0:00:02 > 0:00:10The economy might be struggling, but one area business is thriving.
0:00:10 > 0:00:18The debt business. Pay day loans and door-to-door lending. We go
0:00:18 > 0:00:21under cover with Britain's biggest doorstep lender. I've got a
0:00:21 > 0:00:26customer there and Shopacheck has been in and got money off her and
0:00:26 > 0:00:30she's not paying me. We learn how the company keeps people in debt.
0:00:30 > 0:00:34So if they're good payers you want to offer them more loans? You don't
0:00:34 > 0:00:38ever want to let them pay up. find vulnerable customers who've
0:00:38 > 0:00:44been sold loans. What do you think of the agent that approved it?
0:00:44 > 0:00:54Disgusted. They've taken advantage of her. Tonight, we reveal the real
0:00:54 > 0:01:11
0:01:11 > 0:01:15This is Rochdale in Lancashire. Like towns up and down the country,
0:01:15 > 0:01:19it's had a tough time during the recession. According to Government
0:01:19 > 0:01:27figures, it's one of the poorest boroughs in the country, with
0:01:27 > 0:01:33unemployment rates 40% higher than the national average. Rochdale used
0:01:33 > 0:01:40to be a thriving mill town. This was the main shopping street in the
0:01:40 > 0:01:4550s and again 20 years later. But it's a different High Street today,
0:01:45 > 0:01:50reflecting a new economic climate. Within the space of a five minute
0:01:50 > 0:01:55walk on the main shopping street, there are eight shops offering pay
0:01:55 > 0:01:58day loans. The economic downturn has meant people on low incomes can
0:01:58 > 0:02:03struggle to get credit. These places have stepped into the gap.
0:02:03 > 0:02:10They offer short-term, high-cost loans to people who might struggle
0:02:10 > 0:02:14to borrow anywhere else. So just how easy is it to get one? Industry
0:02:14 > 0:02:17guidelines say lenders should check whether customers can afford to pay.
0:02:17 > 0:02:22We sent an undercover reporter to see how much money he could get
0:02:22 > 0:02:28while claiming to be on the minimum wage. First stop was this place,
0:02:28 > 0:02:32the on shop. -- the Money Shop. wondered if I could take out a loan.
0:02:32 > 0:02:37At each shop he visited he was asked for a bank statement. Working
0:02:37 > 0:02:47at the moment? Yes. Wages going into your bank account? Yes. That's
0:02:47 > 0:02:50
0:02:50 > 0:02:56all been authorised for you. You'll be able to borrow �150 off us.
0:02:57 > 0:03:01So after about 20 minutes, we get �150, a month to pay it back,
0:03:01 > 0:03:04�37.50 in interest. Our reporter was only asked the most basic
0:03:04 > 0:03:14questions about income and outgoings. Next up, the Cheque
0:03:14 > 0:03:19Centre. We were in here for about an hour. We've given you �100 limit.
0:03:19 > 0:03:29If that clears you can increase it. This time just over a week to pay
0:03:29 > 0:03:32
0:03:32 > 0:03:35and a fee of �25. Again very few checks. �250 so far. Next up, The
0:03:35 > 0:03:44Cash Store, again, we were in there for an hour or so. What do you get
0:03:44 > 0:03:49after tax roughly? What was your last pay cheque for? �193.90.
0:03:49 > 0:03:55could do �190 for you. That would be two loans. Remember, we wanted
0:03:55 > 0:04:00to see what checks there would be. Listen to this. The only thing we
0:04:00 > 0:04:05ask for because we don't do credit checks. We ask for five references
0:04:05 > 0:04:08OK. No credit reference checks. Those references he wants are
0:04:08 > 0:04:15telephone numbers for family and friends. He calls three of them.
0:04:15 > 0:04:22Again our reporter gets his cash, this time on a koord. I've added
0:04:22 > 0:04:32�192.50 so you can access your �190. Another �190 borrowed over a
0:04:32 > 0:04:39fortnight, it will cost us �65.25. We're now up to �440 no bother. We
0:04:39 > 0:04:42tried one last place, Cash Converters. �126 borrowed, � 168 to
0:04:42 > 0:04:48pay back. Cash Converters did the most to assess whether we could
0:04:48 > 0:04:52afford the loan. Though, once again, our reporter gets his money.
