When the draper Sir Joshua Waddilove created a loan scheme for Bradford’s poor in the 1880s, it was because he could see their struggle to afford clothing, food and coal.
He issued them vouchers which they could use to buy essentials, to be repaid in small, affordable sums. Over the decades, his clothing business faded away but his mini-loans morphed into Provident Financial, a FTSE 250 business.
As profit, not Methodist altruism became the driving factor, the scheme changed. Annual interest rates now are advertised at 1557%.
But not for long. The Provi has today declared it is pulling out of this line of work. Few will mourn, even as they spare a thought for the 2100 jobs on the line.
Having been accused of mis-selling, the Provi has been chased by claims management firms which could sink the company but for a deal it is negotiating to limit compensation.
The company feels hard-done-by by the courts; why should legal rulings in 2020 be used to judge sales made years earlier? It seems more likely that, like banks with PPI, they should have behaved better in the first place.
But before we get too morally satisfied at the demise of its high-interest lending, it’s right to consider what will take the Provi’s place? Not Amigo, which is in similar straits, and perhaps not NSF, which needs more capital to survive.
Most likely, it will be smaller, local firms with less of a reputation to worry about. Perhaps, even, a fondness for baseball bats and bullying.
Sadly, demand for high-cost loans won’t go away. We need to find a safer way of supplying it.