Page last updated at 01:03 GMT, Monday, 23 November 2009

'I often cry myself to sleep'

By Nick Lawrence
Inside Out West Midlands

Wood End resident Barry Richardson
Barry Richardson said it was hard not being able to afford presents

"If you're unemployed and you've got no money coming in it's hard," said Barry Richardson, who has lived his whole life in Coventry's Wood End estate.

"You've got to tell your kids they can't have the presents. It's really hard."

The Wood End estate is one of the most deprived in the UK.

Many of its residents live below the poverty line - and when you are desperate, the idea of a cash loan to get the family through Christmas seems very attractive.

For many people, getting a knock on the door offering them £300 in cash is difficult to resist, even if they have no disposable income.

'Coming or going'

Loan provider Provident Financial actively markets its services around the Wood End estate just before Christmas - and it is not cheap.

Taking out a £300 loan over a 12-month period will attract a total of £246 in charges.

Provident Financial has claimed that comparing its loans to other credit products is unfair.

A statement from the company said: "Home credit includes all charges in a single, upfront, fixed charge that customers see from the start.

"Other lenders do not include charges such as set-up charges, administration charges, penalty charges or additional interest charges in their products and so direct comparisons are misleading."

Wood End
Wood End is one of the most deprived estates in the UK

One long-standing customer, who wanted to stay anonymous, said she had taken out loan after loan.

She said she now regretted ever getting involved with Provident Financial and was desperate to find a way out.

"I often cry myself to sleep," she said.

"It's taken a lot of my life away. I don't know whether I'm coming or going some days because I'm lending when I can't afford to pay it back."

Provident said it had a commitment to customer service and said it would encourage any customer who was experiencing problems in meeting repayments to contact the company to discuss ways in which it could offer support.

A national study for the Citizens' Advice Bureau (CAB) in 2003 showed that only about 5% of the debts they saw related to home credit.

'Riddled with deprivation'

However, in Coventry, experts have said the problems run much deeper.

Charlie Gibbons, chief executive of Coventry's CAB, said that out of the 3,500 debt cases they saw every year about 2,000 involved Provident debts.

Provident has disputed these figures.

A statement from the company said: "The Coventry Citizens' Advice Bureau statistics are not representative and conflict with other studies, including another study conducted by the Citizens' Advice Bureau themselves."

And the Wood End estate is riddled with deprivation.

There is just one shop and large areas of the estate are boarded up.

It is an area which has failed to break out of the poverty cycle and is a major concern for one of the country's leading debt campaigners.

Customer satisfaction is extremely important to us and all of our products are designed to provide convenient, transparent and flexible credit
Provident Financial statement

Damon Gibbons, from the think tank the Centre for Economic and Social Inclusion, recently visited the estate.

"It's clearly an estate that's on the breadline," he said.

"And ultimately, taking money out of this estate in high-cost interest payments is just going to degenerate its economy, its local economy, further.

"Looking at the shops around us, looking at everything boarded up, you know there's no money left here to actually sustain a decent thriving local community."

Provident Financial said it had a total of 1.8 million home credit customers, many of who, it said, found the loans "helpful to spread the cost of Christmas".

"Customer satisfaction is extremely important to us and all of our products are designed to provide convenient, transparent and flexible credit that reflects our customers' needs," a statement said.

"Loans can be as little as £50 and our customers benefit from the security of knowing that the amount they owe will never go up, even if they miss repayments."

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