0:04:52 > 0:05:00That's your company. I'm manic. I've got two other new customers
0:05:00 > 0:05:06waiting. That's �126 to be paid back in a month, plus a �37 fee. In
0:05:06 > 0:05:11a short period of time, we were able to borrow �566. Over the next
0:05:11 > 0:05:21month, we'll have to pay it all back with interest fees and charges
0:05:21 > 0:05:29of �168. Now, all of the companies, except Cash Converters offered to
0:05:29 > 0:05:32fefr payment. If you do that costs could spiral. -- defer. The
0:05:32 > 0:05:35Consumer Finance Association represents all the companies except
0:05:35 > 0:05:40The Cash Store. Our members work closely to a code of practice.
0:05:40 > 0:05:43They're highly regulated by the Office of Fair Trading. It may not
0:05:43 > 0:05:47be something that's immediately apparent to somebody taking out a
0:05:47 > 0:05:52loan, but there's a careful assessment made to make sure that
0:05:53 > 0:05:56person can afford to pay back at the end of the period. Cash store
0:05:56 > 0:05:59says it asks for evidence of income and assesses the ability to pay.
0:05:59 > 0:06:04All the lenders say costs are transparent. One man has carried
0:06:04 > 0:06:09out a study of debt in Rochdale. Professor Karl Dayson says deprived
0:06:09 > 0:06:12communities have an unhealthy dependencey on credit. They have a
0:06:12 > 0:06:15dichotomy where it's helpful in the short-term because it puts new
0:06:15 > 0:06:18money into the community. But at the same time, the long-term effect
0:06:18 > 0:06:25is that the high cost of that interest is taking money out of the
0:06:25 > 0:06:28community that will never be spent in that communities. It didn't take
0:06:28 > 0:06:32long to get that cash. We went looking for the loans. There is
0:06:32 > 0:06:41another high interest lender, but you won't find them here on the
0:06:41 > 0:06:45High Street. This is debt that arrives at your front door.
0:06:45 > 0:06:51Provident Financial is a multimillion pound FTSE 250 company.
0:06:51 > 0:06:57Based in Bradford, it offers door t door loans at relatively high
0:06:57 > 0:07:02interest rates to 1.8 million customers. Last year, it made �127
0:07:02 > 0:07:08million in pre-tax profits from its home credit business. This is one
0:07:08 > 0:07:11of their promotional videos. Their agents -- their agents and those
0:07:11 > 0:07:15from Greenwoods, another company owned by prove dents, collect loan
0:07:15 > 0:07:20repayments from your home. We call on one household in 20 in the UK
0:07:20 > 0:07:25every week. Provident dominate the doorstep lending market. Many
0:07:25 > 0:07:29families have used them for generations. But Panorama has been
0:07:29 > 0:07:36told by customers and by people who have worked for the company of
0:07:36 > 0:07:42concerns surrounding some of provident's business practices. We
0:07:42 > 0:07:47decided to send a reporter under cover. He applies and within two
0:07:47 > 0:07:51weeks is invited in for an interview. He meets one of
0:07:51 > 0:07:55provident's district managers who explains you mainly get paid on
0:07:55 > 0:07:59commission and straight away it's clear there's pressure to sell
0:07:59 > 0:08:03loans. Everyone's targeted everywhere, right the way down the
0:08:03 > 0:08:06business. Everyone gets a target. I'll get a target of maybe I need
0:08:06 > 0:08:10to give 15 grand of loans out. I spread that amongst the agents. You
0:08:10 > 0:08:14might get two grand of it. If you hit your target in the month and
0:08:14 > 0:08:19you put customers on, you get a bonus. He tells us the best ways to
0:08:19 > 0:08:24keep people repaying the loans. don't want people bullying people.
0:08:24 > 0:08:28You talk in a firm and fairway. The agents will show you how they do it.
0:08:28 > 0:08:32Women are the best. Some of them are bloody marvellous how they get
0:08:32 > 0:08:38money out of people. But they're good at it and nice about it.
