Category Archives: News

Ireland Cost of Living 14% Higher Than UK According to Recent Study

A new study has revealed that Irish people pay 14% more than UK residents for rent and clothes causing consumers to suffer more. Irish consumers are paying more for groceries, rent, fashion and cars among many other household goods and services according to a Provident Personal Credit study.

This is despite the small difference in wages between Irish people and their neighbours. The average wage in Ireland is £1,920.51 which is £107 more than in the UK. This slightly higher wage isn’t enough to cater for a higher cost of goods and services.

Key concerns: Rent, Fashion, Cars, and Fuel

Rent is a massive problem in Ireland given Irish people pay 51 to 53 percent more than their counterparts in the UK. The ever-rising cost of rent has caused many Irish residents into homeless shelters as the Irish government comes under immense pressure to provide a solution to the problem.

Although London is considered one of the most expensive places to live in the UK, Ireland is more expensive, and the costs extend to clothing as well. Fashion lovers in Ireland also have to pay more for clothes than their UK counterparts.

A pair of jeans costs £64.80 which is £8.40 more than the cost of a similar pair in the UK. Shoes aren’t cheap either with a pair of mid-range Nike running shoes costing £68.52 which is £8.56 more than the cost of the same type of shoes in the United Kingdom.

Even cars are more expensive in Ireland. A Volkswagen Golf (e.41) costs £18,000 in the UK while Irish residents have to pay £21,000 for the same car. What’s more interesting is; the cost of maintaining cars is the same whether you live in the UK or Ireland. Fuel is more expensive although the difference is small. The average cost of petrol in Ireland is £1.18 per litre which is about the same in the UK.

Consumer Association of Ireland (CAI) sentiments

According to the C.E.O of the CAI, Dermot Jewell, the price differences between essential goods is depressing. Jewell states it is difficult to comprehend why Ireland is still paying way above the odds compared to its nearest neighbour. He states that there are other players in the market yet the Irish people keep paying more for essentials. Jewell blames overseas players for their refusal to break down and offer price structure analysis and the reasons justifying charging Ireland residents so much more.

Coping with a high cost of living

When essentials become expensive, it is easy to plunge into debt. Many people in Ireland are already dependent on payday loans among other types of short- term loans for survival. Here are useful tips to help you reduce over-dependence on payday loans, overdraft loans, credit card loans, etc.

• Buy in bulk: You can enjoy huge discounts if you buy household goods in bulk. Although you need a considerable amount of money to do this in the beginning, it is possible to shield yourself from high prices when you buy things like clothes and household goods in bulk. This tip can also work for fuel.

• Compare prices: You’ll also need to do a bit more research before buying anything. Although the cost of living in Ireland is high, it is still possible to find stores which have better prices than others. It might be a bit more work on your side, however, this tip can save you thousands of pounds yearly. Furthermore, it is easier to compare prices today considering most companies have an online presence and almost everything can be bought online. You just need to go online and compare the prices of clothes in the most popular clothing stores in Ireland to get a good discount.

• Consider savings over loans: It is always cheaper and more convenient to use your savings instead of taking a payday loan or other short term loans. If you haven’t set up a savings account, do so immediately. Over-reliance on debt can make life unbearable especially when you are living in a place like Ireland with a skyrocketing cost of living.

• Consider home ownership over renting: When the cost of renting a home is too high, it is advisable to think of becoming a homeowner. There are many home- ownership programs in Ireland including rent-to-own that make the cost of rent more bearable since your payments go into owning the home.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Fresh Calls for Tighter Lender Regulation as Credit Costs Rise

UK borrowers are paying way more than expected for personal loans as the difference between the actual and advertised rates rises. Leading lenders in the UK are currently advertising fixed rates on typical loans at 2.8 to 4.9%, but in reality, borrowers are paying an average APR of 7.3%. This translates to approximately £204 million more every year according to the Centre for Economic & Business Research (CEBR) which discovered that these representative rates have been unrepresentative for years (since 2011).

