Provident Financial is one of the best-known consumer credit firms not just in the industry, but also across the industry’s customer base. It began life with a model that many other firms went on to imitate and which had the agent-customer relationship at its heart. It has served thousands of low-income customers over many years and across several generations.
One of the keys to its success was its’ self-employed agents and the way that they knew and understood their customers, providing substantially more than just a service and collection point.
What today’s news demonstrates is that market disruption – through the unintended consequences of regulation or market forces – leaves casualties across all stakeholders; consumers, employees and shareholders.
It appears that FCA intervention – though well-intended – has disrupted the agent-customer relationship which ensured appropriate, affordable borrowing. Provident’s new customer experience managers appear to be operating from afar, not being able to fully understand the requirements and capacity of the short-term credit customer.
It has created a woeful gap, for shareholders and employees, but mostly for customers. It begs the question of where are these customers going to go? Credit Unions have their place, but not in this particular space. Financial education requires a ‘root and branch’ review as market innovation moves apace.
We are yet to understand the full impact of new regulation and changing business models. What we do know, however, is that legacy and longevity does in no way guarantee a firm’s future in today’s industry arena.
Greg Stevens, Chief Executive Officer, CCTA