0:08:38 > 0:08:45are online exercises in the office, but most of our reporter's trainer
0:08:45 > 0:08:49is on the road. He spent time with two women. Sam, an agent and Jo, a
0:08:49 > 0:08:55manager, both working in the North West. They do demanding jobs with
0:08:55 > 0:09:01targets to meet. First, we meet Sam. She started working for provident
0:09:01 > 0:09:05having had loans with the company herself. Are you Sam? Hello.
0:09:05 > 0:09:10weren't expecting a man were you? No I wasn't. Not at all.
0:09:10 > 0:09:14explains we're going to go door to door collecting Rhone repayments.
0:09:14 > 0:09:21Agents earn commission on the money -- loan repayments. Agents earn
0:09:21 > 0:09:31commission on the money they collect between �9 and �6 for every
0:09:31 > 0:09:34
0:09:34 > 0:09:42The pensioner pays provident �54 a week to pay off her loans. So she
0:09:42 > 0:09:46owes an absolute whack, about �5,000? Yes. Blimey. Is she on
0:09:46 > 0:09:52benefits? She's got a lot of pension. She has a disability as
0:09:52 > 0:09:57well. She owes �4,485. Sam says the majority of customers are on
0:09:57 > 0:10:00benefits. She pays the �54 a week and her pension and benefits will
0:10:00 > 0:10:08cover that all right? Yeah and she's been offered more money.
0:10:08 > 0:10:13She's only just had one last week. What's she been offered? She's been
0:10:13 > 0:10:18offered 1200 quid. So despite already owing �4,500, she's being
0:10:18 > 0:10:26offered more. We found many customers who'd been sold
0:10:26 > 0:10:31successive loans. It can mean some customers being in debt for years.
0:10:31 > 0:10:37Like Joseph and Mary. I looked out the window and I went, oh, that's
0:10:37 > 0:10:42my Mary. After we filmed them under cover, I went back to meet them.
0:10:42 > 0:10:47They told us they borrowed �500 more than 15 years ago, but one
0:10:47 > 0:10:51loan turned into many. When they were struggling to pay recently,
0:10:51 > 0:10:57provident reduced their weekly payments, but they say they still
0:10:57 > 0:11:03owe nearly �2,000. How did it feel when you got the money? It felt
0:11:03 > 0:11:12great, have some money in your hand. Due trust the company? I did at
0:11:12 > 0:11:17first, yeah. Now it's money, money, money. If somebody had said to you
0:11:17 > 0:11:20when you took the loan out in 17 years you'll still be paying �120 a
0:11:20 > 0:11:27month for this and other loans, what would you have thought?
0:11:27 > 0:11:35wouldn't have believed them. They go on and on and on. There's no end
0:11:35 > 0:11:42to it. And we saw that happen, as well as collecting payments, ats
0:11:42 > 0:11:46are encouraged to sell more loans. -- agents. Sam explains how with
0:11:46 > 0:11:49another customer. Say you're being offered �1200 more. He'll go right,
0:11:49 > 0:11:53I'll think about that. So that you've put the seed there, so that
0:11:53 > 0:11:57you know, he can then contact you when he's ready for it. He know
0:11:57 > 0:12:00that's he's got it and he know it's there. That helps you, because if
0:12:00 > 0:12:03they don't know they're being offered money, they're not going to
0:12:03 > 0:12:11take it, are they? They arrive at his house. He currentsly owes just
0:12:11 > 0:12:17over �300. He hasn't asked for this new loan. 1200 quid. They're
0:12:17 > 0:12:25offering you 1200 quid. And how the bloody helm I going to pay 1200
0:12:25 > 0:12:30quid back. His current loan costs �15 a week. Sam suggests he can pay
0:12:30 > 0:12:34�20 a week for the next two years. Then he can afford another �1,000
0:12:34 > 0:12:39loan. It sounds a tempting offer. Come back Tuesday with a thousand
0:12:39 > 0:12:45quid. You want it Tuesday? In 12 seconds he goes from worrying about
0:12:45 > 0:12:51how he'll pay to agreeing to a two- year loan. Good profit for
0:12:51 > 0:12:56provident and there are two rewards for Sam. One, for clearing the old
0:12:56 > 0:13:04loan and then commission on the new one. Four days later, Sam returns
0:13:04 > 0:13:08with the cash. What's all the rubbish here? It's yours. I'm going
0:13:08 > 0:13:12to tell you about it in a second. But there's a problem. He thought
0:13:12 > 0:13:19he was getting �1,000 in his hand, but he doesn't seem to realise that
0:13:19 > 0:13:29the balance of his outstanding loan, which is �310 is being deducted.
