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You can find the current article at its original source at https://www.theguardian.com/business/2017/aug/31/doorstep-lender-morses-club-provident-financial-cash-loans
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| Doorstep lender Morses swipes customers and agents from Provident | Doorstep lender Morses swipes customers and agents from Provident |
| (about 1 hour later) | |
| Britain’s second-largest doorstep lender has recorded a big increase in lending after poaching customers and agents from rival Provident Financial. | Britain’s second-largest doorstep lender has recorded a big increase in lending after poaching customers and agents from rival Provident Financial. |
| Morses Club, which offers cash loans from £100 to £1,000 to people in financial difficulty, said its gross loan book had grown 12% in the six months to the end of August. Customer numbers were also up by 12%, to 233,000. Total credit issued increased by 25% to £82.2m. | Morses Club, which offers cash loans from £100 to £1,000 to people in financial difficulty, said its gross loan book had grown 12% in the six months to the end of August. Customer numbers were also up by 12%, to 233,000. Total credit issued increased by 25% to £82.2m. |
| Its chief executive, Paul Smith, said the firm had “capitalised on market conditions” and that its growth was based on “listening to our customers and adapting to their needs”. | Its chief executive, Paul Smith, said the firm had “capitalised on market conditions” and that its growth was based on “listening to our customers and adapting to their needs”. |
| He added: “The growth we had planned was just accelerated by Provident’s current position, rather than caused by its position.” | He added: “The growth we had planned was just accelerated by Provident’s current position, rather than caused by its position.” |
| Provident, the UK’s biggest doorstep lender with 800,000 customers, lost two-thirds of its stock market value last Tuesday when it issued a second profit warning in two months, parted company with its chief executive and cancelled a dividend for shareholders. | |
| Analysts blamed a botched attempt to overhaul its 130-year-old business model by replacing its army of part-time self-employed agents, who managed their own schedules, with full-time staff on the company’s payroll. Problems with new software used to arrange home visits meant the new “customer experience managers” were sent to the wrong addresses or at the wrong time, and were unable to make new sales or collect payments. | |
| Unlike Provident, Morses has been increasing its force of self-employed agents, adding another 400 since March. Most of them have come from its bigger rival, attracted by a guaranteed commission in the first year. This takes its total to about 2,300. | |
| Smith said: “We subsidise agents so they don’t feel pressured to sell where it would not be appropriate.” | Smith said: “We subsidise agents so they don’t feel pressured to sell where it would not be appropriate.” |
| He said Morses was attracting more customers, rather than lending larger amounts – the average balance has fallen from about £480 three years ago when he became chief executive to £450 today. Household finances in the UK have been squeezed by rising inflation and stagnating wages. Smith said people still mainly borrow for special events such as Christmas, Easter and summer breaks. | He said Morses was attracting more customers, rather than lending larger amounts – the average balance has fallen from about £480 three years ago when he became chief executive to £450 today. Household finances in the UK have been squeezed by rising inflation and stagnating wages. Smith said people still mainly borrow for special events such as Christmas, Easter and summer breaks. |
| On a typical loan of £200 repayable over 20 weeks, people pay £15 per week to Morses, so end up paying £300 in total. Morses has a fixed interest rate of 50% on a 20-week loan, 65% on a 33-week loan and 82% on a 52-week loan. | On a typical loan of £200 repayable over 20 weeks, people pay £15 per week to Morses, so end up paying £300 in total. Morses has a fixed interest rate of 50% on a 20-week loan, 65% on a 33-week loan and 82% on a 52-week loan. |
| Doorstep lenders cater for about 1.8 million people who borrow regularly, out of a total of 10 million who have poor or incomplete credit histories. | Doorstep lenders cater for about 1.8 million people who borrow regularly, out of a total of 10 million who have poor or incomplete credit histories. |
| Neil Wilson, a senior market analyst at ETX Capital, said: “More evidence of the botched revamp at Provident Financial – rival Morses Club is stealing business hand over fist ... This is more evidence that the idea to change a business model that’s worked perfectly well for a 130 years was not so clever.” | Neil Wilson, a senior market analyst at ETX Capital, said: “More evidence of the botched revamp at Provident Financial – rival Morses Club is stealing business hand over fist ... This is more evidence that the idea to change a business model that’s worked perfectly well for a 130 years was not so clever.” |
| Morses looks poised for more growth after expanding its existing loan facility by £15m to £40m to fund expansion, he said. “This new loan facility is expected to deliver 400 new agent territories over this financial year – the troubles at Provident mean it may require a bit more.” | Morses looks poised for more growth after expanding its existing loan facility by £15m to £40m to fund expansion, he said. “This new loan facility is expected to deliver 400 new agent territories over this financial year – the troubles at Provident mean it may require a bit more.” |