Provident tells former clients to use ethical lenders as rappers’ compensation scheme
Provident Financial advises former clients to use ‘affordable’ loan provider as raped over ‘arbitrary’ sell-off compensation scheme
- Provident Told Former Customers To Use Affordable Lenders And Credit Unions
- He shut down his home loan business in May after a surge in abuse requests
- The Financial Conduct Authority today struck its £ 50million compensation package
- Affordable credit provider warns borrowers about ‘predatory’ lenders
Provident Financial has written to former clients telling them to use affordable credit providers and credit unions for future borrowing as he was violated by the city watchdog today for his scheme. ‘arbitrary’ compensation for improper sales.
Around 280,000 customers in its closed-door lending arm will today receive emails directing them to the more than 250 UK credit unions and a group of nearly 50 affordable credit providers who are part of the Responsible Finance member body.
These organizations offer credit on more affordable terms than subprime lenders like Provident, give clear information about the amount of repayments, and will not lend to customers if they think they will go overboard.
Provident Financial is a personal credit provider based in Bradford, UK
Some also don’t give cash loans, but pay money for essentials – such as washing machines or refrigerators – directly to the retailer.
Provident’s home lending arm was placed under administration in March and ceased lending on May 10.
The home loan is a form of high cost short term credit where payments are collected at the homes of borrowers.
A spokesperson for Provident said, “People need access to credit, and we felt that letting customers know where credit is now available to them is the right thing to do.”
One of the largest affordable providers mentioned in the letter, community interest company Fair for You, warned low-income borrowers to avoid predatory lenders and illegal loan sharks looking to “make money fast. money to vulnerable families “.
He said they could look to take advantage of the withdrawal of subprime lenders by targeting their former clients.
James Wilkinson, Acting CEO of Fair for You CIC, said: “We know that millions of people across the UK have to borrow money on a regular basis to buy essential household items and even food.
Managing Director of Affordable Credit Provider Fair for You CIC Warns Former Home Lender Customers About Credit Offers That “Seem Too Good to Be True”
“If you are in this position, don’t be tempted by illegal money lenders, shady individuals, or offers that sound too good to be true.
“Make sure anyone you borrow from is regulated by the Financial Conduct Authority and that there are online reviews or customer testimonials that show they can be trusted.”
Provident said its home loan business has become unprofitable due to an increase in the number of claims management companies submitting thousands of abuse claims.
It made £ 25million in payments in the second half of 2020, up from £ 2.5million in the same period in 2019.
Provident has set aside £ 50million to compensate clients who have suffered badly sold loans through its home loan arm as part of a so-called ‘plan of arrangement’.
Today, the Financial Conduct Authority wrote to Provident to express its disapproval of the program, saying it was offering customers less than they were entitled to and describing the £ 50million contribution as a “potentially arbitrary figure “.
“Doorstep” lenders are short-term finance providers who collect borrowers from homes.
He said: “The FCA is very concerned about the arrangement schemes used to circumvent the payment of customers with their full entitlement to relief in the manner proposed by the scheme.”
But despite FCA’s concerns, she said she would not oppose the program in court when Provident appears in a sanction hearing on July 30.
This, he said, because Provident faces impending insolvency where creditors would likely receive even less than they do under the proposed scheme.
The FCA letter continued: “The [Provident] The group has made it clear that it does not intend to increase its contribution or share the profits with relief creditors, so relief creditors are left with a ‘take it or leave it’ choice. between a very low recovery under the scheme or a lower recovery (if any) in the event of insolvency. ‘
The FCA asked Provident to include his letter in its evidence for the hearing.
Provident CEO Malcolm Le May said: “We continue to believe that the program is fair and in the best interests of CCD [consumer credit division] customers.’
The pension creditors will vote on whether or not to approve the plan on July 19.
More than 50 percent will have to vote for it to be approved, and their claims must represent at least 75 percent of the aggregate value of the claims.
Another risky lender, Amigo Loans, had plans for a compensation scheme that capped payments for historic complaints dismissed by the High Court in May.
He has now said he risks insolvency.