The chair of the Commons business select committee has demanded the financial regulator take action against the payday loan firm Provident, after it “cynically” advertised 535% APR loans over the Christmas period.
In the run up to Christmas, Provident’s mail-shot featured photographs of a small girl smiling and wearing a Christmas cracker hat. The direct marketing literature stated that it would not be Christmas without “the look on her face”.
Other images included two girls laughing as they hung tinsel around their grandfather. The leaflet offered loans of £100-£1,000 at a “representative” interest rate of 535%.
Rachel Reeves, the Labour MP who chairs the business, energy and industrial strategy select committee, said the leaflet had been clearly designed to pull at the heart strings of the vulnerable, and was a “new low” for the payday lending industry.
Reeves, who is the MP for Leeds West, said the company was clearly trying to exploit the financially vulnerable.
On Monday she wrote to the head of the Financial Conduct Authority, Andrew Bailey, asking what action the regulator could take against Provident, in a bid to prevent such adverts appearing again.
“I believe this was a cynical tactic to exploit vulnerable people who struggle financially at the best of times, let alone over the festive season. Provident tried to use a deliberately, emotionally loaded message to urge them to take out a loan at a rip-off rate of interest,” Reeves said.
Last week the Advertising Standards Authority ruled that the advert had been irresponsible, and it had targeted vulnerable consumers. The ASA ruled that it should not be used again.
Reeves said she believed the ASA’s action had not gone far enough in tackling Provident’s behaviour, which is why she was writing to the FCA.
Provident did not respond to the Guardian’s request for comment.
It previously told the ASA that credit was only issued “following a face-to-face meeting in a customer’s home, where their needs were discussed and where checks on affordability, suitability and sustainability were made”.
In 2017 Provident Financial, as it was then called, lost two-thirds of its stock market value in a day, after the doorstep lender parted company with its chief executive and revealed it was facing an FCA investigation into its credit card business.
In the same year it replaced 4,500 self-employed sales agents who went door to door, offering loans and collecting debts, with 2,500 full-time “customer experience managers”.