Provident Financial recently decided to reintroduce their controversial performance bonuses for lenders

Commenting on the decision, Dr Roger Gewolb stated:
 

“Much like commissions paid to salespeople and brokers, where there should always be clawback for loans that fail to perform properly, there is nothing wrong with incentives for loan business generation. But in a company such as Provident Financial, with their history, with the regulatory concerns and in an industry dealing with our most severely financially challenged citizens, I would recommend that the largest proportion of these incentives be payable on the successful performance of the loans generated. ​

That is to say that if a three-year loan is sold to a customer, there could be a small incentive bonus upfront and another bonus each year that it performs properly, for example. In this way, the issues of quality and outcome can be underpinned by the incentive as much as the sales element. ​

To incentivise the sales element alone, would be a grave mistake in my view (albeit on a smaller scale to the bonus culture that fomented the sub-prime crisis and credit crunch.)”

If you are interested and would like to read the full article, you can find it here:https://uk.reuters.com/article/uk-provident-bonuses/provident-financial-plans-return-of-doorstep-lending-bonuses-from-august-memo-idUKKCN1TR1QB?il=0%C2%A0