Doorstep lender Provident Financial came under fire for charging “extortionate” interest rates after reporting a hike in half-year profits to £53.1 million.
The Bradford-based firm, whose consumer credit arm sells small loans door to door, said pre-tax profits rose 3.5 per cent and customer numbers soared to more than two million across the group in the six months to June 30.
News of its profits haul came as children’s charity Barnardo’s slammed the lender for plunging poor families into “worrying levels of debt” and called for an inquiry into industry practices. Barnardo’s claimed Provident was charging interest rates up to 545 per cent annual percentage rate (APR).
Provident revealed that its home credit arm, which trades under the Provident Personal Credit and Greenwood Personal Credit brands, accounted for the bulk of group profits, at £52 million for the half-year.
Revenues at the division lifted 4.9 per cent to £339.9 million.
Provident specialises in offering loans to so-called sub-prime borrowers with non-standard credit histories. Barnardo’s claimed many high-interest lenders “prey on the poor”, after a year-long study into child poverty.
The charity’s chief executive, Martin Narey, said: “Many parents turn to high-interest money lenders in desperation. They can’t afford the basic necessities for their children, so are forced to borrow.
“Banks don’t want their custom; they are excluded from access to everyday overdrafts and loans with reasonable interest rates, so they are left with no choice but to take what they can get.”
The industry is to come under scrutiny in an Office of Fair Trading (OFT) review, launched just weeks ago.
A spokeswoman for Provident said: “Unlike many other lenders, all of Provident Financial’s charges are included in its APR.
“That includes the interest charge on the money lent, the charge for the weekly collections at the customer’s home and the cost of providing an absolute guarantee that customers will not face any extra charges – even if they are late in repaying their loan.”