Troubled door step lender Provident Financial (PFG) troubles worsen on Tuesday as it states the Financial Conduct Authority (FCA) is investigating one of its businesses.
The FCA is focusing on Provident’s Moneybarn division, a sub-prime motor finance business. The regulator is looking into the processes applied to customer affordability assessments for vehicle finance and the treatment of customers in financial difficulties.
The company says it ‘will work collaboratively with the FCA to investigate the remaining concerns and resolve any outstanding related issues as soon as practicable’.
The impact of the FCA’s actions has wiped 13.1% off Provident’s shares which now stand at 765p.
2017 has been an annus horribilis for the company. In February it announced it was restructuring its home credit business by axing 4,500 self-employed debt collectors and replacing them with 2,500 customer experience managers.
This did not work out well. In August the company released a statement saying the home collection business’s profits will be down by £60m causing a 65% share price crash.
Provident had stated that its other businesses, including Moneybarn, were trading in line with expectations.
ANALYSTS ARE NOT IMPRESSED
This latest wobble by the 135-year-old company has caused analysts to vent their spleen at the company.
Liberum analyst Portia Patel says ‘we remain concerned about underwriting quality across the group’ and gives it a ‘sell’ recommendation.
Even one of the company’s better performing divisions, its credit card business Vanquish, has not escaped scrutiny. While Patel says that the ‘greatest value is clearly in Vanquish’ it has also been under investigation by the FCA regarding its repayment option plan (ROP).
ROP allows Vanquis credit card customers to freeze their account for up to two years, without incurring any interest, or take a payment holiday once a year. Vanquish stopped offering the product to new customers in April 2016 but around half a million still use it.
