Provident Financial is set to dump its doorstep lending business after 141 years of business.
Doorstep lending is where providers give out loans, usually with high rates of interest added on, and then call at your home to collect the repayments.
Provident Financial offers these types of loans, ranging from a minimum of £100 and a maximum of £1,000.
But the high-cost credit firm is set to dump this offering.
The Mail on Sunday has reported the company will look to claw back loan repayments as it closes down the business.
Provident Financial’s online lending business, Satsuma – which offers payday loans – is also set to close.
How to cut the cost of your debt
IF you’re in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money
Work out your budget – by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay
Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
But the firm will still run its credit card business, Vanquis Bank, and its car finance arm, Moneybarn, which last year had to pay out £30million in compensation to 6,000 customers who took out loans they couldn’t afford.
The company hasn’t confirmed exactly when it will close its doorstep lending business for good.
It has also not said what will happen to customers who are still paying off loans – but we will update you as soon as we know more.
Provident Financial declined to comment.
The news comes as companies including Provident Financial have been feeling the heat over doorstep lending since 2018.
The City watchdog, the Financial Conduct Authority, introduced tougher rules on issuing doorstep loans three years ago.
These rules included providing customers with comparative costs of taking out another loan on top of an existing one, so they can see the total cost upfront.
The crackdown marked a huge victory for The Sun’s Stop The Credit Rip-Off campaign, launched to help the millions of Brits who fall prey to high-cost loan providers.
The Sun spoke to families who spent years paying back these loans along with sky-high interest rates.
The FCA also warned later that year that providers may have to cough up compensation for millions of Brits who were offered unaffordable loans.
The warning came as complaints about these loans reached a record high in 2018.
But earlier this year, it was revealed that Provident wants to limit the amount of compensation borrowers can claim over mis-sold loans.
It said it was planning to create a £50million pot of money to make payouts to those found to have been irresponsibly lent to.
But this was less than the compensation claims are actually worth.
If you're struggling to pay off your debt, it's worth getting help from organisations like Citizens Advice and National Debtline.
They can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
Millions of Brits in loans and credit card debt can apply for a two-month ‘breathing space’ from next week.
A quarter of young people using Buy Now Pay Later can’t afford food, rent or bills, Citizens Advice says.
Meanwhile, here's how to get help with mortgage costs as 700,000 struggle with repayments.
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