Watchdog warns over Provident takeover

With the future of 2.4m borrowers in the balance . . .

THE City watchdog has issued a stark warning over the treatment of customers to the firm targeting Provident Financial, in one of the most bitter takeover battles the City has seen for years.

Andrew Bailey, head of the Financial Conduct Authority (FCA), said that he will not tolerate efforts to exploit the Provvy’s 2.4m customers if the bid by rival Non-Standard Finance succeeds.

NSF, run by the Provvy’s 70-year- old former boss John van Kuffeler, has pledged to boost the lender’s profits.

But its plans, and the hostile nature of the bid, have sparked fears of a squeeze on vulnerable borrowers.

In a highly unusual intervention, Bailey told the Mail that the FCA will use its powers to stop that.

He said: ‘We’re not going to tolerate seeing a reversion to some of the practices that were there in the past. We’re not saying you can’t do this deal, it’s not for us to do that.

‘But don’t price this deal on the basis of assuming you can go back to some of the processes of the past.’

Van Kuffeler ran the Provvy for 22 years before leaving in 2013.

The FCA started to regulate doorstep lending the following year, and brought in tough rules to protect borrowers from abuse.

Van Kuffeler then set up NSF in 2015. It is much smaller, with only 180,000 customers.

Bailey’s warning doubles down on a letter sent to van Kuffeler by the FCA in which it warned him not to put customers at risk.

MPs are also increasingly concerned. Stella Creasy, of Labour, wrote to City minister John Glen to ask what sanctions could be used to punish the Provvy if it changes its approach to customers under new management.

It comes amid a vicious war of words between the Provvy and NSF. This week, Provvy chairman Patrick Snowball said his rivals offered a ‘dreadful deal’, adding, in a letter to shareholders: ‘It is more of a coup d’etat than a hostile takeover, spearheaded by a management at NSF with a track record of value-destructive acquisitions and facilitated by powerful shareholders.’ In response, NSF claimed: ‘The Provident board is determined to deflect from its history of self-inflicted wounds and incompetence – its defective leadership, customer failings, destruction of shareholder value, erosion of shareholder trust and strategic vacuum. It reveals an extraordinary disregard for some of its largest shareholders.’

Three of the Provvy’s biggest shareholders who control more than 50pc of the stock back NSF, which is seeking support from 90pc of investors, although it could reduce this target to get the deal over the line.

The Provvy has been embroiled in a mis- selling scandal over a product sold by its Vanquis credit card arm, and was forced to give £169m back to customers.

It is also being probed by the FCA over sales tactics at Moneybarn, its car finance division.

NSF insists it will comply with all FCA rules. Provvy shares fell 1.4pc, or 7.2p, to 509.6p and NSF dipped 1.5pc, or 0.8p, to 51.5p.