James Moore: Like it or not, legal loan shark's time has come
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 26 February 2013
Outlook Loan sharking is a wonderful business to be in, especially if you can do it legally. There are more than 10 million potential customers out there that banks don't want to touch.
The fact they have been rejected by mainstream lenders suggests their finances probably aren't exactly on sound footing, so they will probably have to borrow quite regularly to make household budgets add up.
That's why Provident Financial is having such a wonderful time of it. Today's barnstorming results were driven by its Vanquis bank, whose credit cards come with interest rates more than double what you'd pay for, say, a Barclaycard and 10 points above the Barclaycard designed for those without a credit history.
But an APR of 40 per cent (base rates are at 0.5 per cent, by the way) is positively mild when compared with the group's home credit products. It's the wonga.com of the age before the internet, not that it needs the internet.
At the interim stage, the group paid for a comical interview (the sycophantic interviewer does a very impressive job of finding new ways to say impressive) to enable chief executive Peter Crook to outline the group's expansion plans. He is delivering on those, so it's a fair bet that the Crook household won't have cause to use Provvie Products, unless it plans to open a private bank sometime in the future.
Provvie has been cited, very negatively, by charities such as Barnardo's. Its rates are ruinous, and it has already had one kicking from the Office of Fair Trading. But it is a business whose time has come. And if you can't maintain a perfect credit rating, it's coming for you.
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