Critics of this practice have boosted their calls for tighter legislation over marketing using these misleading rates after a survey discovered over 80% of applicants trust the advertised rate. According to current rules, at least 51% of borrowers must be offered a rate for it to be advertised. Considering personal borrowing amounts to more than £209 billion (compared to £196 billion same time last year), UK borrowers are feeling increasingly dissatisfied, mislead and confused according to industry commentators.

Shawbrook Bank, which co-authored the report, warns that this lack of transparency makes it impossible for borrowers to make informed decisions on affordability from the onset of the loan application process. Lack of transparency has in fact contributed to many people taking larger loans than they would otherwise take if they knew the actual rate initially.

In fact, this tendency can be linked to increased cases of defaults according to the CEBR research. Since the first quarter of 2016, lenders have recorded a rise in default rates for unsecured consumer loans in a record 8 out of the last 9 quarters. This clearly shows the importance of giving borrowers accurate information before they apply for loans. The research has come out immediately after the regulator reviewed the UK’s high-cost credit market last week.

There are millions of Britons depending on doorstep lenders, overdrafts, payday loans, catalogues, hire-purchase as well as rent-to-own agreements among many other forms of short-term loans in the UK. The FCA is expected to take tough action on lenders found culpable of misleading borrowers and charging high interest rates on a variety of financial products including overdrafts used by approximately 19 million Britons.

The proposals which include capping the total cost of hire purchase products and banning overdraft fees will be subject to consultation for some time. If implemented, the proposals could save UK consumers approximately £200 million every year.

According to Rachel Springall, a finance specialist at moneyfacts.co.uk, the FCA’s proposals to deal with lenders overcharging customers for loan products like overdrafts is welcome since the move would see borrowers enjoy savings amounting to £140 million per year.

Springall acknowledges that many banks have adjusted overdraft structures over the years by abolishing interest charges and introducing flat fees. Although the move has made it easier for customers to calculate charges, flat fees have turned out to be more expensive than interest on an overdrawn balance. The average usage fee for arranged overdrafts has increased to £6.75 (from £4.69) five years ago.

For instance, customers who had overdrawn £300 for two weeks on a Santander Everyday current account would have to pay £14 as charges (£1 every day). However, the same customer with a first direct 1st account would pay £0.33 only in fees based on a 15.9% EAR.

According to Springall, the complex process of comparing deals tends to put some customers off making it hard to make overdraft fees fairer. So, customers who feel they are getting bad deals should shop around for the best short-term loan deals without forgetting about their long-term borrowing needs.

However, some critics argue that the FCA needs to do much more considering StepChange Debt Charity statistics show a record 1.4 million British households used high-cost credit to pay for essential goods last year.

According to the head of Which? Money, Gareth Shaw, unarranged overdraft charges tend to spiral up to seven times more in charges compared to payday loans making it wrong for the regulator to continue delaying action.

Shaw continues to stress on the fact that the FCA expressed concerns on the way overdrafts work last summer but is yet to take action one year later. Shaw states that the government must intervene to make sure unarranged overdraft fees are matched with fees charged on arranged overdrafts. This should take place since many people are suffering because of these rip-off fees yet the FCA continues to delay action.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Sham UK Payday Loan Companies Con Vulnerable Borrowers £3.5 m Yearly

UK watchdogs have launched an investigation involving over 200 lenders in an effort to nab a large network of fraudsters that has been targeting vulnerable borrowers in the UK.

One such borrower, Peter Elliot aged 75 was conned £200 as he tried to hunt for a £1000 loan to go for a Christmas trip.

According to a Sunday People investigation, bogus payday loan companies in the UK are targeting the elderly and vulnerable conning them approximately £3.5 Million a Year.

According to the probe, the conmen offer short-term loans to old and desperate people but demand upfront payment (to act as insurance) before issuing the loan. The cons simply pocket the upfront payment without issuing any loan leaving their victims hundreds of pounds poorer. They have concealed addresses hosted abroad and bearing details cloned from respectable institutions operating in the UK.

One popular scam involves asking unsuspecting victims to purchase iTunes vouchers and send the redemption code as insurance.

