups and customer satisfaction surveys, and by convening annual roundtable sessions with representatives from key stakeholder groups.
This approach has enabled us to develop a CR management strategy which is organised around six key themes: governance and management, our customers, our people, our supply chain, community involvement, and the environment. Through the ongoing management of our CR programme we are able to work towards our mission to be the leading non-standard lender in the UK and Ireland, while ensuring that we continue to deliver high levels of customer satisfaction, reduce the impact that our activities have on the environment, act responsibly in all our relationships, and play a positive role in the communities we serve. Our CR programme in turn underlines the importance of our company values of acting in a fair manner, conducting our business dealings responsibly, delivering accessible products to our customers, operating in a straightforward way and being progressive.
Comprehensive governance and management structures have been put in place across the group to ensure that CR remains a core part of our strategy. The Chief Executive has responsibility for our overall, group-wide CR programme, and chairs the group's management committee which provides oversight to the CR programme on behalf of the Provident Financial board. In addition to the Chief Executive, this committee comprises the Finance Director and Managing Director of the Consumer Credit Division, the Managing Director of Vanquis Bank, the Directors of Corporate Affairs and Corporate Strategy, and the Company Secretary and General Counsel.
During 2009, the group's management committee made significant contributions to the way that we manage our CR performance. This included approving the newest strand of our community involvement programme to ensure that employees from across our business initiate projects within the many communities we serve throughout the UK and Ireland.
In addition to the management committee, there are three key working groups which have been established to ensure that CR is a core part of our business and to address the social, environmental and economic issues that are material to our activities. The working groups, which feed into the board either directly, or via the management committee, are set out in the table below.
Throughout 2009, we continued to be represented on the main global sustainability indices and responded to requests from investors and analysts to share information on our CR programme. This is an important aspect of our approach to CR management as it provides investors and other stakeholders with demonstrable evidence of our commitment to operating our business in a responsible manner, and how we manage the social, environmental and ethical impacts that are material to our operations.
During 2009, the CR working group discussed a range of measures that could be implemented across our business to reinforce our commitment to improve workplace diversity.
“There are three working groups which have been established to ensure that CR is a core part of our business.”
During 2009, the CR working group discussed a range of measures that could be implemented across our business
“Throughout 2009, we continued to be represented on the main global sustainability indices.”
Number of years of experience serving the non-standard credit market
Year home credit business established
| Working group | Chair | Membership | Role |
|---|---|---|---|
| Responsible lending group | Chris Gillespie, Managing Director of the Consumer Credit Division and Provident Financial Executive Director. | Representatives from the Consumer Credit Division, Vanquis Bank and Provident Financial corporate office. |
|
| Corporate responsibility working groups | David Stevenson, Head of Communications, Provident Financial. | Groups have been established within both the Consumer Credit Division and Vanquis Bank and include representation from HR, procurement and communications functions. |
|
| Environmental working groups | Rob Lawson, CR Manager, Provident Financial. | Groups have been established within both the Consumer Credit Division and Vanquis Bank and include representation from facilities management, HR and IT functions. |
|
During the year we were included in the FTSE4Good index, the Dow Jones Sustainability indices for the World (DJSI World) and Europe (DJSI STOXX) and the Ethibel Pioneer and Ethibel Excellence Investment Registers. We continued to make annual submissions to the Business in the Community Corporate Responsibility Index and the Carbon Disclosure Project survey. We were also awarded a 'Prime' CR rating by Oekom research. This recognises our status as a leading organisation within our sector, and our success in meeting Oekom's sustainability criteria, which cover a range of social, ethical and environmental issues. The rating means that our shares will qualify for ecologically and socially based investment by Oekom's clients.
In addition to including information on our CR programme in our Annual Report, we remain committed to producing an annual CR report. This report enables us to provide our stakeholders with a written account of our CR performance and how it relates to our values, overall business strategy and stated objectives and targets. It also enables us to subject the management systems, processes and procedures which underpin our CR report to a process of independent assurance. During 2009, the commentary and data in our 2008 CR report was independently assured by the specialist management consultancy Corporate Citizenship. In undertaking this work, Corporate Citizenship evaluated the nature and extent of our report's adherence to the AccountAbility 1000 assurance standard principles of inclusivity, materiality and responsiveness. The report was also checked to determine whether it was aligned with the Global Reporting Initiative's G3 sustainability reporting guidelines.
Further information on our CR reports can be found at www.providentfinancial.com.
At the centre of our business and our CR programme are our customers; in particular our commitment to lend responsibly and provide products which meet their needs. In practice this means providing straightforward and clear information on our products and charges, and not lending more than our customers can afford. This allows them to make informed choices and ensure that they are not overstretched with their repayments.