0:13:29 > 0:13:31
0:13:31 > 0:13:35that's what there is there ��689.27. If you want to check it? No, I
0:13:35 > 0:13:39trust you, love. Sam hasn't explained the interest rate or how
0:13:39 > 0:13:47much he'll pay back in total. Our reporter asks her. How much will it
0:13:47 > 0:13:51all to the up to over two years? �2,120. That's quite a lot. Yes,
0:13:51 > 0:13:55that's why we're doorstep lenders. If you think they have to pay their
0:13:55 > 0:14:05agents. They've got to pay the office staff. They've got to pay
0:14:05 > 0:14:07
0:14:07 > 0:14:10the big bosses. That's why there's We showed our footage to Gillian
0:14:10 > 0:14:18Guy, the Chief Executive of the Citizens Advice Bureau, a charity
0:14:18 > 0:14:23which offers help to people in debt. It's like "we give you money",
0:14:24 > 0:14:29that's how it sounds. It's selling money. It feels quite misleading
0:14:29 > 0:14:34and quite exploiting a relationship. Provident says it's always the
0:14:34 > 0:14:37customer's decision to take out another loan. But it doesn't always
0:14:37 > 0:14:41feel that straightforward on the ground.
0:14:41 > 0:14:51On a round with Jo the manager, our reporter is offered inside advice
0:14:51 > 0:15:01
0:15:02 > 0:15:07on how the debt business really You heard that right - she just
0:15:07 > 0:15:17said "you don't ever want to let them pay up". The company and the
0:15:17 > 0:15:21
0:15:21 > 0:15:28agents make money from good Away from the round, our chase for
0:15:28 > 0:15:31easy loans continues. So, we've already got more than
0:15:31 > 0:15:36�500 from payday loan companies that are on the high street. What
0:15:36 > 0:15:38we want to do now is see what else we can get from payday loan
0:15:38 > 0:15:45companies that operate on the Internet.
0:15:45 > 0:15:49In the space of an hour, we borrow another two loans, each of �200.
0:15:49 > 0:15:53The checks appeared minimal, one company simply asked us to tick a
0:15:53 > 0:16:00box if we thought we could afford a loan.
0:16:00 > 0:16:05Here we go. �200 safely secured. We are now up to nearly �1,000 with
0:16:05 > 0:16:09barely any effort. Only one in ten online loans
0:16:09 > 0:16:14applications are approved. There is a huge amount of data that is
0:16:14 > 0:16:18assessed in a very short period of time through very complex
0:16:18 > 0:16:24technology to ensure that when you apply for an online loan, that
0:16:24 > 0:16:28lender knows a great deal about you and has made a huge amount of
0:16:28 > 0:16:35calculations that have taken place. Across all the loans, high street
0:16:35 > 0:16:39and Internet, the interest and charges on �96 6 is �287. But if
0:16:39 > 0:16:45the companies' letters defer paying for another month, we'll be looking
0:16:45 > 0:16:48at paying back more than �500 with debt. With debts soreadily
0:16:48 > 0:16:54available, it's easy to see how it can slip out of control. It becomes
0:16:54 > 0:16:58an extra form of income. People see it as an income stream, especially
0:16:58 > 0:17:01if you are rolling from one form of credit to another. That becomes
0:17:01 > 0:17:05difficult. We are back on the road with Sam,
0:17:05 > 0:17:09the Provident agent. Her job is to collect the weekly payments, to
0:17:09 > 0:17:14sell new loans and decide whether customers can afford them.
