Prudential - Profiting from Poverty?...
17th March 2003

Contact head of corporate responsibility

Debt on our Doorstep can reveal that Prudential, one of the U.K's leading pension providers, and owners of Egg, one of the new breed of low cost, internet based financial service companies, is directly profiting from investment in door to door lending companies Provident and Shoppacheck.

Prudential also seems unable to recognise the poor deal that licensed money lenders offer, despite backing financial literacy campaigns through the Personal Finance Education Group and having a clear policy on "socially responsible investment". In reply to correspondence from Debt on our Doorstep, M&G (Prudential's fund management company) stated that "Following... discussion and a review of information from Provident Financial and the Consumer Credit Association, we believe that APRs can become artificially distorted depending on the form of credit and time frame of the loan. Based on our ongoing analysis of the company, we are confident that Provident Financial meets our SRI policy."

However, the calculation of APR's to one side, it is clear that Provident's rates are high. Their own website reveals that they lent an average of £564 to each of their 1.6 million customers last year. But they collected an average of £795 - a mark up of 40% per customer in the year, after allowing for bad debts.

It is a major concern that Prudential, which is contributing to the development of financial literacy resources in the UK cannot see this for the bad deal it is. And, in terms of the effects on communities you only need to look at the survey conducted by Debt on our Doorstep into borrowing on the Meadowell estate (see "Money ripped out of estates" below).

We have written to Prudential asking them to reconsider, but in the meantime we are asking supporters to contact Liza Vizard , Prudential's Head of Corporate Responsibility directly to ask that they sell their investment in Provident and Cattles plc (owners of shoppacheck).