Choose your villain in the latest drama in the unlovely world of high-cost short-term lending.
Is it Provident Financial, which is adopting aggressive tactics to deal with a flood of complaints from customers of its doorstep lending business? The punters can support a “scheme of arrangement” backed by a £50m pot of the company’s money, which won’t be enough to satisfy claims in full. Or they can say no to the scheme, in which case Provident will put the unit into administration, which is as good as saying “go whistle” for compensation.
Or is the true culprit the professional claims management companies, which Provident says lie behind the surge in complaints? There were 3,500 complaints to the Financial Ombudsman Service in the first half of 2020, but 10,000 in the second half. The company feels overwhelmed. It paid out £25m in the latter period, or 10 times as much as in the equivalent period of 2019. Thus the radical attempt to cap liabilities.
The Financial Conduct Authority is now investigating the “affordability and sustainability” of Provident loans made in the last year, so we’ll eventually get an answer of sorts on the question of who is to blame. By then, though, Provident may have pulled the plug on doorstep lending to concentrate on its profitable Vanquis credit card and Moneybarn car finance operations.
Its shareholders, looking at a 28% fall in the share price and another regulatory inquiry, might count closure as a blessing. Doorstep lending is the company’s roots, dating back to 1880, but has supplied only headaches for the past five years.
In fact, the deeper worries are probably for the FCA. The regulator provided a service for the nation when it took on Wonga and its payday imitators, but the likes of Provident Financial, with a quoted-company board signed up to “responsible” practices, were meant to be easier to control.
So why is the ombudsman siding with so many customers when they complain about sub-standard affordability checks? And would any Provident-sized gap in the doorstep market be filled by something worse? The position is messy. And since Provident will be writing to 4.3 million people – everybody who has had a loan from it since 2007 – the mess is large.
The FCA doesn’t like the company’s proposed scheme since it would mean claims won’t be met in full. But, if the regulator has a better idea, it needs to speak up – and soon.
‘Technoking’, ‘master of the coin’? Really?
Obituaries of Marvin Hagler in recent days have recalled how the brilliant middleweight boxer grew so annoyed with ring announcers’ refusal to include his nickname “Marvelous” in their pre-fight introductions that he changed his name by court order. Fair enough: self-promotion has always been part of the boxing game.
What’s Elon Musk’s excuse? The chief executive of Tesla is formally amending his job title to include the moniker “technoking”. Meanwhile, the electric car company’s chief financial officer, Zach Kirkhorn, will try to pass as “master of coin”, according to an apparently serious filing with the US Securities and Exchange Commission.
One could regard Musk’s latest stunt as harmless nonsense. But one imagines Tesla’s cast of serious-minded non-executive directors, providing governance oversight at a company worth $660bn (£475bn), sitting around debating the merits of the silliness and then approving it. If there’s a joke in the change of job titles, it’s on them.
A bitter-sweet decline for Thorntons
Another retailing casualty of lockdown? Sadly, Thorntons’ decline as a force on the high street goes back further. In 2015, when it was bought by Ferrero, the Italian chocolate manufacturer, the business still had 242 shops in the UK and Ireland. Now the chain is down to the 61 outlets that will close, which demonstrates how the trend has been relentless. Temporary pandemic closures may have delivered the final blow, but shopping habits were changing already.
The brand itself looks strong enough to survive in product form in supermarkets and other stores, backed by a strong international owner. But reinvention of the stores as cafes, which was the strategy to save the retailing estate, always looked a long shot. Even before Covid, the country was not short of cafes.