0:17:14 > 0:17:17But these are often deprived areas and there's only so much money to
0:17:17 > 0:17:22go round. Customers may take on debts with
0:17:22 > 0:17:32other companies and it can be hard for the agents to know. And that
0:17:32 > 0:17:32
0:17:32 > 0:17:42can create problems. Sam has spotted an agent from a
0:17:42 > 0:17:54
0:17:54 > 0:17:59rival company Shopacheck visiting A few days later, Sam calls on the
0:17:59 > 0:18:02customer. She's almost �4,000 in debt to Provident and is falling
0:18:02 > 0:18:12into arrears. If Sam doesn't collect today, the company will
0:18:12 > 0:18:31
0:18:31 > 0:18:41Her fears are confirmed. The competition got there first. Sam
0:18:41 > 0:18:58
0:18:58 > 0:19:03Professor Karl Dayson helps set up and run a not-for-profit door stop
0:19:03 > 0:19:07lending company. The agents for those organisations live on the
0:19:07 > 0:19:10same estates. Their money is often peace rate money, they depend on
0:19:10 > 0:19:15you repaying their debt in order for them to get paid. In that sort
0:19:15 > 0:19:18of environment, that can create all sorts of local tensions, if you
0:19:18 > 0:19:28don't repay. Provident says that even when customers miss payments,
0:19:28 > 0:19:38
0:19:38 > 0:19:43As our reporters' training continue, he becomes concerned about
0:19:43 > 0:19:47apparently vulnerable people being lent money.
0:19:47 > 0:19:57Jo, the manager, tells him of a conversation she had about a
0:19:57 > 0:20:18
0:20:18 > 0:20:22customer with mental health Later, with Jo, he visits another
0:20:22 > 0:20:32woman, 60-year-old Sheila who lives on her own. She has two loans,
0:20:32 > 0:21:03
0:21:03 > 0:21:08though Jo didn't issue them, she Industry guidelines say borrowers
0:21:09 > 0:21:13who may be particularly vulnerable should not be targeted or exploited.
0:21:13 > 0:21:16What does the Chief Executive of the Citizens Advice Bureau think of
0:21:16 > 0:21:21our footage? I don't blame the agent for that
0:21:21 > 0:21:25because that's the mill they're in, it's kind of, you know, keep the
0:21:25 > 0:21:29money rolling in, keep people hooked. But there's a whole model
0:21:29 > 0:21:34here that is not about any social responsibility or other
0:21:35 > 0:21:43responsibility for what is happening to people.
0:21:43 > 0:21:48I went back to see the customer, Sheila, myself. She's had loans
0:21:48 > 0:21:54with Provident over the last seven years. She's a good payer and says
0:21:54 > 0:21:59she gets letters from the company offering her more loans. But should
0:21:59 > 0:22:03they be doing that? When you get the loans, talk us
0:22:03 > 0:22:09through what happens? Have they offered youd the money, or have you
0:22:09 > 0:22:16asked for the money? No, they've offered me the money. What do they
0:22:16 > 0:22:22say? Well, they just send your letters saying you can have another
0:22:22 > 0:22:27say �200 and just ask you to ask your agents.
0:22:27 > 0:22:32Provident told us that in its view, Sheila is capable of making
0:22:32 > 0:22:42informed decisions about her finances. But her sister, who was
0:22:42 > 0:22:46
0:22:46 > 0:22:51unaware of the loans, was angry at If you went to talk to her, your
0:22:51 > 0:22:57sister, in her house, should an agent then approve a loan?
0:22:57 > 0:23:02No. No. Because they'd clearly be able to see just by looking around
0:23:02 > 0:23:07the house that she is vulnerable. So what do you think then of the
0:23:07 > 0:23:10agent that approved it? Disgusting. They're taking advantage of her.
