Provy’s £50m compo crisis
DOORSTEP LENDER FACING COLLAPSE
PROVIDENT Financial yesterday warned its doorstep lending arm could collapse if disgruntled customers reject a cap on payouts.
Complaints have surged about its Consumer Credit Division (CDC) from people who claim they should never have been offered loans.
Provident blames claims management firms for fuelling the rise.
However, City regulator the Financial Conduct Authority is now investigating the division’s “consideration of affordability”.
Provident paid back £25million to customers in the second half of last year – 10 times the same period in 2019.
With complaints still coming in, it announced proposals yesterday to place a £50m limit on future payouts.
However, the move needs to be approved by customers who have made a complaint but have yet to get redress. If rejected, Provident warned the Consumer Credit Division “will be placed into administration or liquidation”, adding: “If this were to happen, CCD customers would not be expected to receive any redress payment.”
Provident’s history dates back to 1880 when it was founded in Bradford to help struggling working-class families pay for essentials such as furniture, clothes and shoes. Known by some as the Provy, it built a network of agents lending and collecting payments door to door.
Nowadays, around 90% of Provident’s customers are in its two other divisions, Vanquis and Moneybarn.
However, the doorstep lending arm still had 379,000 customers at the last count.
Yesterday, shares in the company dived 27%.