Peter Elliot was a victim of the iTunes Voucher scam. The scammers promised him a £1000 loan if he bought a £200 iTunes voucher as insurance for the loan. The crooks use the voucher codes to purchase goods or sell the codes online. Peter Elliot, a dad of six, was targeted as he was looking for a short-term loan to go and visit friends during Christmas.

He handed over iTunes vouchers worth over £200 but got nothing in return. The retiree from Mexborough, Doncaster couldn’t believe he had been scammed. The scammers were so friendly and charming he couldn’t believe they conned people. Elliot admitted to feeling stupid after he was conned and blames it on being vulnerable.

In April 2018, the FCA issued an alert on loan fraud stating unsuspecting borrowers were falling for fee scams amounting to £3.5million per year. The regulator claimed incidences of fraud had increased by 44% since 2016. In 2017 alone, there were more than 4,700 loan fee swindles reported to Action Fraud.

227 enquires have been launched to investigate fraudulent lenders since 2015. According to an Action Fraud spokesman, any person required to pay upfront fees to access loans or credit services is at risk of falling prey to loan fee fraudsters. Research shows that loan fee scammers target financially vulnerable individuals who are desperate to get loans.

Research also shows that most loan fee fraud victims are 38 and above with low incomes, low credit ratings and limited access to typical credit.

Action Fraud assesses all loan fee fraud reports received and in most cases, takes action against entities breaching the watchdog’s rules.

Precautions to take

According to Resolver.co.uk expert, Martyn James, scammers emerge everywhere when money is tight. According to Martyn James, it is easier to con a person who is desperate for money because they are willing to do more.

James advices borrowers to sick to FCA regulated firms since it is easy to launch a complaint via the financial ombudsman if the regulated firm you are dealing with fails to keep their end of the deal. It is crucial to note that there are some FCA-regulated financial services firms which ask for upfront fees (approximately £50) before offering credit broking facilities. So, not all firms which ask for upfront fees are fraudulent. It is up to a borrower to choose the firm they want to deal with although; it is advisable to avoid paying upfront fees.

In case you find yourself a victim of loan fee scams, you should act immediately. If you have transferred money via your bank, call your bank immediately and request for a recall of the funds. If you have already bought vouchers, contact the firm which supplies the voucher immediately and request that the code is suspended or cancelled and claim a refund. If the firm refuses to cancel the code, launch a complaint against the firm immediately.

Loan related fraud must be acted upon immediately if you wish to get a favourable outcome. Even if you have already been conned, the least you can do is launch a complaint. Notifying the relevant authority can save someone else from a similar fraudulent scheme. It can also help apprehend the fraudsters. It is not advisable to accept and move on although most victims of fraud don’t report to avoid embarrassment.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

FCA Warning: Senseless Housing Policy Fueling High-cost Credit Rip-off

FCA boss Andrew Bailey has called out ministers for “forcing” tenants to take costly loans. According to Bailey, the social housing policy offering tenants unfurnished council homes has pushed many Brits to take high-cost loans. Bailey doesn’t see sense in offering tenants homes with no essential furnishing.

In a recent speech, The FCA Chief Executive hinted that social housing was driving tenants to take expensive debt to buy washing machines, cookers, and other household goods at three to four times the actual cost of the goods. Bailey doesn’t see sense in creating a good social housing system without providing essential fittings and furnishings. He also hinted that the FCA might fail to extend the payday loan cap to cover rent-to-own goods and doorstep lenders.

As an alternative, Bailey stated that the FCA was examining a wide range of approaches to dealing with the harm experienced by borrowers using these products. The FCA will elaborate on its views in June 2018. Bailey insists that the regulator will not necessarily use the same approaches to regulate different markets. In his speech, Bailey affirmed that the FCA is aware of the problems facing Britain’s poorest households depending on rent-to-own firms like PerfectHome and BrightHouse.

PerfectHomes is among the rent-to-own firms guilty of charging Britons exorbitant interest fees for household goods.

Brits who use high-cost credit pay more than twice the loan amount in interest and additional costs like insurance. In some cases, the cost can be five times the loan amount according to investigations by UK newspaper, The Sun.

