James Moore: Give Provvie credit for taking it slow

Outlook

Poor old Provvie. While the new bloods in the sub-prime lending market such as Wonga and Cash Lady bombard the airwaves with their repellent ads, the grandaddy of them all is suffering.

Provident Financial operates a far more traditional model than the two ugly sisters named above. While they’re busily enticing the youngsters with their slick marketing and fast IT, Provvie’s still trying to get its hooks into their mums and dads, and sometimes their grandmas and grandads.

Provvie’s collectors tramp door to door selling loans and picking up repayments, but customers have stopped biting.

Although they’re a world apart in many ways there is a similar dynamic at work here to the one blighting the housing market.

Consumers lack confidence and aren’t willing to spend on the sort of items Provident’s small high interest loans have traditionally funded, TVs and the like.

They’re also getting squeezed, which means there’s less room for Provident’s interest rates, although it should be noted that the company’s Vanquis Bank is faring rather better.

All the same, Provvie must wonder whether it’s missed a trick as Cash Lady and Wonga continue to press ahead with their attempts to rule the world. Is there a reason why it hasn’t joined the party?

Perhaps there is. Many years ago there was another so called “sub-prime” business that took over the airwaves with glossy ads, called Yes Car Credit. Provvie wanted a piece of the action and bought the company, only to see it crash and burn amid a storm of bad publicity and bad debt.

Perhaps that’s why it’s taking the slow road this time around.