With 130 years of experience in the non-standard credit market, we have acquired a huge amount of knowledge about our customers. This has enabled us to develop home-collected credit and credit card products which are tailored to meet the needs of our customers, along with high levels of personal customer service and affordable repayments.
The concept of responsible lending is built into the products and services we offer our customers. To make sure we are lending responsibly, it is imperative that we help our employees and the self-employed agent force to make the right lending decisions. The business has continued to refine and use its credit scoring systems to help decide whether to accept new customers or extend further credit to existing ones. There are two systems we use in home credit to do this: the System Enhanced Lending system and the Single View of Customer system.
The System Enhanced Lending (SEL) system is used to assess the loan applications made by existing customers on the basis of their previous payment history. Following this assessment, a credit score is assigned to the customer, which is in turn used to inform the lending decision. If an unacceptable credit score or 'do not issue' message is generated as a result of the assessment, the customer will not be offered an additional loan. The SEL system enables us to issue loans to existing or previous customers of the right size and at the right time. The SEL status for each customer is updated each week whether an application is made or not. This information is available to agents to assist them in dealing with customer requests. As well as filtering out higher credit risks, the system can also help agents to spot good payers earlier in their relationship, providing opportunities to offer more credit sooner, when that is appropriate for the customer.
The Single View of Customer (SVC) system is applied to customers that come to us directly, via our website or contact centre, or are introduced to us by agents. SVC is used to create a risk profile of new customers using a bespoke risk index scorecard. The system is used to inform lending decisions and ensures we lend customers the right amount at the right time.
In addition, all new Vanquis Bank customers undergo a credit bureau check prior to being taken on. Bureau data is then used to inform our decisions whether to accept or reject customers, and how much to advance at any particular time. Vanquis Bank also uses internal behavioural data along with external bureau data to re-score every account every month to inform credit line, price and contact decisions.
The approach to lending we have developed over the past 130 years means we are well placed to decide to whom we will lend, and to whom we will not. We currently turn down around 50% of home credit applicants and around 80% of applications to Vanquis Bank.
Our approach to collecting repayments from customers is both practical for us and helpful for them. From our experience of lending to customers in the non-standard credit market, we know that those on modest incomes have particular needs and our approach to collecting repayments addresses those needs.
The home credit business includes a weekly visit from a local agent to customers' homes to collect repayments. This weekly routine helps customers to keep their account in order and means they do not need to worry about having the money in their bank account on a particular date with the consequent danger if they do not of incurring default charges. There are occasions when our home credit customers miss repayments or make reduced repayments; they incur no extra charges whatsoever for this.
Vanquis Bank customers who sign up for our Repayment Option Plan can also choose to miss one repayment every six months. We find that allowing customers to miss occasional repayments within the terms and conditions of their credit agreement helps them remain good customers in the longer term and fits with their needs.
Vanquis Bank sets a high minimum monthly repayment level of 5% for customers with lower credit limits compared with most other credit card providers who set minimum repayments at 2% to 3%. This enables customers to stay in control of their finances. To make repayments as flexible as possible, Vanquis Bank customers can choose to make payments fortnightly or monthly and pay by a variety of means.
Our ongoing dialogue with customers means that difficulties can be identified early, discussed with the customer, and actions agreed.
“We know that those on modest incomes have particular needs and our approach to collecting repayments addresses those needs.”
By developing and delivering products and services that are tailored to meet the needs of our customers, we are able to achieve customer satisfaction rates that are consistently high. The table (below) shows overall customer satisfaction with our main services for the period 2005-2009.
| % of home credit customers very or quite satisfied with the service |
% of Vanquis Bank customers rating their overall experience as good or excellent |
|
|---|---|---|
| 2005 | 94 | n/a |
| 2006 | 93 | n/a |
| 2007 | 94 | 84 |
| 2008 | 95 | 88 |
| 2009 | 94 | 86 |
In order to continue to operate a sustainable business, Provident aims to attract, develop and retain the best people by providing a working environment that is safe, inclusive and meritocratic, and where behaviours that are aligned with our core values are recognised and rewarded. As such, we are committed to investing in the 3,700 people we employ across the UK and Ireland to help them reach their full potential and help our businesses to flourish.
Our people are at the heart of what we do as a business. It is therefore incumbent upon us to continue to train and develop them to ensure that they maximise their career potential and contribute to the long-term success of our business. We aspire to create a culture where everyone is supported, developed and encouraged at all levels and where everyone strives to achieve the highest quality standards in meeting our business objectives and their personal goals.
Throughout 2008 and 2009, both our businesses introduced a range of training and development programmes to improve the way in which training is delivered to staff and subsequently recorded.
