Provident Financial quits doorstep lending after 141 years

Subprime lender Provident Financial has quit doorstep lending after 141 years, placing 2,100 jobs at risk, the company announced.

Bosses at the credit business said they would instead focus on its Vanquis Bank credit card division and Moneybarn car finance business.

The company said the move was due to “changing industry and regulatory dynamics” alongside “shifting customer preferences”.

Winding down the business or selling it will cost Provident around £100 million, it added.

The decision comes as Provident revealed it sunk to a £113.5 million pre-tax loss in 2020, with £74.9 million losses in the home credit division alone.

By comparison Vanquis Bank brought in pre-tax profits of £38 million and Moneybarn £10.9 million.

Chief executive Malcolm Le May said: “In light of the changing industry and regulatory dynamics in the home credit sector, as well as shifting customer preferences, it is with deepest regret that we have decided to withdraw from the home credit market and we intend to either place the business into managed run-off or consider a disposal.”

He added: “Our credit card and vehicle finance businesses saw improving trends during the first quarter of 2021, with credit card spend improving and the demand for vehicle finance increasing month on month.

“These positive trends, supported by the group’s strong balance sheet, mean that we feel confident about how we are positioned in our markets.”

The company has had a difficult time recently in its doorstep lending division, including a spike of mis-selling complaints by customers.

Claims management companies have targeted the business as a new stream of revenue following the deadline for the payment protection insurance mis-selling scandal passing.

In March, the lender wrote to customers warning that its consumer credit division could collapse into administration because of the large number of compensation claims.

The doorstep lender also revealed the Financial Conduct Authority (FCA) had launched an investigation in February into a number of issues, including whether it carried out proper affordability checks before lending to borrowers.

On the new investigation launched by the FCA, set to complete by next year, the company said: “The appointment of investigators does not mean that the FCA has determined that rule breaches or any other contraventions have occurred.”

Provident can trace its roots back to 1880 when insurance agent Joshua Waddilove came up with a scheme for poorer residents of Bradford, West Yorkshire, to pay for clothing using vouchers that were then paid back in instalments.