27th Apr 2006 07:00
Provident Financial PLC27 April 2006 Statement on Competition Commission Provisional Findings Provident Financial notes the publication of the Competition Commission'sProvisional Findings and Possible Remedies for its home credit inquiry. This isthe latest stage in the Competition Commission (CC) process. No decisions havebeen taken and the inquiry is now expected to be concluded later than scheduled- in the autumn of 2006. As the CC itself acknowledges, there are a number of areas where it has yet toconclude its thinking including the "difficult and contentious" area of theapproach to the measurement of profitability. We strongly disagree with theCC's methodology and conclusions regarding profitability, which forms thecornerstone of its Provisional Findings. We believe that the CC's approach onprofitability is flawed and we have produced expert evidence from Sir BryanCarsberg and Professor Colin Mayer to support this view. Customers are notbeing over-charged for their home credit loans nor is the home credit sectormaking excessive profits. We will continue to engage with the CC on this topic. Provident Financial is pleased that the CC's own research confirmed high levelsof satisfaction among customers who find home credit products well-suited totheir needs. The CC has recognised evidence of innovation within the industry,that the relationship between customers and agents is appropriate and thatcustomers value the service they receive. We are also pleased to note that theCC recognises that "the APR is an imperfect basis for comparison in this market"and that "the home credit product in its current form fulfils an important rolefor a significant number of customers". We will work constructively with the CC on the potential remedies they haveidentified: increased data sharing; better price information; provision ofregular statements; the provision of comparable products; relaxation of therules on canvassing new customers and increasing the amount of the earlysettlement rebate. We will aim to ensure that any remedies are in the bestinterests of our customers. We share the CC's reluctance to pursue price caps. We do not believe they workin the interests of consumers. Rather, they can harm those that they aresupposed to protect, as most recently highlighted by the Review by theDepartment of Trade and Industry in 2004. Indeed the National Consumer Council,sponsor of the original super-complaint which led to the CC inquiry, agrees withus on this point. Further discussions and a thorough consultation with the CC with regard topotential remedies will now begin. Enquiries: Kevin Byram, Brunswick, 020 7404 5959 27th April 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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