Undercover: Debt on the Doorstep Panorama

The economy might be struggling, but one area business is thriving.

The debt business. Pay day loans and door-to-door lending. We go

under cover with Britain's biggest doorstep lender. I've got a

customer there and Shopacheck has been in and got money off her and

she's not paying me. We learn how the company keeps people in debt.

So if they're good payers you want to offer them more loans? You don't

ever want to let them pay up. find vulnerable customers who've

been sold loans. What do you think of the agent that approved it?

Disgusted. They've taken advantage of her. Tonight, we reveal the real

This is Rochdale in Lancashire. Like towns up and down the country,

it's had a tough time during the recession. According to Government

figures, it's one of the poorest boroughs in the country, with

unemployment rates 40% higher than the national average. Rochdale used

to be a thriving mill town. This was the main shopping street in the

50s and again 20 years later. But it's a different High Street today,

reflecting a new economic climate. Within the space of a five minute

walk on the main shopping street, there are eight shops offering pay

day loans. The economic downturn has meant people on low incomes can

struggle to get credit. These places have stepped into the gap.

They offer short-term, high-cost loans to people who might struggle

to borrow anywhere else. So just how easy is it to get one? Industry

guidelines say lenders should check whether customers can afford to pay.

We sent an undercover reporter to see how much money he could get

while claiming to be on the minimum wage. First stop was this place,

the on shop. -- the Money Shop. wondered if I could take out a loan.

At each shop he visited he was asked for a bank statement. Working

at the moment? Yes. Wages going into your bank account? Yes. That's

all been authorised for you. You'll be able to borrow �150 off us.

So after about 20 minutes, we get �150, a month to pay it back,

�37.50 in interest. Our reporter was only asked the most basic

questions about income and outgoings. Next up, the Cheque

Centre. We were in here for about an hour. We've given you �100 limit.

If that clears you can increase it. This time just over a week to pay

and a fee of �25. Again very few checks. �250 so far. Next up, The

Cash Store, again, we were in there for an hour or so. What do you get

after tax roughly? What was your last pay cheque for? �193.90.

could do �190 for you. That would be two loans. Remember, we wanted

to see what checks there would be. Listen to this. The only thing we

ask for because we don't do credit checks. We ask for five references

OK. No credit reference checks. Those references he wants are

telephone numbers for family and friends. He calls three of them.

Again our reporter gets his cash, this time on a koord. I've added

�192.50 so you can access your �190. Another �190 borrowed over a

fortnight, it will cost us �65.25. We're now up to �440 no bother. We

tried one last place, Cash Converters. �126 borrowed, � 168 to

pay back. Cash Converters did the most to assess whether we could

afford the loan. Though, once again, our reporter gets his money.

That's your company. I'm manic. I've got two other new customers

waiting. That's �126 to be paid back in a month, plus a �37 fee. In

a short period of time, we were able to borrow �566. Over the next

month, we'll have to pay it all back with interest fees and charges

of �168. Now, all of the companies, except Cash Converters offered to

fefr payment. If you do that costs could spiral. -- defer. The

Consumer Finance Association represents all the companies except

The Cash Store. Our members work closely to a code of practice.

They're highly regulated by the Office of Fair Trading. It may not

be something that's immediately apparent to somebody taking out a

loan, but there's a careful assessment made to make sure that

person can afford to pay back at the end of the period. Cash store

says it asks for evidence of income and assesses the ability to pay.

All the lenders say costs are transparent. One man has carried

out a study of debt in Rochdale. Professor Karl Dayson says deprived

communities have an unhealthy dependencey on credit. They have a

dichotomy where it's helpful in the short-term because it puts new

money into the community. But at the same time, the long-term effect

is that the high cost of that interest is taking money out of the

community that will never be spent in that communities. It didn't take

long to get that cash. We went looking for the loans. There is

another high interest lender, but you won't find them here on the

High Street. This is debt that arrives at your front door.

Provident Financial is a multimillion pound FTSE 250 company.

Based in Bradford, it offers door t door loans at relatively high

interest rates to 1.8 million customers. Last year, it made �127

million in pre-tax profits from its home credit business. This is one

of their promotional videos. Their agents -- their agents and those

from Greenwoods, another company owned by prove dents, collect loan

repayments from your home. We call on one household in 20 in the UK

every week. Provident dominate the doorstep lending market. Many

families have used them for generations. But Panorama has been

told by customers and by people who have worked for the company of

concerns surrounding some of provident's business practices. We

decided to send a reporter under cover. He applies and within two

weeks is invited in for an interview. He meets one of

provident's district managers who explains you mainly get paid on

commission and straight away it's clear there's pressure to sell

loans. Everyone's targeted everywhere, right the way down the

business. Everyone gets a target. I'll get a target of maybe I need

to give 15 grand of loans out. I spread that amongst the agents. You

might get two grand of it. If you hit your target in the month and

you put customers on, you get a bonus. He tells us the best ways to

keep people repaying the loans. don't want people bullying people.

