Having over 2.7 million people across the UK and Ireland use our home credit and credit card products means that being a responsible lender is our most important corporate responsibility.
Provident Financial is a financial services group specialising in the provision of personal credit products for consumers in the UK non-standard lending market.
The customers we serve
Typically, our customers are hardworking people living on modest incomes. They borrow relatively small amounts, but it is a big commitment. They need it to be easy to make repayments and they like the flexibility to adjust those payments if their circumstances change.
- are looking for reliability, control, flexibility and certainty
- have modest incomes and are more likely to face financial uncertainties
- are often overlooked by high street banks and mainstream lenders
- have complex, changeable financial and social situations.
Home credit customers are not always the main breadwinners, but they often control the household budget. Just under half of our customers (49%) are in receipt of non-universal benefits. Home credit customers value the discipline of the weekly visit and appreciate having flexibility on repayments.
Vanquis Bank customers use their credit cards in a similar way to users of mainstream cards; on the high street and for internet shopping. Growth in online shopping and changes in merchants’ payment policies have made everyday tasks increasingly difficult without a payment card. The card therefore has a high utility value and offers useful additional consumer protection–it is often the only credit card they have.
We provide tailored credit products to 2.7 million non-standard borrowers in the UK and Ireland. Our home credit business has been providing small loans, issued in the home and collected weekly, since 1880. Vanquis Bank issues credit cards to people often excluded by mainstream card issuers and also provides competitive retail deposit accounts for savers.
Our home credit products have the following characteristics, which differentiate us from other forms of credit:
- Weekly home visit –the weekly agent visit to the customers’ home enables them to collect re-payments and meet any future credit needs. This is an invaluable part of the home credit service. The routine of the visits helps encourage our customers with their repayments.
- Small-sum credit–our customers’ credit needs are restricted because their family income can be limited. With home credit, our customers can borrow only the few hundred pounds they need.
- Amount to repay is fixed–being on a low income, it is particularly important to our customers that the total amount they agree to repay never rises. Even if they miss some repayments, there are no extra charges whatsoever.
- Credit history–some of our customers have, in the past, had problems with credit, which means they have an imperfect credit history. Despite this, we are able to lend to them where others may not be able to.
Our Vanquis Bank credit card has the following characteristics, which differentiates us from other credit card providers:
- Sensible credit limits–our customers appreciate the relatively low credit limit Vanquis Bank allows them; it helps them to keep in control of their finances. A credit limit of under £1,000 means that they don’t over-extend themselves and the monthly payments are manageable.
- High level of contact–as busy people, our customers like the high level of telephone contact Vanquis Bank maintains with them and the texts they receive to remind them to make repayments.
- Part of modern life–the Vanquis Bank card enables customers to participate more fully in modern-day life by taking advantage of bargains on the Internet and getting valuable consumer protection when they use their cards.
- Rebuilding a credit history–some of our customers have had credit problems in the past but are now over them. Therefore, they appreciate the fact that Vanquis Bank are more interested in their current circumstances and are prepared to help them rebuild a good credit profile.
The typical APR of our products is as follows:
- PPC or GPC loan–399.7%
- Vanquis Bank credit card–39.9%
What do we mean by responsible lending?
For Provident, responsible lending is about continuing to deliver products that meet the needs of our customers, whilst ensuring that we do not lend in a way that they cannot afford to repay. We do this by offering simple and transparent financial products delivered through a friendly, personal and flexible service.
Both our operating businesses have rigorous processes and systems in place that underpin the lending decisions that they make. This ensures that we issue credit to new and existing customers at the right time and for the right amount. We maintain high levels of contact with our customers through face-to-face meetings or telephone contact. This means we can discuss any difficulties or queries that they may have at an early stage and agree a course of action to resolve them.
The role played by the agent
The self-employed agents play an important role in the home credit business model and are integral in our approach to responsible lending. A network of 9,500 self-employed agents advance credit and collect payments in the communities in which they serve.
Through the home visits, agents develop an intimate knowledge of their customers’ circumstances, which informs their lending decisions. This is good for the customer and also allows the business to closely manage impairment.
The agent’s regular visit also acts as a useful reminder to put the money aside for the repayment. If customers get into difficulty, they know they’ll get a sympathetic response from their agent.
The home credit agent’s weekly routine
Agents typically collect payments two to four days per week (Friday and Monday are the most popular days).
Collections are ‘paid-in’ on either Tuesday or Wednesday. This enables reconciliation and compliance checks to be carried out, and customer payment data to be collected.
Wednesday is processing day, when all customer behavioural score data is updated and refreshed. This helps inform discussions at the agent’s weekly interview with a development manager on Thursday so that agents can plan the next week’s activity.
Development managers provide support to between 8 and 10 agents on a range of issues including products, arrears activities, compliance and agency development. Daily performance data, at the individual agency level, is produced at 11am each day, which helps us to manage the business on a day-to-day basis.
Maintaining high levels of customer satisfaction
The success of our business depends on ensuring that we provide our customers with an excellent product proposition and service. As such, both our businesses are committed to continuing to earn extremely high levels of customer satisfaction for the products and services they deliver.
We measure our performance against this KPI by conducting regular surveys with our customers to determine rates of satisfaction among customers. 92% and 89%, the percentage of customers who are satisfied with the service they have been given by our home credit business and Vanquis Bank respectively.
Supporting money advice and research
Our approach to responsible lending also involves working with and supporting a wide range of free and voluntary money advice organisations to help consumers who may have problems repaying their debts to us and others. These include: Advice UK, Citizens Advice, Institute of Money Advisers, Money Advice Liaison Group, Money Advice Scotland, Money Advice Trust, National Debtline and StepChange.
We also continue to support publicly available, independent research to help understand the financial behaviour of those on modest incomes and increase the quality and availability of free, independent money advice in the UK. For example, we supported research undertaken by the Social Market Foundation which led to the publication of the report ‘Sink or Swim? The impact of Universal Credit’ in September 2012. This research explored whether low income families were coping with the current financial squeeze and to understand to what extent potential recipients of Universal Credit would be able to adapt their current budgeting and money management techniques to align with the reforms to the benefits system. This publication can be found at the following link: www.smf.co.uk
The relationships we develop with our customers, and the outstanding service we provide, are central to our success and help make our business sustainable.