Calling all Provident Customers

Dawn Cowderoy, Business Development and Marketing Manager at MCU, shares a childhood memory of her family’s use of doorstep lenders.

When I was a young girl growing up in the early 70s, I always remember my grandmother putting money aside on the kitchen table to be collected on a Thursday evening by a local representative. One was for an insurance product with the Co-op and the other was to pay back a loan with Provident Financial. I’m sure many of you have similar experiences as older generations were strongly aligned with both the Co-op and Provident and the use of doorstep lenders was widespread.

Until recently, it never crossed my mind why my grandmother took a loan with Provident rather than a bank. She worked, wasn’t in debt and didn’t have a bad credit record leaving her with little option but to choose a high cost loan. Maybe she took one out because it was easy to arrange or maybe she didn’t hugely trust banks but the Thursday evening process of putting money aside each week is a strong childhood memory.

This memory came to me when it was announced that Provident Financial had decided to close down its doorstep lending operation after 141 years. The company has been subject to mounting losses and complaints of mis-selling so has made the decision to step away from the home credit sector. As a result, their customers are now in a position of having to find an alternative provider for their financial needs.

We have major concerns that many of these customers might turn to loan sharks to provide high cost credit. Manchester Credit Union works closely with the Illegal Money Lending Team and are acutely aware of the scale of loan shark activity in the UK. They are everywhere in the community offering cash loans at extortionate rates of interest and can be threatening if you fall behind on payments. Loan sharks rarely supply any paperwork and often people have no idea how much they owe, what the interest rates are, or how long it will take to pay back.

We have come across many people in the credit union over the years who are trapped in a cycle of borrowing with a loan shark and are too frightened to do anything about it. One member in particular wanted to pay them off but they refused to tell her how much she owed and were very threatening to her and her family.

There is a better and safer way! We want to help and encourage customers of Provident Financial to contact us if they are worried about where to get credit in the future. In many cases, we may be able to offer you an affordable loan which will be much cheaper than a Provident loan, and certainly safer and cheaper than turning to a loan shark in desperation. With a credit union loan you only pay interest on the decreasing balance, so you can see your balance reducing and when the loan will be repaid. You are also encouraged to save a small amount whilst repaying the loan, which will help you to build a savings pot for the future.

To their credit, Provident are recommending that their customers look towards a credit union as the best option - please read their communication here.

So if you live or work in Greater Manchester please get in touch with us, or one of the other Greater Manchester credit unions, and see if we can help you. I wish my grandmother had been aware of her local credit union - it would have saved her a fortune!