In conversation with Charley Davies of Provident Financial Group

Teresa Owusu-Adjei:

Welcome to the latest episode of our Business in Focus podcast. I am Teresa Owusu-Adjei, I am a financial services partner and head of legal in PwC UK, and I am your host for today. I am really excited to bring to you this next episode of our ‘In conversation’ with podcast. These features discussions between our people and our clients about the impact of COVID-19 on their organisations. We will explore what we’ve learned from the disruption that we’ve experienced from the past year, and how we can take those lessons forward to help us navigate future challenges. We’d also discuss how we’ve worked together with speed, imagination, and care to deliver results that really make a difference.

Joining me today in our virtual studio are Dan Schwarzmann and Charley Davies. Basically, I wonder if you could just give me a brief introduction, and Charley, please can I come to you first.

Charley Davies:

Hi, I am Charley Davies, I am the general counsel and company secretary at Provident Financial Group PLC. Provident Financial, we also call ourselves PFG, is a specialist lender for the 12 million UK adults that are not served by mainstream credit companies. We’re also a FTSE 250 company, which is listed on the London Stock Exchange.

Teresa:

Brilliant, thanks Charley, and Dan hi.

Dan Schwarzmann:

Thank you very much Teresa, and hello everyone. I am Dan Schwarzmann, and I’ve worked at PwC for over 30 years. I am a member of the UK management board, and have been responsible for industries at PwC since 2014. Prior to that I was responsible for the business recovery services team for six years. I’ve been involved in company restructurings and insolvency work from 1990 with a focus on financial services, and for example, was one of the administrators of Lehman. I am absolutely delighted to be part of this podcast today.

Teresa:

Brilliant, thank you both of you. Charley, I want to start with you, and I didn’t know a lot about PFG, and looking through the website and understanding more about PFG, what PFG does in having customers, in that, most part, financially vulnerable adults in society. I am just fascinated by what the last 15 months have been like for you, how the pandemic, first of all, has impacted your customers, and also then what’s that meant for you, but can we just start with your customers, what that’s broadly been like for them?

Charley:

Sure Teresa, absolutely, you will appreciate, because of the nature of our customer base, many of our customers are already in financial difficulty. We were very concerned to make sure that we were quick to react in protecting our customers and responding to their needs. We’ve got a very high proportion of customers that were put on furlough, and a very high proportion of customers, who also were in key worker roles. We wanted to make sure that we could support them in getting them to work, but also quickly support customers, who were not able to work. It really did involve a very quick reaction in terms of ramping up staff, and making sure that we could check customers appropriate forbearance. I had an example, recently given to me by my friend, who spent many hours on a phone, trying to get through to a call centre and other credit card provider to ask them for a payment freeze. We had waiting times of around five or six minutes, which was quite extraordinary. We were able in that way to make sure that we spoke to as many customers as possible in the shortest space of time, to give them the assurance that we were going to show them forbearance and create the right options for them, so they didn’t have to worry about money amongst everything else that they had to worry about.

Teresa:

I just wanted to pick up on really the purpose of PFG, which is around putting people on a better path to everyday life, and how has that guided, just some of the big decisions you’ve had to make over the last 12 to 18 months?

Charley:

Teresa, well our purpose, as you said, to put customers on the path for better everyday life has absolutely guided us through the pandemic in terms of how we responded to customer needs with products and services that supported them, as well as having responded to individual difficult customer circumstances. We believe financial inclusion for the 12 million customers not served by the mainstream banks is critical. This became even more evident as the economic consequences of the pandemic became more apparent. The purpose also guides us with our employees and suppliers, and we’ve worked over the past year to create a much more inclusive workspace to help our colleagues in the way that they wanted to, during some really challenging times. We also remained committed to working with our charity and community partners throughout the year, and through our social impact program. We’ve actually been supporting various charities and community partners in addressing community needs, which would include some of our customers and supporting customers, who are underserved in their recovery. For example, we provided hundreds of laptops to a leading debt advice charity. We made donations to organisations that provide support to individuals, who’ve been severely impacted by the pandemic, and we also supported the education of young people through financial education workshops to make sure that we could help them with budget and money management.

