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Provident Financial in race to fix technical problems and retain staff
Provident Financial in race to fix technical problems and retain staff
(about 5 hours later)
The troubled doorstep lender Provident Financial is racing to fix its technical problems as rival firms attempt to cherry-pick its most valuable staff and borrowers.
The troubled doorstep lender Provident Financial is racing to fix its technical problems in time to stop staff leaving for rival firms, taking its most lucrative customers with them.
Shares in Provident had plunged 66% on Tuesday, wiping £1.7bn off its stock market value, after it issued a shock profit warning and its longstanding chief executive, Peter Crook, resigned.
Concerns of an exodus came as the company’s lead financial adviser, JP Morgan, wrote down its estimated value of Provident’s home credit business to nothing.
The company, which makes short-term loans at high interest rates to people in financial difficulty, blamed its woes on new software it uses to arrange home visits by its “customer experience managers” (CEMs), who travel the country selling loans and collecting debts.
Shares in Provident had plunged 66% on Tuesday, wiping £1.7bn off its stock market value, after it issued a shock profit warning and longstanding chief executive, Peter Crook, resigned. The share price recovered 12% on Wednesday to 661p, still far below Monday’s close of about £17.40.
Comments on an internet forum used by dozens of Provident salespeople, Providentagents.com, suggest that the company is risking an exodus of staff to rival companies, raising the prospect that customers could follow them.
The company, which makes short-term loans at high interest rates to people in financial difficulty, blamed new software it uses to arrange home visits by its “customer experience managers” (CEMs), who travel the country selling loans and collecting debts.
One forum user, Daisy Boo, said she was aware of several CEMs who were planning to quit after just 10 weeks with the firm, claiming that there would be “loads more leaving”.
Comments on an internet forum for Provident salespeople, Providentagents.com, suggest that the company faces losing staff to competitors.
Provident created the full-time CEM role earlier this year, doing away with its 130-year old army of self-employed agents who managed their own list of clients.
One forum user, Daisy Boo, said she was aware of several CEMs planning to quit, claiming that there would be “loads more leaving”.
But the use of new software to manage their schedules has fallen into disarray, with debt collectors complaining of continuing problems despite recent signs of improvement. One forum user, Bunny, said: “Some days I don’t have an active list at all. Other times I have a list full of card payers or monthly payers that don’t need calling on. I feel I am falling behind when all I want to do is work. So frustrating.”
One CEM, who asked not to be named, showed the Guardian a message from rival a company, Loans At Home, offering him a job. “People are going to be jumping ship,” he said.
Stuart Duncan, an analyst at Peel Hunt, said Provident was now under pressure to fix its technical issues in time to prevent current and former staff joining rivals and taking valuable customers with them.
Provident created 2,500 full-time CEM roles earlier this year, doing away with its 130-year old army of self-employed agents who managed their own list of clients and decided their own hours.
“The likes of [its competitors] Morses Club and Non-Standard Finance are picking up experienced agents and it’s probably fair to say that a lot are coming from Provident,” he said.
But the use of new software to manage their schedules has fallen into disarray, with debt collectors complaining they are being sent to the wrong addresses at the wrong time, or to homes already visited by colleagues.
“Once they [sales agents] have relationships with customers, they become valuable. Every competitor will be looking at every agent, thinking ‘How many of them can we get?’”
One forum user, Bunny, said: “ I feel I am falling behind when all I want to do is work. So frustrating.”
Another forum user, MavisBloggs, said: “I left in March, it was bad enough being ‘self employed’, I was never even applying for a full-time position. Lots of my old customers came to me and they still are, they are showing no signs of ‘drying up’.”
Stuart Duncan, an analyst at Peel Hunt, said Provident was under mounting pressure to fix its technical issues quickly.
At least one rival company has posted on the providentagents.com forum offering disgruntled employees work.
“The likes of [its competitors] Morses Club and Loans at Home are picking up experienced agents and it’s probably fair to say that a lot are coming from Provident,” he said.
Posts by Provident customers on the company’s Facebook page suggest that some of its 800,000 borrowers are also considering leaving, amid anger at the chaos caused by its technical problems.
“Once they [sales agents] have relationships with customers, they become valuable,” said Duncan.
“I’ve been a loyal customer for over 20 years, definitely not going with them any more when I’ve finished paying this loan,” said one. Another wrote: “I’ve used this company for nearly 15 years, on and off, I’ve never known it so bad. Hands up who will be paying off their loans as possible and never taking out another loan with this company.”
“Every competitor will be looking at every agent, thinking ‘How many of them can we get?’”
Several customers also expressed discomfort with a new policy of recording conversations between staff and borrowers.
One former agent told the Guardian that Provident had offered agents a 20% commission if they stayed for three months until it had hired enough CEMs.
In its statement to the stock market this week, Provident also admitted that it is facing a regulatory investigation into its banking division, Vanquis Bank, over the sale of repayment option plans (ROP), a product that helps people to freeze credit card debt. Provident said the product was worth £70m a year in revenues, while it could face claims for compensation if the inquiry by the Financial Conduct Authority finds the ROPs were mis-sold.
But he claimed that many left anyway, after Morses Club offered to match any commission they had been making for 12 months, regardless of how they did.
But industry sources suggest it is unlikely to face a damaging flurry of deposit withdrawals because many of its customers signed up to deals that block them from withdrawing cash for an agreed period, in return for higher interest payments. Its deposit-holders are also protected by the Financial Services Compensation Scheme, a government body that guarantees savings up to £85,000 if a bank collapses.
One former agent said this was already costing Provident customers. “Any agent that’s left and gone elsewhere will have taken, I’d imagine, 50-100 customers already,” he said. “They’re only going to take the good ones.”
One well-placed source said Vanquis Bank does not have any customers with more than £85,000 of savings.
Several of Provident’s 800,000 home credit customers told the Guardian they have been badly affected by the company’s problems.
Jacqueline Goddard, 62, from Boston, said no Provident employees had come to collect payments for four weeks and she is now in arrears. “I am on the breadline now, so I cannot afford more payments. The money we used for loan repayments went on other things.”