These findings have prompted The Sun to launch a campaign meant to stop credit rip-off. The Sun is pushing for payday loan regulation to be extended to other high-cost loans. The payday loan cap has proved to be very effective according to Citizens Advice statistics which show a 50% reduction in problematic payday loans.

The FCA seems to be shifting focus on public awareness rather than cap policies given Mr. Bailey commented on the need for charities to focus on educating the public on the options available for borrowers struggling to get by.

In an interview with The Sun, Citizens Advice C.E.O., Gillian Guy stated that the FCA needs to do more to protect vulnerable Brits from falling into debt. According to her, giving vulnerable borrowers alternative credit options doesn’t help everyone or replace the urgent need for more borrower protections especially for doorstep and rent-to-own loan customers.

Landlords should be part of the solution

Sara Williams from popular money blog, Debt Camel, believes landlords can contribute to the solution by offering tenants a chance to purchase some household goods like washing machines at discounted prices or with affordable repayments. Williams recognises the possibility of doorstep and rent-to-own loans becoming difficult to manage in cases of defaults which is why she stresses on the importance of the FCA stepping in to cap total repayments when borrowers face repayment problems.

Williams insists on the need for the regulator to give lenders better guidelines i.e., on affordability to ensure those who get loans are capable of repaying them.

The C.E.O. of Joseph Rowntree Foundations, Campbell Robb shares similar sentiments. Robb sees it as unethical for low-income earners to be exploited by high-cost lenders stating that this is how people are trapped in poverty. He sees the need for more to be done to make affordable credit accessible given the UK has experienced long periods of low wages, frozen benefits and rising prices, factors which are landing many into poverty.

The Sun campaign

The Sun is demanding an end to credit rip-off. The newspaper’s demands for rent-to-own credit include; repayable costs to be capped to twice the item list prices. The Sun is also calling for a ban on sales staff incentives and discounts for existing clients to discourage them from taking more credit. Credit companies should also publish examples highlighting all costs.

For doorstep lending, The Sun wants stricter affordability checks and a cap on total fees and interest paid to match the payday loan cap, i.e., cost of loan should never exceed the amount borrowed. The Sun is also calling for a ban on discounts offered to existing doorstep loan borrowers in an attempt to lure them to take more credit.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Ministers Set Aside £800,000 for Hunting Down Illegal Loan Sharks

UK Ministers have pumped £800,000 into efforts aimed at cracking down on illegal loan sharks out to exploit the most vulnerable borrowers. Rogue lenders capitalising on desperate borrowers are going to face a fresh stringent crackdown. £100,000 of the money set aside was seized from dodgy firms. The £800k will be spent on efforts aimed at encouraging vulnerable borrowers to join credit unions instead of considering high-cost credit options.

A record £5.6 million will be availed to Illegal Money Lending Teams in the UK to fight unscrupulous lenders who target poor and desperate borrowers. The money is meant to help troubled borrowers get out of debt and stay away from lenders offering loans at ridiculously high interest rates.

An estimated 300,000 British households are indebted to illegal lenders. According to Treasury’s Economic Secretary, John Glen, “high-interest lenders are lowlife crooks who take advantage of the most vulnerable. The 300,000 Britons indebted to these illegal lenders must know we are on their side. This is why we are spending more to support the victims and fight the loan sharks.”

The news has been received positively by many including The Sun which already has a campaign pushing for a ceiling on the total cost of high-cost credit offered via rent-to-own products and doorstep loans.

In 2017, 7 million British households used high-cost credit like doorstep loans and rent-to-own products. Ministers have called on an extension of the payday loans cap to many other types of high-cost credit including credit cards.

Stella Creasy has been on record accusing high-cost lenders of “preying” on Britons who survive on insecure incomes. In a recent statement, she pleaded with ministers to borrow from the payday loan cap lessons and apply a similar cap to other loan products stating that Britain is drowning in debt.

The latest statistics indicate that there have been 380 prosecutions against illegal lenders since the IMLT (Illegal Money Lending Teams) was formed in 2004. The IMLT has written off 73 million pounds of illegal debt saving 28,000 poor borrowers from the jaws of loan sharks.