Within the Consumer Credit Division, the career development programme is the Effective Performance Management (EPM) process. The purpose of the EPM process is to identify development opportunities to improve individual performance in line with the individual's current role, future roles and future business requirements. The process includes quarterly performance reviews and annual career reviews. These reviews are used to highlight an individual's development needs, which are in turn documented and monitored using a Personal Development Plan (PDP). PDPs are updated each time a formal review takes place, with newly identified development needs and progress reviewed against existing development needs.
Within Vanquis Bank, two different career development programmes are in place. Annual performance reviews are used for all non contact centre staff and all managers. Six-monthly performance reviews are used for all contact centre staff who are not managers. PDPs are used to complement and link to the annual performance reviews and the objective setting process. In addition, an annual process is in place to identify and support employees with high potential or who are rising stars.
Both the Consumer Credit Division and Vanquis Bank continue to use learning management systems in order to deliver a range of role-related computer-based training (CBT) courses that can be accessed by employees via our intranets. Throughout 2009, CBT courses were delivered to staff on a range of topics, including the Consumer Credit Act 2006, the 'Treating Customers Fairly' regulatory regime, the Data Protection Act, complaint handling processes, and personal safety.
During 2009, the Consumer Credit Division received accreditation from the Chartered Management Institute (CMI) to develop and deliver two courses for the leaders of tomorrow. The leadership management programme, which is for area and head office managers, meets the CMI's 'Level 3 Diploma in First Line Management' standard, and the senior leadership and management programme, which is for senior managers from across the business, meets the 'Level 5 Diploma in Leadership and Management' standard.
Provident Financial is committed to providing a working culture that is inclusive to all and ensuring that equal opportunities underpin our recruitment, employment, training and remuneration practices. Our corporate policy states that we will ensure that individuals are selected, promoted and treated on the basis of their relevant merits and abilities and that no job applicant, employee or third party acting on behalf of the company will receive less favourable treatment because of race, colour, nationality, ethnic or other national origin, gender, sexual orientation, marital status, age, disability, religion or belief.
Both the Consumer Credit Division and Vanquis Bank undertook a range of activities during 2009 to reinforce our corporate commitment to manage diversity-related issues. For example, the Consumer Credit Division developed an action plan that was approved by the divisional board to improve diversity management performance across the business. In addition, we worked with the Employers' Forum on Disability to develop an interactive line manager guide on attendance management and disability. During 2010, this guide will be made available to line managers via the learning management systems on Provident Financial's intranet sites.
In January 2009, we carried out the third employee engagement survey across the Consumer Credit Division and corporate office. The survey measured the level of engagement based on employees' willingness to 'say' (i.e. to speak positively about Provident to colleagues, potential employees and customers), 'stay' (i.e. to show desire to be part of the company) and 'strive' (i.e. to volunteer extra effort and engage in behaviour that contributes to the company's success). The overall engagement score within the Consumer Credit Division and corporate office rose to 60% compared with 42% in 2007. The feedback obtained through the engagement surveys has been used to develop a number of work streams that will be introduced across our business to improve employee engagement levels.
“Provident aims to attract, develop and retain the best people by providing a working environment that is safe, inclusive and meritocratic.”
Provident Financial's mission is to be the leading non-standard lender in the UK and Ireland, acting responsibly in all our relationships and playing a positive role in the communities we serve. With this mission statement it is imperative that we conduct our business dealings responsibly and ensure that we have a positive impact on the communities in which our customers, agents and employees live and work. Our approach to community involvement has two main strands: helping to address the education and social inclusion needs of young people who live in less privileged communities, and working with the money advice sector on issues such as financial education.
2009 was a significant year for our community involvement programme and saw the launch of a major new strand of our programme and the last year of funding for our Spark project.
For the past four years, Spark has been our flagship community involvement project. It has been an ambitious and exciting arts education project which has brought creative arts education into hundreds of classrooms in schools from disadvantaged areas of the UK and Ireland. Spark was managed throughout the UK and Ireland by the West Yorkshire Playhouse in partnership with seven other theatres in Battersea, Birmingham, Bolton, Dublin, Dundee, Edinburgh and Newport.
Between 2006 and 2009, Spark has provided more than 10,000 children and 260 teachers with opportunities to participate, learn, and develop through experiencing creative art forms in school. Developed as a partnership initiative from the outset, Spark has forged a network of sustainable community-based partnerships between commerce, schools, arts venues, artists, parents and local education authorities. It also provided employment for local professional artists and is aligned with key Government education and cultural agendas. The classroom-based workshops and integral celebration events enabled thousands of children to learn new creative arts skills, increase their confidence, and experience a sense of pride and achievement. Spark has enriched team and group working skills, respect and co-operation, speaking and listening skills, language development and creativity.