You talk in a firm and fairway. The agents will show you how they do it.

Women are the best. Some of them are bloody marvellous how they get

money out of people. But they're good at it and nice about it.

are online exercises in the office, but most of our reporter's trainer

is on the road. He spent time with two women. Sam, an agent and Jo, a

manager, both working in the North West. They do demanding jobs with

targets to meet. First, we meet Sam. She started working for provident

having had loans with the company herself. Are you Sam? Hello.

weren't expecting a man were you? No I wasn't. Not at all.

explains we're going to go door to door collecting Rhone repayments.

Agents earn commission on the money -- loan repayments. Agents earn

commission on the money they collect between �9 and �6 for every

The pensioner pays provident �54 a week to pay off her loans. So she

owes an absolute whack, about �5,000? Yes. Blimey. Is she on

benefits? She's got a lot of pension. She has a disability as

well. She owes �4,485. Sam says the majority of customers are on

benefits. She pays the �54 a week and her pension and benefits will

cover that all right? Yeah and she's been offered more money.

She's only just had one last week. What's she been offered? She's been

offered 1200 quid. So despite already owing �4,500, she's being

offered more. We found many customers who'd been sold

successive loans. It can mean some customers being in debt for years.

Like Joseph and Mary. I looked out the window and I went, oh, that's

my Mary. After we filmed them under cover, I went back to meet them.

They told us they borrowed �500 more than 15 years ago, but one

loan turned into many. When they were struggling to pay recently,

provident reduced their weekly payments, but they say they still

owe nearly �2,000. How did it feel when you got the money? It felt

great, have some money in your hand. Due trust the company? I did at

first, yeah. Now it's money, money, money. If somebody had said to you

when you took the loan out in 17 years you'll still be paying �120 a

month for this and other loans, what would you have thought?

wouldn't have believed them. They go on and on and on. There's no end

to it. And we saw that happen, as well as collecting payments, ats

are encouraged to sell more loans. -- agents. Sam explains how with

another customer. Say you're being offered �1200 more. He'll go right,

I'll think about that. So that you've put the seed there, so that

you know, he can then contact you when he's ready for it. He know

that's he's got it and he know it's there. That helps you, because if

they don't know they're being offered money, they're not going to

take it, are they? They arrive at his house. He currentsly owes just

over �300. He hasn't asked for this new loan. 1200 quid. They're

offering you 1200 quid. And how the bloody helm I going to pay 1200

quid back. His current loan costs �15 a week. Sam suggests he can pay

�20 a week for the next two years. Then he can afford another �1,000

loan. It sounds a tempting offer. Come back Tuesday with a thousand

quid. You want it Tuesday? In 12 seconds he goes from worrying about

how he'll pay to agreeing to a two- year loan. Good profit for

provident and there are two rewards for Sam. One, for clearing the old

loan and then commission on the new one. Four days later, Sam returns

with the cash. What's all the rubbish here? It's yours. I'm going

to tell you about it in a second. But there's a problem. He thought

he was getting �1,000 in his hand, but he doesn't seem to realise that

the balance of his outstanding loan, which is �310 is being deducted.

that's what there is there ��689.27. If you want to check it? No, I

trust you, love. Sam hasn't explained the interest rate or how

much he'll pay back in total. Our reporter asks her. How much will it

all to the up to over two years? �2,120. That's quite a lot. Yes,

that's why we're doorstep lenders. If you think they have to pay their

agents. They've got to pay the office staff. They've got to pay

the big bosses. That's why there's We showed our footage to Gillian

Guy, the Chief Executive of the Citizens Advice Bureau, a charity

which offers help to people in debt. It's like "we give you money",

that's how it sounds. It's selling money. It feels quite misleading

and quite exploiting a relationship. Provident says it's always the

customer's decision to take out another loan. But it doesn't always

feel that straightforward on the ground.

On a round with Jo the manager, our reporter is offered inside advice

on how the debt business really You heard that right - she just

said "you don't ever want to let them pay up". The company and the

agents make money from good Away from the round, our chase for

easy loans continues. So, we've already got more than

�500 from payday loan companies that are on the high street. What

we want to do now is see what else we can get from payday loan

companies that operate on the Internet.

In the space of an hour, we borrow another two loans, each of �200.

The checks appeared minimal, one company simply asked us to tick a

box if we thought we could afford a loan.

Here we go. �200 safely secured. We are now up to nearly �1,000 with

barely any effort. Only one in ten online loans

applications are approved. There is a huge amount of data that is

assessed in a very short period of time through very complex

technology to ensure that when you apply for an online loan, that

lender knows a great deal about you and has made a huge amount of

calculations that have taken place. Across all the loans, high street

and Internet, the interest and charges on �96 6 is �287. But if

the companies' letters defer paying for another month, we'll be looking

at paying back more than �500 with debt. With debts soreadily

available, it's easy to see how it can slip out of control. It becomes

an extra form of income. People see it as an income stream, especially

if you are rolling from one form of credit to another. That becomes

difficult. We are back on the road with Sam,

the Provident agent. Her job is to collect the weekly payments, to

sell new loans and decide whether customers can afford them.

