When you have a Crook at the top how can it not go wrong?
Bad data and new IT system bugs help knock 66% off Provident Financial share price
Software bugs and bad data in a new one-platform-to-rule-them-all IT system contributed heavily to British sub-prime loan firm Provident Financial going into near meltdown. Provident's shares crashed 66 per cent yesterday as the short-term loan company revealed that problems with its new IT system meant it could not collect …
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Wednesday 23rd August 2017 13:43 GMT Anonymous Coward
Up until the crap IT system, it was supposedly working very well.
During the Coalition period (remember it?) the pressure started to mount on payday lenders. Under the present government (since 2015) it has been people like local councils who have been employing ever more vicious debt collection tactics (like charging people with no money £420 that they haven't got to send the bailiffs in to find they are living on the floor.) As I understand it, Capita has outsourced considerable council debt collection and employs its own bailiffs, so it makes more money by letting people get into arrears and then charging for bailiffs.
Much as I dislike the Provident, it is very expensive to lend money to people with poor credit ratings due to the high default rates and cost of collection. It's a vicious circle.
So you would think the government...what am I saying? This government is actually encouraging payday lenders and Capita's bailiffs by getting people onto universal credit - causing severe delays in benefit payment. It then discourages private landlords from letting to tenants on UC because the rent is paid to them, not direct to the landlord.
And then Provident's systems go down.
For some people this is actually going to be a tragedy when Provident goes up again and starts dunning for its money, because some of them will have spent it on inessentials like food and clothes for the children.
Welcome to modern Britain.
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Wednesday 23rd August 2017 17:31 GMT Steve Davies 3
Re: Payday Lenders
are still going strong. Interest rates of 1251% are quoted in TV adverts.
And the BoE Base rate is 0.25%.... someone is getting really screwed into the ground.
The more of these sharks that go to the wall the better IMHO
Back in the day, purcheases on the 'Never Never' (Hire Purchase) with interest rates of 33% over 3 years was bearable with gritted teeth.
Now... your credit score gets marked down (worsens) if you pay off your Credit Cards/store accounts fully each month.
Madness.
There will be a big reconing very soon. We have had it too good for far too long when it comes to getting loans/ zero intereste Credit cards.
This could make what happened 10 years ago a mere ripple in a pond compared to what shit is going to hit the fan shortly. Hundreds of thousants of people could lose their homes due to repossession.
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Wednesday 23rd August 2017 14:25 GMT Alan Brown
The salesman problem
A large chunk of Provident's problems are down to a more prosaic salesman issue - they laid most of them off.
The old model had relatively independent sales agents working on a commission basis who knew their customers and therefore knew who was a high risk. With income dependent on that they acted as frontline filters for loans. With the "new IT model", the sales agent numbers were slashed and all sales staff became direct employees with loan decisions made centrally - most agents declined to move across and simply bailed out of the business.
Not personally knowing your customers and their circumstances adds an extremely high risk factor to an already risky lending model. Up to now Provident had a fairly low default rate (less than 15%) but moving to a massive drop off in business AND an increase to over 50% defaults is on par with blowing both legs off with a shotgun.
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Thursday 24th August 2017 11:14 GMT Anonymous Coward
Re: The salesman problem
"A large chunk of Provident's problems are down to a more prosaic salesman issue - they laid most of them off."
... but from what I heard on reports the reason that they laid off sales agents and switched to the IT based solution was not because they wanted to do this but because changes in regulations forced them to
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Wednesday 23rd August 2017 15:58 GMT vogon00
I wonder if....
...the conversation went like this:
Dev grunt:"It's still not quite right"
Dev lead:"but does it work well enough? Remember, we are horrendously late with it already?"
Grunt:"Not really, still got some schema and logic issues in the time processing. Also, it depends on which version of the requirements you assess it against."
Lead:"Ah... I'll see what higher management want to do..."
Mgmt:"Give us what you have, we can't be seen to fail the timescales we gave the head honcho!"
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Wednesday 23rd August 2017 16:30 GMT John Smith 19
And if you think that's bad....
You wouldn't like to find yourselves on the "overdue" borrowers risk and have a visit from one of their "lending advisors"* So called because they will advise you to give them some money ASAP to avoid more serious trouble later.
*Who have allegedly been known to skip the solicitors letter and move straight to more direct forms of recovery.
Coat because you probably don't want to be in when they come round, although the odds on bet is they will catch up with you eventually.
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Thursday 24th August 2017 10:47 GMT TRT
Re: And if you think that's bad....
"Don't think of it as a loan repayment... consider it to be more of a guaranteed health insurance premium. Pay the premium to ensure your good health."
"Where does the guarantee bit fit in?"
"We guarantee that you will suffer a deterioration in your health if you fail to pay. I think we understand each other now, yes?"
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Thursday 24th August 2017 03:10 GMT Anonymous Coward
How many people to make a calendar app?
How many people to make a calendar app: five to write the actual code and two hundred and forty five to supervise the other five.
"The routing and scheduling software deployed to direct the daily activities of CEMs [debt collectors] has presented some early issues, primarily relating to the integrity of data, and the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritise resource allocation during this period of recovery."
There's your problem right there, the CEO is actually a shape-shifting albino lizard from a planet in the Draco constellation and only learned to speak English from tuning into the Intergalactic Corporate Bullshit Generator.
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Thursday 24th August 2017 11:37 GMT David Lawrence
They went live....
...with poor data quality, and presumably with a poor success rate from their testing (assuming they did some testing). What the heck did they think was going to happen? "If we all close our eyes and cross our fingers it might still turn out OK" ???
Some of the most basic rules of IT Projects broken. Amateurs. They deserve everything that is coming their way, and I say that without considering for a moment that they are glorified loan sharks.
We all know that with every passing day the chance of getting money back from their 'customers' dwindles, so there is a possibility that such an issue will cripple their cashflow and they will then implode.
Moreover there is no magic bullet fix for 'poor data' so I wish them luck with cleaning it.....
Biting the hand that feeds IT
