Provident Financial consumer arm to book hefty losses
The group said its consumer credit division is expected to report a pre-exceptional loss of approximately £120 million.
Provident Financial’s consumer arm will book full-year losses at the upper end of guidance, with the troubled subprime lender blaming a poorly executed change of strategy.
The group, which is attempting to bounce back from a torrid 2017, said its consumer credit division is expected to report a pre-exceptional loss of approximately £120 million.
It reflects a “lower than expected rate of reconnection” with customers affected by a “poorly executed migration” to Provident’s new operating model in July.
As part of efforts to shore up the business, Provident launched a new home credit model last year with the aim of moving from self-employed door-to-door agents to full-time “customer experience managers”.
Provident said the customer service improvements have led to a rise in active customers numbers from 500,000 in September to 530,000.
Shares fell nearly 5% to 876.4p in morning trading.
In October, the firm revealed that it would book heavy annual losses at its consumer credit business, but claimed it is making progress with a turnaround plan.
Provident has had a brutal few months, in which it has issued a string of profit warnings, seen its shares tank and announced the death of executive chairman Manjit Wolstenholme.
To compound matters, the City watchdog recently launched an investigation into one of its sub brands – car loans firm Moneybarn.
The Financial Conduct Authority (FCA) probe will focus on processes applied to customer affordability assessments for car finance and the treatment of consumers in financial difficulties.
Both Moneybarn and Vanquis Bank “traded satisfactorily” through the final quarter of the year, the group added.
Interim executive chairman Malcolm Le May said: “I am pleased to report that good progress has been made towards restoring customer service in the home credit business and that we are engaged in a dialogue with the FCA with a view to reaching a resolution of the regulatory investigations at Vanquis Bank and Moneybarn.
“In addition, we continue to make progress in the search for a new group chief executive.”
He added that Provident’s priorities in 2018 are to rebuild trust with customers, regulators, shareholders and employees.