A lot of these people will be our customers as well, but we were able to actually support them through our social impact programs as well as helping our customers directly through the forbearance options, and the speed that we created in supporting our customers with those forbearance options.

Dan:

Teresa, if I could interject, because this is really interesting, that most of us have a purpose, and we talked about purpose, we talked about values, and not all corporates live and believe their purpose and their values. I am not saying it, because we’re doing this podcast, but everything that Charley has said, and more you will see PFG, they are a purpose driven organisation. Charley, I don’t know if it’s worth mentioning, the work that you and I have been doing over the past many months, around, you’re very successful organisation, but there’s been one subsidiary in particular, that’s had its difficulties, partly COVID driven, but not totally COVID driven, and the way that you’ve reacted to it, I am not sure that’s the way that many organisations will react to it, is it worth to bring that one to life, Charley?

Charley:

Thank you Dan, I do really appreciate these kind words. I believe that’s definitely the case in terms of how we operate. You’re right, we had a very difficult position in our home-collected credit business, not least because of COVID. This is a business where face-to-face relationships are critical, and our customer managers go into individuals’ homes to have a conversation with them about their needs. Customers request loans through that face-to-face conversation over a cup of tea on their sofa. Obviously, that was stopped as a result of the pandemic. We had to be very creative in thinking about alternative ways of supporting those customers through, for example, digital reach instead, but the pandemic really crystallised the problems that we had in that business, and we saw a huge influx of claims from complaints management companies. We had to make a decision, and the decision was, do we try to do something to support our customers in terms of redress, or do we simply put the business into an insolvency process, which may have been the easier option. Dan said, you might reflect that it would have been an easier option after the work that we’ve been doing, but it didn’t feel like the right option. Our purpose continually guided us throughout this entire process, it has been hard, it has been a long period of time that we’ve been working on it, but we wanted to make sure that regardless of what the financial position was of that company, we could find a way of giving customers redress through writing off their debt, having reviewed their account, or else giving them some money. We’ve put a substantial amount of money on the table when we didn’t need to, but we felt it was the right thing to do in order to be able to give our customers some redress.

Dan:

Just bringing that to life, so we are coming towards the end of July at the moment, and the final court hearing to assess the deal effectively that PFG is putting to its customers, and is just over a week away, so we hope we get the right results from that. You’re right Charley, you’re absolutely right, the easier answer would have just been to put it into an insolvency process and walk away. Teresa, you used in your introduction the theme speed, imagination, and care, that was a difficult situation, and the deal that you’re putting to the customers, trying through a scheme of arrangement structure was certainly imaginative. It’s being done relatively quickly, given all the circumstances and the complexity involved, and it shows real care, because you are putting, as you said, a substantial amount of money, many tens of millions of pounds for the customers in a very difficult situation. That really brings to life speed, imagination and care.

There is one thing that’s really important to me from an advisor perspective. When an individual from a team comes and talks to me and I say, ‘you know, we’ve got advice,’ one of the pieces of advice I am quite keen on giving, is that, don’t come from the alligator school of consulting, which is all mouth no ears. When you’re working with a client, you want to be in deep listening mode, and to make sure you really understand the issues and react to them. One of the things for me from the pandemic, is because things have been moving at such pace, and actually, I don’t even think the alligator school of consulting is right anymore, and you’ve got to be in even more intense listening mode, because when you’re talking about speed, imagination, and care, that speed element is so vital. You’ll need to have almost elephant ears, so you are really listening intently. This isn’t necessarily linked to PFG. One of the things that has come out from the pandemic for me is that some of the issues that are common to clients, because we’ve had to move at such pace, because so many industries have been hit, you can hear those issues much more intensely, and therefore, come up with solutions to those, because they are surfacing much more quickly than they would otherwise surface. This is a really interesting aspect to the pandemic for me.

Teresa:

So much of what you’ve focused on there Dan, it is just so real, and Charley just listening to you, the care with which, and the imagination actually with which you and PFG handled the issues over the last 15 to 16 months or so is really inspiring. I wanted to turn to your employees, your people. You’ve got these really difficult circumstances anyway for all of us, dealing with people, the way you’re trying to do the right thing, who are themselves probably in the most difficult of circumstances, what’s the impact been on your people?

