Provident, Yes Car and the Bill
17th March 2005

Last night's BBC expose of Provident's "Yes Car" operation will have shocked many people. Agents giving scant regard to the ability to repay, selling worthless insurance policies, lying and pressurising customers into buying faulty and, according to the BBC, unsafe cars at prices well above their true value were all meticulously detailed by the 'Whistleblower' team. Debt on our Doorstep thanks the BBC reporters, with whom we have had contact over the past few months for their work in this area.

But the findings of the programme unfortunately came as no surprise to this campaign. Over the past five years we have brought the sharp practices of many 'sub-prime' lenders to the attention of Government. The rolling over of loans, and in built incentives for door to door lenders to trap customers in a spiral of debt have both been included in our recent submission to the Competition Commission. Earlier this year, we wrote to the Minister responsible for the Consumer Credit Bill, Gerry Sutcliffe M.P, and asked him directly whether the practice of roll over lending would be outlawed by the Government's proposed measures. We have still not had a straight answer to that question.

Instead, the Consumer Credit Bill will leave the courts to decide what is and what is not unfair. Each and every one of Yes Car Credit's customers would have to take a case through the courts or to the financial services ombudsman to get redress for their appalling practices. We have consistently asked why that should be the case when the Government could provide the Office of Fair Trading with the power to outlaw bad practices and ensure that compensation was paid to whole groups of customers instead.

Provident Financial have been forced to make changes at Yes Car Credit as a result of the BBC programme. But these changes are a one-off. Day in day out, irresponsible lending and the rip off culture portrayed in the BBC documentary is going on in the U.K. A whole wealth of 'alternative' credit providers are now preying on low income families. The UK has the worst consumer protection in Europe and refuses to introduce interest rate ceilings arguing that these would drive businesses underground. But in other European countries introducing interest rate ceilings was used together with measures to force mainstream lenders to re-engage with people on low incomes. As a result, financial exclusion is lower in those countries with interest rate ceilings than it is in the U.K.

Here, the banks themselves are profiting from Provident and Yes Car's operations. HSBC, Nat West, and Royal Bank of Scotland all hold shares in Provident Financial via the Capital Group.

The Consumer Credit Bill is due for its second reading in the House of Lords on 12th April. If an election is called for the 5th May then it is unlikely that the Bill will become law this side of a general election. We therefore ask all supporters to write to Tony Blair urging him to make an election pledge to strengthen the Consumer Credit Bill by adding a power to introduce interest rate ceilings, and by enabling the Office of Fair Trading to intervene on behalf of groups of low income borrowers and obtain compensation from lenders operating in the ways discovered by the BBC yesterday.

As of today, the Office of Fair Trading should be investigating Yes Car Credit and compiling details of all customers with legitimate complaints so that it can award compensation. Unfortunately it doesn't have the power to do this under the current law. Tragically, unless the Government strengthens the Bill, it won't have them to do it under the new law either.