Provident Financial has been accused of driving the payday loan industry to a “new low” by sending a high-cost credit advertisement featuring the faces of children and babies that had previously been sent to financially vulnerable people. Xmas.
Provident, who owns Vanquis Bank and Moneybarn, sent out a mailing featuring a smiling child wearing a Christmas cookie hat, children decorating their grandfather with garlands, and people hugging each other with the words, “That wouldn’t be. not Christmas without … the look on his face … decorating grandpa … and visiting loved ones.
In a letter to Andrew Bailey, Managing Director of the Financial Conduct Authority (FCA), Ms Reeves expressed concern over “the behavior of the credit provider Provident who cynically used the intense pressure on household finances over Christmas to target vulnerable customers.”
“I think it was a cynical tactic to exploit vulnerable people who are struggling financially at the best of times, let alone the holiday season,” Ms. Reeves wrote.
“Provident has tried to reach people’s hearts with a deliberately emotional message to get them to take out a loan at a great interest rate. “
Last week, the Advertising Standards Authority (ASA) ruled that the ad was irresponsible and should not be reused.
Ms Reeves welcomed the move but said she did not go far enough to tackle this “blatantly irresponsible behavior when it comes to offering loans.” The ASA, which is funded by advertisers, does not have the power to impose fines on businesses.
Last year, Provident was ordered to pay a fine of £ 2million and £ 169million to 1.2million Vanquis customers for selling a companion product called a Redemption Option Plan (ROP) which has not been fully explained.
The FCA tried to curb high-cost credit providers with rules capping payday loan interest rates in 2015. Last month, the regulator said providers must compensate consumers who have been mis-sold, even in cases where no complaint has been filed. .
But concerns remain that cash-strapped borrowers are turning to payday loans and other expensive forms of credit to make ends meet.
Bank of England data last week showed credit card debt increased 7.1% in the year through November and now stands at £ 72.5 billion sterling.
A representative from Provident said: “The ASA informed us of a complaint filed about the advertisement and we subsequently removed it from circulation, prior to the ASA’s final decision.
“Provident has also assured the ASA that this content will not be used in other marketing materials. “