Provident to close UK’s oldest home loan business

Provident Financial Group PLC Updates

Provident Financial will be shutting down its home loan business, highlighting the pressures facing the subprime credit market, in particular the high levels of complaints from professional claim companies.

Provident, Britain’s largest subprime lender, has been providing home loans through an agent network for 141 years and has more than 380,000 clients, but the company has been in deficit since an attempt to modernize in 2017 turned bad and generated a pair of profits. warnings.

FTSE 250 is also planning to shut down its online lending business, Satsuma, and instead focus on its Vanquis Bank credit card business and Moneybarn auto finance operation.

Shareholders were expected to be notified of the decision when Bradford-based Provident releases annual results on May 10, according to a person with knowledge of the plans. The closure was first reported in the Mail on Sunday. Provident Financial declined to comment when approached by the Financial Times.

Home loans involve a lender coming to the borrower’s home to collect repayments, often at high interest rates. Provident’s home loan business is the oldest in the country, but the company has struggled on several fronts for some time.

The company, along with other subprime lenders, has been accused of pushing people into debt and failing to see if they can afford to repay.

The volume of complaints is in part due to professional claims management companies that have targeted the subprime credit market.

Provident warned in March that it could shut down some of its divisions, blaming increased submissions by claims management groups that it said made it impossible to continue to treat customer complaints as an operating cost. normal.

The company spent £ 25million to compensate its customers in the second half of 2020, 10 times more than during the same period in 2019.

Also in March, Provident announced that it was under investigation by the city’s watchdog, the Financial Conduct Authority, into how it assessed the affordability of its loans and how she had responded to a decision of the financial mediator last February.

Provident said the investigation is expected to last until next year and added that “the appointment of investigators does not mean that the FCA has determined that breaches of the rules or any other violation have taken place.”

Many well-known short-term lenders, including Wonga and QuickQuid, have collapsed in recent years due to customer complaints.

Previous Wunder Mobility's new lending activity helps micromobility startups fund fleets - TechCrunch
Next Provident Financial "to close its home loan business"

No Comment

Leave a reply

Your email address will not be published.