The largest money lender in the State is to write off the debts of all of its borrowers in an unprecedented move.
Provident is shutting down here and has decided that all those who owe it money will have their debts wiped.
It is thought to be the first time there has been a wholesale writing-off of the debts of all its consumers by a financial institution in this market.
The lender will also ensure the balance has been cleared on the credit record of its customers.
The London-headquartered firm has thousands of borrowers in this market and was operating here for years.
It did not respond to queries, but it is thought it has decided it will be too much hassle to collect outstanding debts now that borrowers know it is pulling out.
Its collection agents are self-employed, and many will already have moved on now that Provident is closing.
The Provident website says: “If you have an outstanding balance on your Provident loan(s), we have some good news for you.
“We stopped collecting payments at 9.30am on June 28, 2021.
“Any remaining balance you have after that date is now paid off. There are no more repayments to make to your agent or Provident. This is because our loans business closes in Ireland on July 1.”
All loans for €500 or more have to be notified to the Central Bank’s Central Credit Register.
However, Provident said if customers have borrowed €500 or more, it will update their credit record to show the balance has been cleared.
Provident is shutting down its sub-prime lending operations in this country and in its UK base.
The doorstep lending operation has been losing money in both markets since before the pandemic.
It has been hit by a huge increase in customer complaints that prompted an investigation by the British regulator, the Financial Conduct Authority.
Licensed money lenders in Ireland typically charge more than 86pc, while some charge up to 288pc once collection charges are added in.
It is estimated there are more than 280,000 customers of money lenders here.
The Central Bank of Ireland said it was aware of the Provident move to write off the debts.
“Provident has advised that it has contacted all of its customers to inform them of this decision, that any remaining balance on their money lending loan(s) is being taken as having been paid off and that their credit record will be updated accordingly,” it said.
Credit unions are hoping to fill the gap left by Provident’s departure.
Kevin Johnson, chief executive of the Credit Union Development Association, which has 50 credit unions in its membership, said customers of Provident should contact a credit union.
“Credit unions have a long history of lending to and supporting members of their communities, regardless of whether the need is for €400 for a washing machine or €40,000 for a complete home retrofit,” he said.
“We would suggest ex-Provident borrowers speak with their local credit union should they need credit in the future.”
The Irish League of Credit Unions (ILCU) said the cost of a credit loan is a lot less than borrowing from a money lender such as Provident.
Paul Bailey, of the ILCU, said that as soon as someone becomes a member of a credit union, they can apply for a loan.