Charley:

That’s a really good question, Teresa. The pandemic allowed us to gain insight into our people’s lives, which I just don’t think we had it before. You see a dog jumping up onto somebody’s lap and a toddler walking and asking for food. I had this extraordinary situation one day, when my teenager, I was actually in a board meeting, so I had the full PLC board and my chairman, everybody on screen, and my teenager going, ‘mom, mom, mom,’ it’s really important,’ I was saying, ‘I am in a board meeting,’ and this is 10 am, and he said, ‘what’s for lunch,’ it was really not important, but to him it was. It really gave us this insight into people’s lives, and we got to know each other in a way that we didn’t before. I knew people in my team had young children and I knew that they had certain situations, but it really helped me get under the skin of their relationships and their challenges.

What this allowed us to do, is to make sure that we offered tailored support to individuals that really met their needs. For example, people with younger children, who were being home schooled, they were offered paid leave or flexible working. They had blocks of hours where meetings didn’t go in. For example, my deputy general counsel, we forced her to take a couple of hours every morning and a couple of hours every afternoon, when the children, particularly needed support, and also so that her and her partner could work around each other. Actually, we also had to think about people who were home alone, because people who were home alone, need to be around work colleagues for their wellbeing. We said to them, ‘look, if you want to go into the office, we will find a way of making sure that you can go into the office.’ Then there were other people, who maybe, didn’t have such challenging situations at home, but they still needed to look after their wellbeing. We made sure that they were carving out time for a walk at lunchtime, because, to Dan’s point, it was so fast paced, everything was so fast paced, there was a danger that we didn’t step away from our desks.

For me the thing that was most effective was constant communication. We had Malcolm Le May, our CEO doing a weekly blog, we had newsletters, we had huddles. I worked out with my team, they didn’t want to, but they did. I exhausted them. We cooked together, we gardened together, we had quiz nights, we had murder mystery nights, coffee huddles. We got to know each other better than ever. The thing for me was we learned to create new boundaries and to claw back from work/life balance. Previously, I would sit at my desk, and I would still be at my desk 6-7 o’clock at night. I am a single mum to three children, and they are teenagers, so they are hungry. I’d get to about 7, and think I haven’t fed them, and I’d be calling deliveroo. What the pandemic taught me, is that I have to step away from my desk and I have to go and do something for my children. Everybody within the executive team at PFG knew that that was my time. Dan and the whole of the PwC team knew that that was my time, and they carved it out for me, and religiously never took that time away from me. That’s what’s really important as we return to work, that our return to work strategy is informed by what we learned during the pandemic. As an organisation, we are making sure that we don’t lose sight of the need to carve out time, the need to give our people space, and the need for them to make sure that they are having quality time with family that they discovered during the pandemic.

Teresa:

So much of what you just said as a mum of two just resonates with me, plus those comical video call moments over the last 15 to 16 months or so, I hope others were chuckling like I was, as I was listening to you, but I can also see why Dan said that our two firms just have so much in common, and because a lot of what you’ve just said in terms of doing the right thing by your people, they are things that I would very much recognise from the approach that we took over the last 15 to 16 months or so.

Dan:

You’re absolutely right, Teresa, when you say the values are aligned, you could almost say that’s how we worked with our people, but it’s very interesting, it’s a really great question you asked, because you are asking about the care, the clients, the customers, and then you talk about the care for your people. It’s interesting isn’t it, in some organisations you see the two aren’t aligned. Then when you talk about real care, I don’t think care has to be something you do with everybody, whether it's internally or externally. I’ve never asked you that question, Charley, I am not surprised to hear your answer, brilliant.

Teresa:

Charley, one of the things that, as you came to the end of your answer, you were talking about the phase of the pandemic that we are now moving into, the return to work. I am recording this from one of our London offices today. With so much of what you’ve learned over the last 16 months or so, you touched on it little bit, but what are some of the things that you gained, that you want to make sure that you hang on to as we move through this next phase and people return to offices, and more people return to offices as well, if you had your top few things, what would they be that as PFG you really want to hold on to?

