Supplementary memorandum by Provident
Financial
I am writing in the hope of clarifying a figure
quoted by Mike Barry of Citizens Advice in his oral evidence to
the Committee on 24 January.[298]
Q47. Susan Kramer: If we were to look
at that group which would probably be described as "completely
excluded", at least from the mainstream, do you have any
sense of how many of them are using the doorstep lender, the kind
of tally man?
Mr Barry: We have been doing a survey of
our debt advisors recently to look at just at that issue. One
of our advisors found that 72% of the people who came for debt
advice, had debts to the doorstep lenders but not exclusively
to the doorstep lenders. They also had mainstream bank loans and
credit cards. So it definitely is a mixture of the two rather
than one.
The statistic from the Blackpool advisor surprised
us as it contrasts with other sources of information on this topic,
notably the 2003 Citizen's Advice Report In Too Deep and
the Competition Commission's 2005 Emerging Thinking report
on the home credit sector. In Too Deep was a large-scale, national
survey. We would suggest that it provides a more representative
picture of the borrowing profile o a typical Citizens Advice client.
Provident Financial highlighted In Too Deep's findings
in its recent submission to the Committee (paragraphs 45 and 46).
45. In a 2003 report, Citizens Advice (England
and Wales) found that home credit did into feature as major source
of debt among those seeking debt advice. Even among those on low
incomes (less than £800 a month) home credit featured as
a debt for only 3 to 4% of clients. Of the 12 categories of debt
recorded by Citizens Advice, clients were more likely to have
9 to 10 other categories of debt before home credit.[299]
46. The Competition Commission noted that:
"credit counselling services and Citizens
Advice Bureaux, which handle many cases of over indebtedness or
other debt problems, have told us that they receive few complaints
and advise on few problems related to home credit."[300]
Provident Financial records formal contacts
made to it from the advice sector as a whole, including Citizens
Advice. These indicate that the percentage of our customers who
approach the free monetary advice sector for assistance is of
the level reported in In Too Deep.
February 2006
298 Ev 1-25 Back
299
Citizens Advice, In Too Deep, CAB clients' of debt, 2003,
page 120. Back
300
Competition Commission Emerging Thinking, 2005, para 36. Back
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