Latest update on Provident’s Scheme of Arrangement and it is now in operation.
The Scheme was proposed because Provident could not afford to carry on paying full refunds to customers winning affordability complaints. The Financial Ombudsman was upholding 75% of complaints against Provident.
The FCA, Provident’s regulator, said it did not approve of the Scheme. But as Provident has stopped providing doorstep loans, the FCA did not object to the Scheme in court.
It started officially on 05 August 2021 after it was approved in court.
The deadline for claims was the end of February 2022.
Provident is now assessing the claims and has started contacting customers. See below for what you should do if yours has been rejected or they have only upheld some loans apparently at random.
Which loans are covered by the Scheme?
More than 4 million people were given a loan by Provident that comes under the Scheme.
These loans were given between 06 April 2007 and 17 December 2020.
The loans came from four different brands:
- Provident – often called “doorstep loans” or “home credit”;
- Satsuma payday loans;
- Greenwood – another doorstep loan brand that hasn’t been used since 2014;
- Glo – a very small guarantor loan brand.
In this article, I talk about “Provident loans” for short – but it also applies to loans from the other brands.
Provident also owns the Vanquis and Moneybarn brands – these are NOT included in the Scheme. If you have an affordability complaint about them, you can still make a normal affordability complaint and get a full refund.
The definition of “unaffordable”
A loan is only “affordable” if you could repay it on time and still be able to pay your other debts, bills and living expenses.
You may have paid the loan on time, but it may still have been unaffordable.
If paying Provident left you so short of money you had to borrow more or you got behind with bills then it was “unaffordable”.
If you had several loans without a break between them, then Provident should have realised you were trapped in a cycle of borrowing and that these expensive loans were not affordable. Even a single loan can be unaffordable if it is large.
You can no longer make a Claim to the Scheme
The deadline to make claims was the end of February – it is now too late.
How refunds are calculated
Is your complaint upheld?
The first stage in getting a refund is for Provident to decide whether to uphold your complaint. The steps in doing this are
- Provident will decide which loans are “unaffordable”. They will use the details of your loans and other information they have in their records, plus any evidence you have sent in. The more loans you had, the more likely it is that some loans will be unaffordable.
Often Provident will decide that the later loans were unaffordable as they should not have continued to lend to you. So if you had 7 loans, a decision may be that loans 4-7 were unaffordable.
If the first loans were very large, or you had recent CCJs, all the loans may be decided to be unaffordable.
- Provident will calculate the interest paid on the unaffordable loans. The interest you paid is the difference between what you borrowed and what you paid, so if you paid £420 on a £250 loan, that is £170 in interest.
- Provident will add 8% simple interest to the total interest on the unaffordable loans to give the total redress. This is 8% per year since the interest was paid. So if your loans were in 2011, you will have about 10 years of 8% interest added. If your loans were in 2019, you will only have 2 years of 8% interest added.
- You will be told which loans were unaffordable and what the total redress is. If you think more loans were unaffordable, you can appeal this.
Keep an eye on your claim
- When you have made a claim, you may not hear anything for months. You should be sent an email when they have decided your claim saying you can log in to the portal and see the result.
- But it is a good idea to check back every month or so though. They may have sent you an email that you missed as it went into spam.
- It’s important that you know as soon as your claim has been decided as there will be a time limit that you have to put in an appeal.
- You can log into the portal. Or look at the comments on this page and see if other people have heard anything.
Should you appeal a rejection or a poor offer?
The first thing you should do is check that Provident actually had a complete list of your loans.
If you moved, or changed agents, or had a Satsuma account as well, or changed your name or email address… you may have more than one Provident account and they all need to be put together and assessed as one account.
If Provident has not sent you a list of your loans with the decision on your claim, you should ask them for it.
You want to know:
- how large the loans were and how much interest you paid
- the date the loans were taken out and the dates repaid.
Email Informationrequests@provident.co.uk and explain that you need to know the dates of your provident loans and the details before you can decide whether to appeal the decision.
When you have the list, does it look reasonable? You may not have a full list yourself, but you should be able to tell if they have missed off all your loans from before 2017 when you moved house… Tell Provident about this and give them enough information so they can track down your other account and look again at whether your claim should be upheld.
You are more likely to get a refund the more loans you had, so getting some more added may make a big difference.
If the list looks complete, have a think about whether the loans were unaffordable. If you only had a couple of small ones, you won’t win an appeal. But if there were several loans, or they were large, then it’s worth making an appeal.
How much will you be paid and when?
The next stage is for Provident to divide up the £50 million in the Scheme between the people who have had their complaints upheld.
You will be paid a percentage of your total redress number, not all of it.
This percentage calculation can only be made after all the claims and appeals have been decided.
Provident thinks people may get paid 5-10% of the calculated amount. But this will depend on how many people claim and how many loans are refunded.
Payments may be made in Summer 2022. The date depends a lot on how many claims are initially rejected and how many of them are then appealed.
Credit records will be cleaned
In other schemes and Administrations, some people say getting rid of a default was the most important result for them. Not the small cash refund!
For upheld loans, any defaults or missed payments will be removed from your credit record.
This clean up will be done at the end when they can do everyone’s together. This is very annoying if you want to make a mortgage application, but there is nothing you can do to speed it up.
Loans that were sold to a debt collector
If your loan was sold to a debt collector, Provident will try to buy back the loan and settle it within the Scheme.
In the recent Money Shop Scheme, this was possible in most cases. There was only one difficult debt collector and I don’t think Provident used them.
Loans that hadn’t been sold were written off in December 2021
In December Provident announced that it was no longer collecting any payments for existing loans.
Your credit record is being changed to show that the loan is partially settled or partially satisfied.
If you are a Provident or Satsuma customer, you should have been told about this by email or letter.
This does NOT apply if your loan was sold to Lowell or another debt collector. Only the loans still owed to Provident have been written off.
You can still get a cash refund for other loans:
- if the refund on all your loans together came to £1500 and £480 has been written off, the refund calculated will be reduced to £1020 as you have already had part of the refund with the wite off.
- if the refund only came to £300 and you have had £480 written off, this will cancel out your refund and you won’t get any cash. But this won’t change the write off that has already happened.
Disclaimer: This article was originally written by Sarah Williams at Debt Camel.