Provident Financial Share Discussion Threads

[spob] 03/12/2006 08:21

Watchdog fails to put bite on loan sharks
By James Moore, The Independent

Published: 01 December 2006

Britain's competition watchdog yesterday stopped short of imposing price caps on door-to-door lenders despite accusing them of making £75m in excess profits at the expense of the poor.

The Competition Commission's move provoked anger among organisations dealing with low-income groups. According to the Commission, interest rates on door-to-door loans can reach 300 per cent for advances lasting six months, and 100 per cent for a year.

David Orr, chief executive of the National Housing Federation, which represents English housing associations, said low-income groups needed more protection.

He said: "We've been campaigning against the extortionate practices of doorstep lenders because they prey on housing association tenants, who will be hit especially hard in the run-up to Christmas. The Commission has already found that doorstep lenders are overcharging customers by as much as £25 for an average £300 loan. It's ridiculous that these companies can name their price when lending to the poorest families and needs to stop."

Mr Orr said price caps "operate successfully in Europe" and would do here. The Commission, however, said it was worried that price caps could limit the availability of credit to low-income groups. It believed the range of measures adopted yesterday would improve competition, leading to lower prices.

They include forcing lenders to share data on customers' payment records, to help new lenders enter the market and compete effectively. Lenders will also be required to publish prices on a website where customers can compare different providers. Customers who repay early will have to receive a "fair" rebate.

The proposals were first mooted in August and yesterday's final report follows a near two-year investigation sparked by a so-called "super complaint" from the National Consumer Council.

The stock market-listed Provident Financial controls 60 per cent of the £2bn-a-year market, with a further 30 per cent held by just five other lenders. The company rejected the claims on excess profits, preferring the views of Sir Bryan Carsberg and Professor Colin Mayer who presented evidence that was "consistent with Provident Financial's position".

"Provident Financial will continue to work constructively with the CC to implement the remedies, the majority of which are due to be in place by the end of 2007," the company said.

The National Consumer Council, which raised the issue as a "super complaint", called the Commission's final verdict an "excellent result" for Britain's two million home credit customers.

Ed Mayo, its chief executive, said: "They have been paying £75m over the odds every year for these small cash loans collected at home. But the Competition Commission's remedies must be accompanied by efforts to increase the range of affordable credit choices for people on low incomes. Reforms to the Government's social fund and more voluntary sector credit initiatives would make a big contribution."

Shares in Provident Financial finished the day down 3p at642p.

[onsider] 13/11/2006 10:51

"They are not selling off the International division, there is a proposed demerger."

OK, have it your way...

DYOR, I've done mine.

As an employee, you'll probably be the last to know.

[cumbrianmale] 03/11/2006 19:59

They are not selling off the International division, there is a proposed demerger.

Currently there is substantial investment in new technology and improved procedures for scoring out non profitable customers. There is also increased marketing and partnership arrangements to attract more customers.

As an employee of Provident the investment and improvements are a long time in coming. Also remember that customer growth was announced which was the first for 3 years, when these customers mature there will be increased sales potential.

[onsider] 19/10/2006 23:07

Management are too focused on selling off the non-uk arm of the company.

[evilwebby] 14/9/2006 12:27

Not such am impressive set of results - below forecast. This is only the 2nd time in 10 years that the company has not delivered growth from the previous year (last year was the other!). Management slipping up?

[evilwebby] 29/8/2006 17:50

Impressive stuff. I'm happy with my profits, however.

[thehearse] 25/8/2006 13:25

This share needs a bit of a push. Why not 670p yet?

[evilwebby] 23/8/2006 10:26

I've sold up. 556p -> 640p in 2 months is much better than I had expected. Will be back sniffing around if they come back to 600p, though. PFG tends to be a range trader.

Short term very overbought, and volume is dwindling.

[spob] 18/8/2006 16:48

Citigroup Starts Provident Financial At Buy

Friday, August 18, 2006 6:42:56 AM ET
Dow Jones Newswires



0923 GMT [Dow Jones] Citigroup initiates Provident Financial (PFG.LN) with a buy rating and a 750p target price. Cites the attractive valuation, a premium dividend yield, strong UK free cash flow and growth potential at its international activities that are to be de-merged, and releasing more value. Shares trade +7.4% at 634.5p. (OTA)

[evilwebby] 18/8/2006 16:06

Excellent volume on today's action. With this and AML in my portfolio I'm well chuffed.

Quite why someone would buy a company that doesn't make any money, drills for oil and hits water, loses its mining licence, or any other number of all too familiar let-downs... when they can buy a perfectly good, profitable, steady, and low risk business such as this, and at a bargain price, too.

