Now Provident’s car loans wing is probed by FCA

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Shares in Provident Financial took another hit as it revealed a probe into possible mistreatment of its customers.

The Financial Conduct Authority is investigating the ailing lender’s Moneybarn division, which loans cash to low-income customers who want to buy a car or van.

It is another crisis for the company after an IT disaster in its doorstep lending arm, a separate investigation into its credit cards and the death of its chairman.

Yesterday its shares dived 10.2 per cent, or 89.5p, to 790.5p.

Moneybarn adds to the woes for the embattled lender and is another headache for Provident management at the worst time

Moneybarn adds to the woes for the embattled lender and is another headache for Provident management at the worst time

The fall follows two previous crashes and means the lender’s value has dropped by almost 75 per cent – or £3.4billion – since June.

It is a further embarrassment for fund manager Neil Woodford, who owns 21 per cent of the company and has suggested that Moneybarn will be a lucrative money-spinner in coming years.

The FCA is examining claims Moneybarn did not properly check that customers could afford to repay their loans.

Investigators are also looking at how borrowers were treated when they got into financial difficulties.

The Provvy’s woes began when it attempted to modernise its appointment scheduling system for door-to-door debt collectors.

But a botched IT upgrade meant staff were sent to the wrong houses or at incorrect times, an estimated 3,000 self-employed debt collectors quit when they were forced to take full-time staff contracts and chief executive Peter Crook resigned in disgrace.

The FCA said it was also investigating potential mis-selling in the credit card division, Vanquis Bank, which has 1.5m customers.

Manjit Wolstenholme stepped in as chairman to try to steady the ship but she died suddenly last month at just 53.

Sources close to the business said it has received a letter from the FCA about the Moneybarn probe, but it is still waiting for full details.

A Provvy spokesman said: ‘Provident Financial has been informed that the FCA has commenced an investigation into Moneybarn in relation to the processes applied to customer affordability assessments for vehicle finance and the treatment of customers in financial difficulties.

‘The group aims to act responsibly in all its relationships, and to play a positive role in the communities it serves.’

Moneybarn was given FCA permission to lend in June last year and has since been in discussions with the watchdog about how it can improve its service, the statement said. 

The car finance division had 49,000 customers at the end of September, and £362million of debt on its books.

The lender typically offers loans of up to £25,000 for between two and five years, at interest rates around 33 per cent.

The FCA declined to comment.

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