0:23:11 > 0:23:15Taking advantage, definitely... Taking advantage of her. Remember,
0:23:15 > 0:23:19Jo didn't sell the loan, she just collects the money. Provident says
0:23:19 > 0:23:23its agents are provided with training to identify where a loan
0:23:23 > 0:23:29would be wrong because of a person's vulnerability. But our
0:23:30 > 0:23:35reporter saw little evidence of it on the ground. In a conversation
0:23:35 > 0:23:45with Sam, he's told of a customer who's not all there. But there's no
0:23:45 > 0:24:01
0:24:01 > 0:24:05apparent recognition of how We tracked down the customer's
0:24:05 > 0:24:10family. Her mother agreed to talk to us but anonymously to protect
0:24:10 > 0:24:15her daughter. She says her daughter wiz diagnosed with schizophrenia as
0:24:15 > 0:24:22a teenager and now, 20 years later needs constant support. How much
0:24:22 > 0:24:26does she depend on you? A lot. I come three times a day and if she's
0:24:26 > 0:24:30really ill, I stop overnight with her. She does depend on me a lot.
0:24:30 > 0:24:37If it weren't for me, she wouldn't have her own home because she
0:24:37 > 0:24:41couldn't cope. We showed her our evidence. Ste stands there grunting
0:24:42 > 0:24:47and rocking... I'm disgusted. It's really upset me. At the end of the
0:24:47 > 0:24:51day, it's a human being, and that is my flesh and blood. I'm sorry
0:24:51 > 0:24:56for getting upset. The lending guidelines are clear - loans should
0:24:56 > 0:25:00only be issued to those with the mental capacity to make informed
0:25:00 > 0:25:06borrowing decisions. The woman tells us her daughter has borrowed
0:25:06 > 0:25:11several thousand pounds over a number ofiers. You can talk to
0:25:11 > 0:25:16(BLEEP) anybody in the right mind should know they've got an illness.
0:25:16 > 0:25:20Then she'll talk as though she's got about three or four voices
0:25:20 > 0:25:26running around her head sometimes. You will naturally know there's
0:25:26 > 0:25:31something wrong with somebody. decided to see for myself whether
0:25:31 > 0:25:36Provident collects from this vulnerable woman.
0:25:36 > 0:25:41It's Friday night, and that's when the agent comes to collect the
0:25:41 > 0:25:47Provident money. Now I know about the case, and how vulnerable this
0:25:47 > 0:25:57woman is, I want to see for myself what they actually just do come and
0:25:57 > 0:26:06
0:26:06 > 0:26:12There you go. In fairness to Sam, she didn't issue the loans, she's
0:26:12 > 0:26:16just collecting the money. Provident says it has strict
0:26:16 > 0:26:23policies to prevent loans being advanced to anyone it believes
0:26:23 > 0:26:27doesn't have the mental capacity to understand the terms of the loan.
0:26:28 > 0:26:33Should Provident be offering deals to your daughter? No. Why? Because
0:26:33 > 0:26:39she's so vulnerable, she just would agree to them all the time. She
0:26:39 > 0:26:43could just say yes, yes, and just carry on. I want it all to stop.
0:26:43 > 0:26:49The business behind all of that is making money out of that situation.
0:26:49 > 0:26:53That's what I call into question, aside from just this personal piece,
0:26:53 > 0:26:58which is the motivation to keep exploiting people who clearly can't
0:26:58 > 0:27:02be held responsible for their own decisions in that situation.
0:27:02 > 0:27:12Provident declined to be interviewed, but in a statement,
0:27:12 > 0:27:21
0:27:21 > 0:27:27However, with 1.8 million customers, we recognised that we will not
0:27:27 > 0:27:32always get it right and if we make a mistake, we work hard to put
0:27:32 > 0:27:38matters right. Our reporter spent five days
0:27:38 > 0:27:43training with Provident, a snapshot from the doorstep.
0:27:43 > 0:27:51We also managed to borrow nearly �1,000 from payday loan companies
0:27:51 > 0:27:55with barely any effort. If we don't care about the entire
0:27:56 > 0:27:59financial system, specially those that are suffering its most extreme
0:27:59 > 0:28:06elements at the bottom, it always comes back to bite us.
0:28:06 > 0:28:11We will all pay. Our economy was brought to its
0:28:11 > 0:28:16knees by bad debt. But our inside view of doorstep lending suggests
0:28:16 > 0:28:25that the pressure to sell loans can still leave some vulnerable people
0:28:25 > 0:28:29with debt they should never have. And on Wednesday, at 9pm, a