James Moore: Compared with this lot, the Sheriff of Nottingham looks like a good guy


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The Independent Online

Outlook Robin Hood is trying hard, but it's the Sheriff of Nottingham who is in the ascendant in today's Britain. Actually, the bad guy from Nottingham Castle looks like a rank amateur compared to modern exponents of squeezing the poor to fatten the rich who have turned the practice into a science.

For this year's Nobel prize step forward Provident Financial. Just how effective Provvie has been was writ large by yesterday's results statement: the company was ahead in just about every positive metric you'd want to be ahead in, with its Vanquis Bank the star performer.

Vanquis has succeeded with a business model that is the direct opposite of what did for Northern Rock.

The latter borrowed short to lend long and came unstuck as a result. Vanquis borrows long by tying its savers up so it can lend very short (at very high rates). If you're in the happy position of having £1,000 or more to invest and are willing to commit to keeping your hands off it for between one and five years, Vanquis will offer you up to 4.5 per cent, a rate you probably won't have seen since before the financial crisis.

Provvie can use the money thus raised to lend at rates that are somewhat higher, in excess of 400 per cent for some products, to people in a very unhappy position. The formula is proving to be phenomenally successful as the banks have withdrawn from large parts of the market: Provvie now boasts 2.5 million customers.

It's probably worth pointing out now that Provvie is actually starting to attain an (undeserved) aura of respectability, largely because its rivals are so awful.

Incredibly, Vanquis' website was even touting a story from trade journal Money Management on a credit union calling for an interest rate cap on payday loans, where annual equivalent interest rates can exceed 1,000 per cent.

See, the Sheriff's not such a bad guy! It's Guy of Gisborne and his men who are the real thugs.

The Office of Fair Trading (OFT) – which has blasted Provvie for excess profits from its hard-up clientele – says so too. It is investigating the payday loans sector. Such an inquiry doesn't go far enough.

An interest rate cap is anathema to the OFT's economists, but given the weak position of people who approach Provvie and its ilk for credit (often desperate enough to pay whatever is demanded), it is time they gave it serious consideration. For the whole sub-prime sector, not just payday loans.

Until, it does, Provvie is set fair for the biggest party Nottingham Castle's ever seen. It had some difficult times a few years back, but the business has since been restructured. It's now fighting fit and the Sheriff couldn't be prouder.

Really, Provvie ought to use him in its ads. Like pawnbrokers H&T and Albermarle & Bond, and its internet rival Wonga, Provident, fuelled by Vanquis, has become a bona fide British success story. A depressing sign of the times.