According to Peter Tutton, StepChange Debt Charity’s Head of Policy, the move by the ministers is welcome. In a recent statement, Tutton stated that the crackdown on illegal loan sharks needs to extend to the entire high-cost credit market to ease the harm experienced by many British households forced to take loans to survive. While reacting to the new efforts aimed at boosting the IMLT’s mandate, Tutton stated it is time for the UK government to seek creative and sustainable alternatives to help vulnerable households.

Why is it important to stop loan/credit rip-off

According to The Sun, no borrower should be forced to pay twice as much as they borrowed or more regardless of the type of loan product they are taking. Paying interest that is equal or more than the borrower amount is unethical in any standard.

This thinking is what inspired UK newspaper The Sun to launch a campaign pushing for a cap on the cost of doorstep loans and rent-to-own loans. The Sun is calling for a cap similar to that set on payday loans in 2015 where the total cost of loans can never exceed the loan amount.

Since the payday loan cap came into effect in the UK, the number of payday loan borrowers with unmanageable payday loan debt has decreased by over 50% according to  Citizens Advice which offers free, independent and confidential financial advice to anyone in need.

People earning the lowest incomes and living in the most poverty-stricken places are paying the steepest price for loans. Doorstep and rent-to-own loan lenders target individuals whose income isn’t enough to cover all the basic monthly household expenses. These high-cost loans are extended to individuals who have problems paying for utility bills and rent among other essential bills. The loans are also extended to borrowers who want to buy household goods like furniture.

Although the loans seem helpful, they attract exorbitant interest rates amounting to 1,500% in some cases. It is scandalous for anyone to have to borrow money for subsistence and then be forced to pay three times the loan amount.

With the IMLT funded, there is enough momentum to deal with all high-cost lenders in the UK conclusively.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Asda Shelves Controversial £99 Petrol Deposit

Supermarket chain Asda has shelved its controversial petrol deposit trial rolled out in three supermarkets in the UK. The move followed adverse news headlines in the recent past. Disgruntled customers have been voicing their displeasure for being charged £99 more after filling up using the supermarket’s pay-at-the- pump system. The system had been allowing Asda customers to pay for fuel upfront using their card without going into the kiosk.

According to BBC reports, Asda claims the £99 deposit was meant to be a holding charge to make sure customers have enough funds to pay for fuel. The scheme has now been suspended. Asda claims they just wanted to do what was best for their customers.

What went wrong?

The Asda petrol deposit was designed to help customers avoid overdraft facilities when paying for fuel in case a customer paid for fuel using their card, and they didn’t necessarily have funds available in the card. Although the trial deposit was designed to do good, it has faced widespread criticism from customers who were forced to pay the £99 deposit over and above the fuel purchased without any warning.

The trial deposit which was meant to be cancelled when the right fuel amount was paid faced serious delays because of coordination challenges between Visa, MasterCard and consumer banks. The challenges left many Asda customers short of £99 temporarily.

According to a statement released by Asda, MasterCard and Visa intended to make sure Asda customers had enough funds in their card to pay for fuel and the £99 deposit would be refunded immediately to the customers through their bank.

Asda admitted to receiving few complaints about the process but went ahead to suspend the change sighting risks associated with harming their customer’s trust in them. Until the British retailer is given assurances that all banks will comply with the MasterCard and Visa rule change, it can’t continue with the petrol deposit trial.

High profile complaints

Asda may have received a few complaints, however; most were shared on social media (Facebook) and reported by mainstream media. One notable complaint was by Asda customer Jade Louise who blasted at the company furiously for being charged £99 after buying petrol worth £5 at an Asda located in Dewsbury, West Yorkshire. According to her complaint, her trial deposit was refunded three days later causing here huge inconveniences. Her complaint, which was in the form of a Facebook post, was shared more than 20,000 times. She attached her bank statement (a screenshot) to back up her claims and a post urging people not to fuel at Asda unless they are willing to wait for days without £99.

Part of her complaint blamed Asda for bringing a new system that allows the retailer to deduct £99 from a customer’s account for fuel as well as a second deduction for the fuel you have actually taken. According to Louise, she had tried contacting Asda and received unsatisfactory feedback from a manager who stated that the deduction was a trial. Louise among many other complainants expressed displeasure at the fact that £99 is deducted from your account and you can’t use the money for days until it is released back after the other payment is cleared. Most complaints were on execution.