[sweeting] 18/8/2006 14:03

I think the stock is cheap at 630/640. The yield is still good, the co makes money to pay out an increasing dividend and the overseas business is to be quoted as a new co. All very encouraging in my view. A fairer price, I think, will be around £7.50.

[thehearse] 18/8/2006 11:12

Is 630/640 a fair price or is the stock still relatively cheap?

[frankl 123] 18/8/2006 11:07

Please don't say the competition commision ;-)

[frankl 123] 18/8/2006 11:06

Any one know where I can get a copy of the competition commision announcement?

[evilwebby] 18/8/2006 10:57

Favourable announcement from the Competitions commission.

[one for the money] 18/8/2006 10:53

No idea, but an interesting move, and it seems to be holding (currently!) at 630.

Some insider news, or maybe the MMS have got short of shares? There don't seem to be any highly significant trades as yet.

Cheers
john

[thehearse] 18/8/2006 10:43

Hello, anyone know what's going on i.e. bid talks, over sold etc? Very high volumes today, good hike in price.

[evilwebby] 08/6/2006 10:15

Back in. Got 360 of the beauts for 556p. Bargain.

[evilwebby] 19/5/2006 10:53

Back under 600p. Good buying opportunity here. Big volume selloff yesterday flushed out a lot of weak holders.

[spob] 18/5/2006 08:26

Provident Financial led the way, up 12.5p to 629. The doorstep lender said lending at its core UK business was up but it continued to lose customers and also reported higher bad debts. But the shares were lifted by news of talks with its major shareholders over plans to demerge its international business, where customer numbers had grown by 10% in the first four months of the year.

[this_is_me] 27/4/2006 22:26

The idiot is going to ensure that it all becomes uneconomic and stops and that is not going to make him popular with the clients and those of them who vote probably mostly vote Lab.

[m.t.glass] 27/4/2006 16:03

..Labour MP Mark Lazarowicz, who chairs the All Party Parliamentary Group on
Debt and Personal Finance, said doorstep lenders should respond by cutting their charges immediately.
"I call upon the doorstep lenders not to delay, but to take action now to
cut their interest rates and charges. If the doorstep lenders do not put their
own house in order quickly and comprehensively, then I would call upon the
Department of Trade and Industry to use the powers open to them under the new
Consumer Credit Act to make them do so." he said.

[m.t.glass] 27/4/2006 14:30

Motley Fool's version:


COMMENT

Deadly Debt On Your Doorstep!
By Jane Mack (TMFJane)
April 27, 2006


Imagine how expensive it must be for a company to send someone to your door to collect £10 from you every week as payment for the £100 you borrowed a few months ago to buy shoes for your kids. And imagine how much interest they're going to charge on the loan.

Welcome to the world of home credit -- the supply of small loans where repayments are collected in instalments, usually weekly or fortnightly from the customer's home.

While it may be costly for lenders to offer such a service, according to the Competition Commission such companies are charging far too much in interest. The Commission has been investigating the home credit market for the last year and half following a complaint by the National Consumer Council and a referral by the Office of Fair Trading. The NCC found interest rates averaged 177% with some as high as 900%!

Around 70% of home credit loans are for less than £500 and the Commission estimates that home credit lenders lent about £1.5 billion to around 2.3 million customers in 2004, and collected around £1.9 billion in repayments.

They too say that the extent of the overcharging appears to be substantial, estimating that it may have amounted to as much as £100 million a year over the last five years across the whole market. They reckon that home credit lenders have been able to earn more than £500 million in profits in excess of the cost of capital.

Lenders have also been making far too much money from people repaying their loans early, which nearly half do, according to the Commission. The cost is particularly high because of the way lenders calculate their costs.

The Commission puts the problem down to a lack of competition in the home credit market and they're threatening to impose price caps on lenders unless they buck up their ideas. There are only six major lenders, one of which, Provident Financial, accounts for well over half the market.

The Commission wants home credit lenders to share data on customers' payment records, to provide better price information so customers can better make comparisons between lenders and to cut the costs for customers who repay their loans early. They plan to publish their final report on the market later in the year.

[m.t.glass] 27/4/2006 09:57

"..Bridgewell Securities meanwhile reiterated its 'underweight' recommendation, saying the report is a reminder of the potential downside in the group's core business..."


It also comes at a time when the media is headlining levels of personal debt.
"..Personal debt in the UK rises by £1 million every four minutes..." (invocas.com)