Member Article

Doorstep lending criticised for ?excessive? APRs

Doorstep lending has been accused of “extortionate” charging after a bank announced half-year profits of £53.1m - no doubt helped by high interests rates, supposedly up to 545% APR.

Provident Financial was described as “probably the most profitable bank in the world” after posting the profits, drawing damning fury from children’s charity Barnardo’s.

Barnardo’s also claimed the Bradford-based lender was ripping off those most in need, rekindling the debate on how low-income families can access affordable credit.

The Consumer Credit Counselling Service (CCCS), however, highlighted said the issue was more complex.

Frank Walker, head of media at the CCCS, said: “The issue is never black and white with doorstep lenders. The APRs are very high because of their agent system and the risk of repayment, but they give borrowers what they want.

“They like to know they have to pay a certain amount back each week, which won’t change.”

There were concerns with doorstep lending before the recession, spurning an inquiry by the Competition Commission in 2006.

The Commission said consumers were charged on average 9% too much for their loans, and so being overcharged £100m.

This was posted in Bdaily's Members' News section by Ruth Mitchell .