Provident Financial “to close its home loan business”

YORKSHIRE-based Provident Financial is on the verge of shutting down its home loan business after more than 140 years, it has been learned.

The Bradford-based institution has more than 380,000 clients and is Britain’s largest subprime lender.

However, it has been in deficit since an attempt at modernization went wrong four years ago, leading to profit warnings.

Provident’s move highlights the pressure in the subprime credit market and follows the collapse of other well-known short-term lenders such as Wonga and QuickQuid in recent years over customer complaints.

It has been reported in national newspapers that Provident will also be shutting down its Satsuma online lending business, focusing on its Vanquis Bank credit card business and Moneybarn auto finance operation.

It has been reported that shareholders are due to be notified of the decision when Provident releases its annual results next week.

The shutdown was first reported in the Mail on Sunday, and Provident declined to comment when approached by the national press.

Home loans involve lenders going to a borrower’s home to collect repayments, often with high interest rates.

Provident’s home loan business is the oldest in the country, but the subprime lending industry has been a hotbed of complaints for some time.

The industry has been accused of driving people into debt and failing to see if people can afford to repay it, with a large number of complaints filed against subprime lenders by professional credit management companies. complaints.

The Godwin Street-based lender warned in March it could shut down some of its divisions, blaming increased submissions by claims management groups.

He said these complaints made it impossible to continue to treat customer complaints as a normal operating cost.

In the second half of 2020, it spent £ 25million to compensate its customers, ten times more than it spent during the same period in 2019.

Provident was founded in Bradford in 1880 to provide affordable loans to working class families in West Yorkshire, and was listed on the London Stock Exchange in the 1960s.

In 2002, she formed Vanquis Bank, which specializes in prepaid credit cards, and in 2013, she formed Satsuma Loans to offer short-term loans online before acquiring Moneybarn a year later.

In August 2017, a second profit warning in two months, its chief executive being replaced by Manjit Wolstenholme, a cancellation of the dividend to shareholders and a warning that the annual dividend could be canceled, and an ongoing Financial Conduct Authority investigation, everything saw the stock price drop from 32p to 8.50p in the space of six months.

The price has since rebounded and stands at 245p.

An FCA investigation began in March into how it assessed the affordability of its loans and how it responded to a financial ombudsman decision last year, and the investigation is expected to last until 2022. , but that “the appointment of investigators does not mean that the FCA has determined that breaches of the rules or any other contravention have occurred.”

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