Customers felt Asda could have communicated better using notices on petrol pumps to ensure customers were aware of the change in policy before facing a huge £99 pre-authorisation charge which wasn’t refunded in minutes.

Change in the rules

According to MasterCard correspondence with BBC, there had been a recent change in industry regulations in 2017 that required automated fuel pumps to pre- authorise a value matching the cost of a full tank of petrol. Before the change, motorists were only charged a £1 pre-authorisation from their accounts as a

confirmation that they were using a valid card. The new rules were meant to ensure customer didn’t fill up more fuel than they could afford which would usually result in overdraft charges.

The controversial £99 petrol deposit trial comes in the wake of an anticipated increase in fuel prices globally as the United States decided to withdraw from the Iran nuclear deal. There is a looming increase in pump prices in the next few weeks.

There is also increasing concern about short term debt like overdraft loans in the UK.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

New Bill Banning Letting Fees Presented in Parliament

A new bill which could mark the end of letting fees in England has been presented in the House of Commons.

Letting fees are separate from tenancy. The fees are charged by property managers or letting agents who conduct viewing and additional work related to letting property out. Letting fees are not refundable.

Besides bringing an end to the letting fees era, the bill also aims to cap tenant deposits to be equal or less than 6 week’s rent. Tenants stand to be protected from hefty deposits spanning months.

If passed, the bill could see tenants enjoy more than £240 million every year in savings. The Tenant Fees Bill was first mentioned in 2016. The draft was published in November 2017.

Holding deposits will also be capped at a maximum of one week’s rent.

Besides banning letting fees among other fees like referencing and admin costs and restricting the number of deposits tenants are supposed to pay, if passed, the bill will also;

Limit holding deposits to less than a week’s rent, and requirements must specify how the deposits are returned to tenants.

The bill will also cap the amount tenants are charged for a change in tenancy. Cap to £50 unless the landlord proves more costs were incurred.

The bill has also imposed a £5,000 fine for breaching the ban for the first time alongside a criminal offence if the person has been convicted or fined again for the same offence in the past 5 years. A maximum fine of £30,000 can be charged instead of prosecution.

The bill will also prevent landlords from repossessing their property through the Housing Act 1988, Section 21 until all unlawfully charged fees are paid back.

The proposed bill also amends sections of the 2015 Consumer Rights Act. The amendments will require letting agents meet specific transparency requirements in relation to property portals like Zoopla and Rightmove.

The bill will also see Trading Standards enforcing the ban and making provisions for tenants to recover fees charged unlawfully.

Lastly, the bill will also see money collected as penalties kept by local authorities and spent on local housing enforcement in the future.

The new measures will be subject to parliament’s timetables. If passed, the new rules will become law in 2019.

The new bill also specifies that, besides rent and deposits, agents and landlords will only have authority to charge their tenants fees related to; changes in tenancy or early termination requested by a tenant, utilities, communication services, council tax or any payments arising because of a tenant (like the costs associated with repairing damaged keys or replacing lost keys).

While commenting on the new bill, Housing Secretary Hon. James Brokenshire stated that the UK government is committed to building a housing market that is capable of meeting future needs. According to the legislator, tenants in the UK must be protected from unexpected costs which is why the government is delivering its promise to get rid of letting fees as well as put in many other measures for making renting more transparent and fair.

For many years, wages in the UK have failed to match inflation rates. The price of goods/services has been rising faster than wages. The growth in wages has been too slow despite widespread hopes that changes like Brexit would see the UK experience unprecedented growth.

Britain is also facing a debt crisis with recent reports showing that an estimated 300,000 British households are indebted to illegal lenders. There is an increase in illegal loan sharks “preying” on desperate Brits who survive on short term loans to counter the slow growth in wages.

In fact, the UK government has increased IMLT funding to help crackdown rogue high-cost lenders. The new bill is in line with the government’s effort to protect vulnerable citizens who are forced to rely on high-cost credit every month to pay for basic needs like utility bills and rent.

