After the holiday period, many consumers are facing cash shortages or struggling with extra debts. And following recent concerns over the effects of high interest loans on personal wellbeing and mental health, Provident Financial is the latest company to be put under the spotlight.
The company have been accused of reaching a “new low” in the industry, thanks to their most recent Christmas advert.
In the UK, data from the Bank of England shows that credit card debt rose by over 7% this year, and is now over £70 billion. Because of this, more borrowers than ever are turning to payday loans, overdrafts and other types of expensive credit to meet their living costs.
Provident Financial owns brands like Moneybarn and Vanquis Bank, which offer more expensive types of credit. Their advert over Christmas featured children and babies, and the company are being accused of targeting vulnerable consumers and families.
In the mailshot, it read: “It wouldn’t be Christmas without … the look on her face … decorating grandad … and visiting loved ones.” Payday lenders typically offer loans with an APR of around 500%.
In a letter, the chief executive of the FCA commented on the effects of “behaviour of credit provider Provident which cynically used the intense pressure on household finances over Christmas to target vulnerable customers”, adding that:
“I believe this was a cynical tactic to exploit vulnerable people who struggle financially at the best of times, let alone over the festive season, Provident tried to tug on the people’s heartstrings with a deliberately emotionally-loaded message to urge them to take out a loan at a tip-off rate of interest.“
A representative from Provident said in a statement: “The ASA informed us of a complaint made about the advertisement and we subsequently removed it from circulation, prior to the ASA’s final ruling. Provident also provided assurances to the ASA that such content will not be used in any further marketing materials.”