The news this week that Provident Financial is to close down its doorstep lending operation has been broadly welcomed by the credit union community.
The company had been the subject of large scale and repeated compensation claims over recent years, on behalf of customers who were mis-sold loans.
Even before that, the doorstep lending model was criticized by campaigners for the eye-wateringly high interest rates and the ease with which people got into significant debt.
We know from our experience of the former Provident customers we’ve helped, that many originally took out quite small loans and made their repayments weekly in cash.
This quite informal method meant some people didn’t really understand how much they were paying back in total, and it could take years for them to realise the financial mess they were in.
But while we are glad to see the biggest doorstep lender withdraw from the market, its loss will leave many thousands of people in limbo and at risk of racking up even more debt with online Payday lenders or even turning to the thoroughly unscrupulous illegal loan sharks.
Provident’s customer base is mainly people who don’t have access to alternative credit.
They don’t have a current account with an overdraft facility and they can’t get a credit card, usually due to a poor credit history.
They didn’t have many choices beforehand, now they have even fewer.
While the ideal is for people not to get into any debt, the reality is they have as much need for cash as anyone else, to pay bills, rents, buy food and clothe their children.
There will be families who have been using the same doorstep lender for generations, who have a great relationship with their contact and rely on the service.
We are desperately hoping that those people will turn to the credit union for help rather than another high-interest lender.
We exist to help people avoid financial difficulty.
We lend responsibly, and our aim is to help people pay off their debts and sort out their finances, not to remain in debt forever.
We offer loans specifically to pay off large debts, and arrange affordable repayment plans.
We provide specific loans to help with buying school uniforms or paying for car repairs or replacement white goods for example.
We do small loans from £200 to help with Christmas and birthdays, and large loans up to £15,000 to pay off many years’ worth of debt.
We are a community focused organisation, a not-for-profit credit union, where a team of genuine, friendly and approachable loans officers really do want to help. If you are worried about the news from Provident, get in touch with any of our loans officers, Kenny, Michelle or me to see how we can help 01253 478390
Anthony Brookes, CLEVR Money Loans Manager