Watchdog may slam door on Provident deal

A TAKEOVER bid for Provident Financial faces a competition probe over concerns it could harm customers.

The attempt to buy the Provvy by rival Non-Standard Finance (NSF) is set to be examined by the Competition and Markets Authority.

The regulator has banned the two from combining any operations while it decides whether to launch a full-blown investigation which could ultimately see the deal blocked.

NSF, founded by former Provvy boss John van Kuffeler three years ago, is seeking control of its larger competitor and is strongly opposed by the Provvy board.

More than 50pc of Provvy shareholders have said they will back the bid, but NSF is seeking support from 90pc.

The firms have 864,000 doorstep lending customers, giving them an overwhelmingly large share in a market dominated by a few major players. NSF and the Provvy serve some of the poorest people in the country, who rely on being able to borrow short-term cash at interest rates they can afford.

The CMA will want to be assured a tie-up would not force interest rates higher than the 1,557pc the Provvy already charges. Its temporary block on a merger does not stop the two sides from negotiating or even from getting a deal signed off by shareholders, but means they must remain separate with their own offices and staff. The ban will remain in force while the watchdog decides its next step. It can force parts of the business to be sold – and could even block the deal.

NSF has said that it would spin off its doorstep lending arm, and sell or shut the Provvy’s car finance arm Moneybarn, and the online payday lender Satsuma.

Doorstep lender Morses Club has bought payday lender Wagedayadvance for £8.5m.