Charley:

Teresa, it’s a really good question. For me is that we’ve learned that we can be just as effective working remotely as we can be face-to-face. We still can have real speed in decision making and still be remote from each other. Making sure that we are not returning religiously to travelling, to having to go to different offices to see each other, to feeling that you have to go to a client’s office to see them or vice versa, because all of us would be working flexibly going forward. It might be the case that I am not in the office the same day as Dan or vice versa, and I don’t think that any of us should feel obliged to go back to those face-to-face meetings. For me, continuing with this reduced travel, and actually using that time for more effective purposes instead. The level of communication that we had in PFG was extraordinary, and really high levels of engagement throughout the pandemic. Keeping that up it’s critical, as we started to go back to the pubs and restaurants, and we might even be able to go on holiday this year, there is a risk that that really intense and frequent communication that we had during the pandemic starts to fall away, because we’ve got other interests and other things going on. We’ve got to really make sure that we continue to focus on communication. The other priority for us is going to be, how do we make sure that we can operate effectively in that hybrid environment. I was saying earlier that we were all on screen, looking at each other, it was actually incredibly effective, but what happens when you’ve got some people who are on screen, and some people who are in the office, and how do we make sure that we can still have effective interactions with each other, and not lose that pace and agility that we had from seeing each other face-to-face.

This is a big challenge for organisations, do we have meeting rooms with large screens in, that allow us to see everybody that’s at home, or are we going to end up with slightly mucky situations where we’ve got some people who are on the phone line, and some people that are seeing each other, in which case it is going to be much harder to communicate. That’s something that everyone is going to have to worry about.

Dan:

You have to remind me, Teresa, never to do a podcast with Charley again, because everything I wanted to talk about, Charley has mentioned that. I was just thinking particularly of the things I want to talk about, what additional items would I say. One of the areas, and Charley has touched upon it, one of the reasons I like coming into the office, is I find it easy to collaborate in the office. As you said, we are also coming to the end of July, and I like coming into the office, because there is air conditioning in the office. In terms of what Charley was saying, not just making sure that where we are meeting, whether you’re in the room or you’re outside the room, that you are part of that meeting. In terms of areas like collaboration, there are some things that you can only do when you are in the physical environment and being respectful of that by saying that, we really need to brainstorm this issue on this particular day, if we can get the team together that would be great. That’s something we’re just going to have to plan a bit more, because it just used to happen a bit more naturally.

Teresa, if I just want to pick on the new points that Charley hasn’t mentioned, so just moving a bit. I am not going to go into areas like, we’re seeing our clients going down digitisation route more, things like the deals led recovery, we’ve talked about a lot in previous podcast; the supply chain, and how the supply chain is changing for ESG reasons; I am not going to go down that route. The route I am going to go down, if I may, answering your questions, and it comes back to something I was saying earlier, I do think that we’ve gone through, and we are still going through a time where there are many more risks. As I was saying earlier, we’ve been able to be more imaginative, because those risks have surfaced much faster. There are opportunities for clients as well. There is something around, as we come out of the pandemic, hopefully, and we return to normality, just not losing that, that real focus on reacting to opportunities at speed, we talked about speed, imagination, and care. That’s something we’ve developed over the pandemic, I don’t think it is something that we should lose, or our client should lose as we come out of the pandemic. We’ve created that environment, and let’s not lose it.

Teresa:

Great thanks, Charley, can I come back to you on, we've just been talking about the journey that you’ve had in relation to your employees. We talked about your customers and what the pandemic was like for them, but actually I want to do a bit of a look forward as we bring the podcast to a close, and to ask you, what are the priorities that you are seeing in relation to your customers now, and it’s that same question as what are some of the things that you’ve done well that you want to hang on to, and what’s that new world going to look like for your customers and how do you respond to that? There are lots of these in my mind, really about that look forward, from a customer perspective.

Charley:

We’ve been talking about this a lot lately actually, Teresa, so it is definitely at the front of my mind. Really for us, given the customers that we have, and the fact that they are underserved by mainstream banks, it is really thinking about the products that they need as opposed to the tradition of creating a product and marketing it. It’s actually really putting yourself in the customer's shoes, and thinking about how you deliver a product and service that is right for them. Traditionally, a customer would have phoned up and they would have said, ‘I’d like a credit card please,’ and you would do an analysis of whether it was right to give that customer a credit card, but they might have been putting a car deposit on that credit card. Actually, we could potentially serve them much better with a lower interest rate by having a car loan offered to them through Moneybarn, our car finance business. For me it’s making sure that we are using a lot of the digital tools that we learned from the pandemic, the digital response that we learned from the pandemic, and to Dan’s point, we implemented a lot with huge speed, and managed to do more probably in three to six months then we’ve done in the previous 12 months.