But these are often deprived areas and there's only so much money to

go round. Customers may take on debts with

other companies and it can be hard for the agents to know. And that

can create problems. Sam has spotted an agent from a

rival company Shopacheck visiting A few days later, Sam calls on the

customer. She's almost �4,000 in debt to Provident and is falling

into arrears. If Sam doesn't collect today, the company will

Her fears are confirmed. The competition got there first. Sam

Professor Karl Dayson helps set up and run a not-for-profit door stop

lending company. The agents for those organisations live on the

same estates. Their money is often peace rate money, they depend on

you repaying their debt in order for them to get paid. In that sort

of environment, that can create all sorts of local tensions, if you

don't repay. Provident says that even when customers miss payments,

As our reporters' training continue, he becomes concerned about

apparently vulnerable people being lent money.

Jo, the manager, tells him of a conversation she had about a

customer with mental health Later, with Jo, he visits another

woman, 60-year-old Sheila who lives on her own. She has two loans,

though Jo didn't issue them, she Industry guidelines say borrowers

who may be particularly vulnerable should not be targeted or exploited.

What does the Chief Executive of the Citizens Advice Bureau think of

our footage? I don't blame the agent for that

because that's the mill they're in, it's kind of, you know, keep the

money rolling in, keep people hooked. But there's a whole model

here that is not about any social responsibility or other

responsibility for what is happening to people.

I went back to see the customer, Sheila, myself. She's had loans

with Provident over the last seven years. She's a good payer and says

she gets letters from the company offering her more loans. But should

they be doing that? When you get the loans, talk us

through what happens? Have they offered youd the money, or have you

asked for the money? No, they've offered me the money. What do they

say? Well, they just send your letters saying you can have another

say �200 and just ask you to ask your agents.

Provident told us that in its view, Sheila is capable of making

informed decisions about her finances. But her sister, who was

unaware of the loans, was angry at If you went to talk to her, your

sister, in her house, should an agent then approve a loan?

No. No. Because they'd clearly be able to see just by looking around

the house that she is vulnerable. So what do you think then of the

agent that approved it? Disgusting. They're taking advantage of her.

Taking advantage, definitely... Taking advantage of her. Remember,

Jo didn't sell the loan, she just collects the money. Provident says

its agents are provided with training to identify where a loan

would be wrong because of a person's vulnerability. But our

reporter saw little evidence of it on the ground. In a conversation

with Sam, he's told of a customer who's not all there. But there's no

apparent recognition of how We tracked down the customer's

family. Her mother agreed to talk to us but anonymously to protect

her daughter. She says her daughter wiz diagnosed with schizophrenia as

a teenager and now, 20 years later needs constant support. How much

does she depend on you? A lot. I come three times a day and if she's

really ill, I stop overnight with her. She does depend on me a lot.

If it weren't for me, she wouldn't have her own home because she

couldn't cope. We showed her our evidence. Ste stands there grunting

and rocking... I'm disgusted. It's really upset me. At the end of the

day, it's a human being, and that is my flesh and blood. I'm sorry

for getting upset. The lending guidelines are clear - loans should

only be issued to those with the mental capacity to make informed

borrowing decisions. The woman tells us her daughter has borrowed

several thousand pounds over a number ofiers. You can talk to

(BLEEP) anybody in the right mind should know they've got an illness.

Then she'll talk as though she's got about three or four voices

running around her head sometimes. You will naturally know there's

something wrong with somebody. decided to see for myself whether

Provident collects from this vulnerable woman.

It's Friday night, and that's when the agent comes to collect the

Provident money. Now I know about the case, and how vulnerable this

woman is, I want to see for myself what they actually just do come and

There you go. In fairness to Sam, she didn't issue the loans, she's

just collecting the money. Provident says it has strict

policies to prevent loans being advanced to anyone it believes

doesn't have the mental capacity to understand the terms of the loan.

Should Provident be offering deals to your daughter? No. Why? Because

she's so vulnerable, she just would agree to them all the time. She

could just say yes, yes, and just carry on. I want it all to stop.

The business behind all of that is making money out of that situation.

That's what I call into question, aside from just this personal piece,

which is the motivation to keep exploiting people who clearly can't

be held responsible for their own decisions in that situation.

Provident declined to be interviewed, but in a statement,

However, with 1.8 million customers, we recognised that we will not

always get it right and if we make a mistake, we work hard to put

matters right. Our reporter spent five days

training with Provident, a snapshot from the doorstep.

We also managed to borrow nearly �1,000 from payday loan companies

with barely any effort. If we don't care about the entire

financial system, specially those that are suffering its most extreme

elements at the bottom, it always comes back to bite us.

We will all pay. Our economy was brought to its

knees by bad debt. But our inside view of doorstep lending suggests

that the pressure to sell loans can still leave some vulnerable people

with debt they should never have. And on Wednesday, at 9pm, a