Door lender Provident Financial sees losses widening amid indemnity frenzy

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Subprime lender Financial foresight saw his statutory losses reach £ 44.2million in the first six months of this year.

But, excluding its consumer credit division, the group’s adjusted profit jumped to £ 63.5million from £ 4.9million the year before.

More than four million of the lender’s clients may begin to seek compensation after the High Court gave the green light to the group’s repayment plan last week.

Results: Risk lender Provident Financial saw statutory losses climb to £ 44.2million in the first six months of this year

Affected Provident clients who have been sold unaffordable loans by the subprime lender will need to register via an online portal in order to initiate their compensation claims.

Compensation claims must be made within six months.

The Compensation Plan applies to borrowers who have been sold unaffordable loans between April 6, 2007 and December 17, 2020 from any of Provident’s personal credit brands.

These are Provident Home Lender, Satsuma Payday Loans, Greenwood, which was a home lender that has been gone since 2014, and Glo, which is a brand of loan guarantor.

Shares of Provident, which is listed on the London Stock Exchange, are currently up 1.56% or 4.80p to 312.00p. A year ago, the share price was 195.80 pence, which means it rose almost 60% last year.

The group said it would not declare a dividend distribution to shareholders for the first half of the year, “as the focus remains on capital preservation during the period of closure of the Consumer Credit division.”

He added : ‘The group will review its policy at the end of the year, leaving time for the board to assess the impact of the end of the leave and any future foreclosure restrictions on the group’s clients.

The company’s credit cards and personal loans arm, Vanquis Bank, reported first half adjusted profit before tax of £ 57.1million, compared to £ 11.8million at the same time in the year last.

The group said Vanquis’s profit was “due to lower write-downs due to more favorable macroeconomic conditions.” But the number of new customers in this branch rose to 97,000 over the period, against 147,000 a year ago.

The group’s auto finance business, Moneybarn, posted an adjusted pre-tax profit for the period of £ 15.5million, up from £ 2.3million at the same time in 2020.

This is due “to higher year-over-year revenue, due to the growth of the debt portfolio and lower write-downs,” Provident said.

Payment holiday taking by Moneybarn customers was “extremely low” and ended the period at just 0.1% of customers, up from 3.5% last year, he said.

Malcolm Le May, chief executive of the group, said today: “The first six months of 2021 have shown a stark contrast to the extremely difficult conditions seen throughout 2020.

“Underlying customer trends and macroeconomic conditions have improved year over year, allowing us to focus on core businesses, which is reflected in our results. “

Payments: over 4 million Provident Financial customers can now claim compensation

Payments: over 4 million Provident Financial customers can now claim compensation

He added: “In March, we notified the market of our intention to launch a Scheme of Arrangement for CCD and in May, unfortunately, we made the difficult decision to put the company into a managed run-off.

“I am happy that the draft scheme of arrangement for the CCD, which was foreseen in our 2020 accounts, was sanctioned by the High Court on August 4.

“We can now continue to advance our plans for shutting down the business before paying customer repair claims in 2022.

“During the remainder of 2021, PFG will accelerate its transition to become the leading specialty bank focused on financially underserved customers, serving growing market segments with a range of mid-priced products such as credit cards, financing vehicle and unsecured personal loans. ”

In March, Provident announced the plan of arrangement for its Consumer Credit division, and in May, it announced the closure and management of the liquidation of the division.

Provident has written to 4.3 million of its past and current customers, telling them that its consumer credit division could collapse in administration unless they agree to a sharp cut in abuse claims.

Home loan is a form of high-cost short-term credit where payments are collected at the borrowers’ homes.

Provident has now set aside £ 50million to meet compensation claims from affected borrowers who have mis-sold loans by the company.

But, affected customers will not receive all of their money after the company warns paying full compensation would force it into bankruptcy, leaving many affected with nothing at all.

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