Families in limbo as crisis shakes lender
HUNDREDS of thousands of struggling families have been left in limbo by a crisis at doorstep lender Provident Financial.
Shares in the business crashed by 66 per cent yesterday after bosses admitted a software bug has made it impossible to collect debts from customers.
It is believed to be the biggest ever one-day stock price fall for a firm in the blue chip FTSE 100 index, wiping £1.7billion off its value.
The company’s chief executive, Peter Crook, resigned in disgrace. It was also forced to announce that its door-to-door loan division would lose up to £120million this year, and to axe its dividend.
In a shock update to the stock market, Provident also revealed that it was being investigated over a potential mis-selling scandal at credit card business Vanquis Bank which could ultimately cost up to £140million.
Analysts have been closely watching 137-yearold Provident, which targets customers with poor credit history, because any repayment problems are likely to be an early warning sign that Britain’s debt bubble is about to burst.
Most of its 2.5million customers are among the most vulnerable in society. Many do not qualify for standard bank loans and are categorised as ‘sub-prime’.
Bradford-based Provident’s woes began when it launched a £21.6million overhaul of its doorstep collection business. The company got rid of 4,500 freelance debt collectors and planned to hire 2,500 full-time staff to replace them.
However, a recruitment campaign initially fell flat and it was forced to warn two months ago that it had a shortage of staff.
A new computer system was introduced to make it easier for appointments to be scheduled. But it has made things far worse because bugs mean meetings are arranged at the wrong time and employees are not sure when they are meant to meet clients.
Customers whose payments are late because of the disaster will not be charged extra interest or hit with any financial penalties.
However, many rely on regular visits from Provident staff for credit to tide them over – meaning the scheduling chaos could leave them dangerously short of cash.
Chairman Manjit Wolstenholme, who has taken over day-to-day running of the firm, said: ‘We’ve got people on the ground, but we have issues with the software being used by them.’