Lancashire credit union launches campaign to aid collapsed doorstep lender customers

Former Lancashire customers of national loans firm Provident Financial have been urged not to turn to high interest pay day loans or loan sharks.

Wednesday, 11th August 2021, 3:45 pm

The national sub-prime lender’s doorstep loan operation went into administration in March and stopped trading in May.

In an email to its customers and a post on the Provident website, it has directed people to affordable providers, especially credit unions.

Lancashire credit union CLEVR Money, welcomed the advice and has launched its own initiative to seek out and help former Provident customers across Blackpool, Preston, Fylde and Wyre.

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Anthony Brookes and Jackie Colebourne of Lancashire credit union, Clevr Money

Backed by Blackpool Council, Preston City Council, and the government’s Fair4All Finance agency, the CLEVR initiative aims to reach out to all those left in financial hardship by the lender’s collapse.

CLEVR is writing to all local councillors, MPs, housing associations, the Citizens’ Advice Bureau, and its own payroll partner member organisations – including hospitals, schools and private businesses – asking them to direct former Provident customers to the credit union.

The team has also created a new loan product specifically to help those struggling to cover bills and other repayments, following the loss of the Provident option, named the CLEVR Doorstep Replacement Loan.

Anthony Brookes, loans manager for CLEVR Money, said the credit union is trying hard to make sure people know about the ethical alternative on offer: “Thousands of local people and their families have used Provident doorstep lenders for small loans over many generations. Despite the extremely high interest rates, customers appreciated the doorstep approach which made taking out and paying back loans relatively simple.

“While many of us in the responsible lending sector are pleased when any high interest lender withdraws from the market, we know it leaves leave thousands of people in limbo when it comes to getting credit in the future.

“To their credit, Provident have written to customers to signpost them to credit unions, which we welcome. The fear is that people left without the Provident option will turn to other doorstep lenders, online payday loans companies, or even loan sharks, incurring eye-watering interest rates and hidden fees, or worse.”

Councillor Matthew Brown, Leader of Preston City Council, said: “The past year has been very difficult for a lot of families who have either lost jobs or seen their hours significantly cut as a result of COVID which has put a strain on finances and household budgets.

“It is important that people in need of finance have access to fair and affordable loans to avoid falling into the trap of pay day and online lenders that charge high levels of interest and often contain hidden costs which can compound problems for struggling families.

“Sadly many vulnerable people are often taken advantage of by unscrupulous lenders and end up agreeing to loans they’re unable to pay so it is important that everyone is aware of the options available as well as the advice and support on hand.

“Credit Unions can be a great way for people to access loans at an affordable rate and contribute to community wealth building as not-for-profit financial cooperatives. I’d encourage anybody who is unsure about accessing a loan and their options to contact the Citizens Advice Bureau to discuss their options and get advice.”

Sacha Romanovitch OBE, CEO of Fair4All Finance, added: “The high-cost credit market is shrinking further but demand for credit isn’t going to disappear with it. People who can’t access mainstream credit still need loans, whether that’s for a cooker, a washing machine or new school uniforms.

“Going without essentials like these is a tough option to face and there’s a real risk this increasing gap in the market will be exploited by loan sharks. We urgently need to scale up fairer alternatives.

“Credit unions and CDFIs have fantastic expertise in serving customers sustainably and ethically. They are supportive at every step of the borrowing journey and invest any profits back into the communities they serve. They don’t have the deep advertising pockets of mainstream providers though, so more must be done to increase awareness of them among customers.

“Affordable credit delivered in a fair and responsible way can be a lifeline for people who are excluded from mainstream providers, helping them weather income shocks and buy essential items. And community finance providers show that you can sustainably serve this market if you have the right business practices in place around affordability checks, collections and repeat lending.”

CLEVR Money provides loans at a fair and affordable rate, at levels capped by the government. It is regulated by the FCA and its savers protected by the FSCS, just like the banks. As a community-focused ethical organisation, it exists to provide a responsible alternative to high-interest loans with no hidden fees or agendas.

Anthony added: “We prioritise people over profit, working directly with them to help sort out debts and put them on a track to better financial health. In the wake of the Provident collapse we have created a new Doorstep Replacement Loan to assist. I will speak directly to each caller to understand their circumstances and recommend the best course of action for that individual.”

Provident Financial is also in discussions with the Financial Conduct Authority about its compensation scheme for people who were mis-sold loans.

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