The FCA put a limit on the cost of payday loans in 2015, a move which saw unsustainable payday loan debt decrease by 50%. Consumer groups are pushing for the same cap to be implemented on other high-cost loans like door-to-door loans. As the UK government continues to introduce legislation to protect UK consumers, there is a lot of hope in the future even if wages don’t increase immediately.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Provident Financial Breaks Gloom, Reports Strong Start to 2018

According to a trading update by Provident Financial, all the lender’s businesses are performing well. The update has put an end to the doorstep lender’s recent problems. The Bradford-based lender offers high-cost loans to some of the most vulnerable families in Britain. Reports of a strong start have put an end to recent financial woes.

According to the trading update, all three businesses of the group have started 2018 on a positive note. This announcement comes after Provident Financial tapped £300 million of fresh investment funding. The lender had failed to reorganise its debt collection business and announced two profit warnings in the recent past. Provident Financial had also had a challenging year for shareholders before making the positive announcement.

In August 2017, the then C.E.O. Peter Crook resigned after the lender announced a 2nd profit warning in a span of two months. The second profit warning was triggered by a decision to overhaul home-collection business by hiring 2,500 customer experience managers to replace self-employed debt collectors. In the wake of the news, there was a massive exit of self-employed agents that happened faster than Provident Financial had envisioned resulting in poor debt collection rates.

The lender also faced a massive fine of £2m and compensation amounting to £169 million in February 2018 paid to its Vanquish Bank Unit consumers after the FCA found the lender guilty of malpractice. The regulator discovered that Provident hadn’t informed its customers accordingly about the total cost of add-on product, Repayment Option Plan.

The FCA is also investigating Provident’s car finance business Moneybarn. The regulator is concerned on how the lender has been evaluating potential car buyers before issuing loans. Although Provident Financial’s debt collection business is still making losses, the business is set to become profitable in 2019.

The trading update also covered the level of debt collection after Christmas which happens to be the busiest and most profitable period for high-cost lenders. Provident Financial debt collection arm enjoyed considerable business during this period adding that Vanquis Bank had been delivering profits beyond

expectations and although Moneybarn business was affected by bad debts, the performance was modestly beyond expectations with customer numbers higher by 24% compared to the same period last year.

The improvement was experienced despite the lender tightening the criteria for choosing suitable borrowers. In remarks made to mark an end to the first quarter, Provident Financial C.E.O. Malcolm Le May stated that the financial and operational performance of Provident Financial is promising and the lender is on track to post 2018 results that match internal plans.

About Provident Financial: Brief overview

Provident Financial is a sub-prime lender or “doorstep lender” in the UK. The company specialises in home collected credit, online loans, credit cards and consumer car finance. The company is listed on the LSE.

Provident Financial conducts business under different brands. Vanquis does credit card business. Provident Personal Credit is a home credit operations company while Satsuma offers online instalment loans. Other brands include Moneybarn for car finance business and Glo for guarantor loans. Provident Financial’s home credit brand Provident Personal Credit lends to individuals in their homes via local agents. The company serves over a million home credit customers.

Provident Financial was established in 1880 to offer cheap credit to residents of West Yorkshire. The lender was listed on the LSE in 1962. The company formed Vanquis Bank in 2002 to issue/operate credit cards. Vanquis focuses on pre-paid credit card business. In 2013, Provident Financial started its online short-term loan business Satsuma Loans before acquiring Moneybarn a year later. The Moneybarn acquisition was meant to give the lender exposure to automobile finance business.

Provident Financial has had a fair share of challenges ranging from fines to reprimands for questionable lending practices to breaching regulatory requirements. The lender’s stock has dropped by over 60% in a single day (22nd August 2017) after issuing a 2nd profit warning, events which saw the resignation of the then C.E.O., cancelation of shareholder dividend, a warning alluding to the cancellation of the full-year dividend in 2017 and announcement of an ongoing investigation by the FCA.

The latest trading update signalling the end of the lender’s financial woes is a “breath of fresh air”. If Provident Financial manages to maintain the current momentum, the lender may be able to reclaim long-lost glory.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.