Over the last four years, we have worked closely with all our project partners to ensure that the Spark project leaves a robust legacy of improvement in the provision of arts education. It is important to us that our funding achieves a sustainable platform for development and growth. Through Spark, theatre venue partners have been able to build close working relationships with primary schools in their regions – schools that in many cases had never previously visited the theatre or had an arts education agenda. Arts centres learned what schools need, and teachers learned how creative techniques reach and inspire young children. Since Spark, many theatres and schools have continued to collaborate independently on other arts education projects.
Percentage of children who said taking part in Spark made them feel proud
Number of children who took part in Spark
Following stakeholder research that was carried out during 2008, a major new strand of our community programme called Good Neighbour was launched in 2009. It will replace Spark as Provident's flagship community programme and support our ambition to play a positive role in the communities we serve. Good Neighbour has the following three components:
Since the launch of Good Neighbour earlier this year, Provident Financial has established nine long-term projects with a range of community partners.
These include:
In addition to the above, a number of one-off projects across the country have been funded to date, including: equipment for a sensory garden at a special needs school in Ayr; an after-school project in Halifax; and a support programme in Stoke-on-Trent for families affected by drugs or alcohol.
In terms of employee matched funding and the volunteering component of Good Neighbour, 604 employees took part in 16 team challenges and other volunteering initiatives during 2009.
We support, through financial contributions and other means, a programme to provide debt advice and financial education across the UK. During 2009, we continued to work with a number of organisations in this sector, including Advice UK, Citizens Advice, Consumer Credit Counselling Service, Institute of Money Advisers, Money Advice Liaison Group, Money Advice Scotland, Money Advice Trust, and National Debtline. We also worked with the following more specialised providers: Credit Action, DebtCred, and Christians Against Poverty.
Ensuring that we purchase products and services that have minimal impacts on the environment and are socially responsible and ethical is a key component of our CR programme. In 2009, the annual procurement spend of the Provident Financial group was £87.7m, making our supply chain a significant part of our CR footprint. This means it is vital that we work to ensure our suppliers are aware of our commitments to manage the social, environmental and economic impact of our operations. Furthermore, it is important that we seek to improve the sustainability credentials of the products and services we procure for our businesses.
We remain committed to ensuring that we treat our suppliers in a fair and reasonable manner. This means paying our suppliers in accordance with their agreed terms and conditions. This is particularly important to small and medium sized enterprises (SMEs) as late payment can severely affect an SME's cash flow.
During 2008 and 2009, we started undertaking site audits to verify the compliance of suppliers with our environmental, health and safety, and data protection policies. For example, work was carried out to implement new waste management and recycling facilities within the Consumer Credit Division's network of branch offices. This involved using a CR questionnaire at the pre-qualification and invitation to tender stages to elicit social, environmental and ethical information from prospective suppliers, and undertaking visits to sites managed by a range of organisations. On the basis of the information generated by this work, we were able to select a supplier who would be able to increase our recycling rates and minimise the waste generated by our branch offices.
Employees volunteered in 2009
Long-term Good Neighbour projects started
Our values state that we will conduct our business in a responsible manner and this includes ensuring that we manage our impacts on the environment. As a business with operations spread across many towns and cities in the UK and Ireland, Provident Financial has a number of impacts on the environment. These impacts relate to a wide range of issues, including energy use and transport, water consumption, waste management, and the use of materials such as paper.
While our impacts on the environment are small compared to businesses in some other sectors, we recognise that by actively managing our environmental impacts we can contribute to the long-term sustainability of our business. This means ensuring that we identify opportunities to reduce levels of energy and resource use, and being accountable for our impact on global environmental issues such climate change.
We recognise that climate change represents one of the most significant environmental challenges facing society. To address this issue, we published our low carbon strategy in 2007 which underlines our commitment to reduce the carbon intensity of our operations. Throughout 2009, we undertook a range of activities which helped deliver our low carbon strategy. This included:
Throughout 2009, we made progress with our plans to relocate our head office to a new site in Bradford city centre. The move, which is scheduled to take place in 2010, will give us the opportunity to implement measures to reduce our impact on the environment at the design and procurement stages of this development. To this end, we will use the Building Research Establishment Environmental Assessment Methodology (BREEAM) for Offices in the development of the new offices. This methodology is the world's most widely used means of reviewing and improving the environmental performance of office buildings. Buildings are assessed and awarded credits according to their level of performance within a range of environmental categories including energy use, health and well being, transport, materials and water. The credits are then added together using a set of environmental weightings to produce a single overall score. The building is then rated as either Outstanding, Excellent, Very Good, Good or Pass. It is anticipated that Provident's new offices will achieve a rating of Very Good.
“We recognise that by actively managing our environmental impacts we can contribute to the long-term sustainability of our business.”