Using that to make sure that the delivery of services to customers is really suited to what they need, and everybody has moved on in terms of their digital propositions during the pandemic, because they had to, and we really need to harness that. To Dan’s point,reacting more quickly. The speed of implementation was quite extraordinary, the way that we were able to respond to customer’s needs. There should be no reason why we can’t continue to harness that and do that going forward, because our customer’s needs will potentially evolve very quickly as situations evolve quickly going forward. The one thing that we learned is that you can’t model or predict anything from the pandemic. Speed to react to make sure that our customers’ needs have been met as quickly as possible, will remain critical.

Also, what was really effective for us in the project that we worked on with PwC and our other advisors, was broad cross discipline teams, everybody’s heads on something at once, so that we could make sure that the delivery of propositions to our customers is sleek, and its effective, and it's exactly how it needs to be. We’ve managed to do that time and time again over the past 12 to 18 months, by having a lot more people on calls, but actually decisions being made within that call on a real time basis, which everybody has got confidence, and everybody stood behind, and that stopped the traditional washing machine of going around in circles, and conversations that possibly don’t need to take place for the decision making, most definitely is going to be critical going forward to make sure that we are reacting to customer needs appropriately.

Dan:

Brilliant Charley, and Teresa, if I could just add to that if I may, just looking at it through my lens. One of the massive privileges of looking through the industry lens is that you are very close to your clients. We’ve got a saying, we talk about, ‘make what you can sell, don’t sell what you make,’ because you could be making completely the wrong things, and not appropriate to be selling to clients. The thing that I would just add from my perspective, Charley, to what you were saying, is in terms of that collaboration, we are seeing the boundaries between industries blur more and more. The reason for that, is that when you are working as a team, the team is a much wider team. If I was to bring to life something from the PwC perspective, one of the things we are seeing there is that the team will include alliance partners. It’s very public, I can talk about something we’ve just been doing with Google, and it’s the sign of the times. You will relate to this, Charley, that some of our customers are saying understanding what we are saying to our customers real time is really important for a variety of reasons. One, we may want to sell better to our clients. Two, to the point you’ve been making, we may have some vulnerable customers, and we need to be really sure that we are treating our customers properly, which is, I know, something dear to the heart at PFG. We’ve been working as a firm with Google on a voice analytics technology, which will help clients to make sure that they are interacting better with their customers.

That is the sort of thing that, Charley, when you were talking about collaborating as a team, that team has got wider and wider for a PwC perspective, and I am seeing it with clients as well, their team may not just be, as you were saying, their inhouse team, it goes much wider, especially, as we get modern from a technology perspective.

Charley:

It is not to say, Dan, is not to say that there isn’t appropriate governance, because there has to be so you still got a governance framework, when you are thinking about products and services that you have to adhere to, but it's making sure that when you are ready to take it through that governance process, through committees and boards, that it has been really well thought through, and that everybody is having opportunity to comment on it, but still incredible speed of delivery.

Dan:

It’s a really great point, and actually there, we do bit of a circle back to purpose and values, because when you are looking to collaborate on some really important areas, you do with organisations naturally, that’ve got similar purpose and values, because as you already said, it is really important from the governance perspective, you are still delivering at the quality that you expect.

Teresa:

What a lovely way to end the podcast. I woke up this morning actually really looking forward to this conversation, and it has absolutely delivered. Thank you so much Charley and Dan for a really fascinating conversation, and also thank you to everyone for listening. If you would like to explore PwC’s industry led insight and thought leadership, and get some more insights and information for your organisation, visit industry in focus at pwc.co.uk/industries.

Finally, don’t forget to subscribe to keep up to date with future episodes, thanks everyone and please tune in again soon.

Participants

• Teresa Owusu-Adjei
• Charley Davies
  
• Dan Schwarzmann