Exit of usurer Provident to cancel outstanding loans
The largest money lender operating in the state in recent years, Provident Financial, has stopped taking payments from Irish borrowers and will cancel outstanding loans, after deciding last month to stop lending in the market.
Provident had £ 18.3million (€ 21.3million) in loans outstanding at the end of December in the Republic, a market where it has been in deficit for three years, according to figures in the latest annual reports.
The amount currently released on the Irish market would be significantly lower than the figure at the end of 2020.
“If you have an outstanding balance on your provident loan (s), we have good news for you,” the lender said in a statement posted on its Irish website. “We stopped collecting payments at 9:30 am on June 28, 2021. Any remaining balance after that date is now refunded. There are no more reimbursements to be made to your Agent or Provident. Indeed, our lending activity in Ireland closes on July 1st. “
Provident has said it will update borrowers’ credit reports with loans of $ 500 or more to show that their balances have been cleared. This is the threshold at which the Central Credit Register of the Central Bank must be notified of a loan.
“If your loan was less than $ 500, don’t worry because we didn’t put anything on your credit report when you took out the loan,” Provident said.
UK group Provident Financial revealed in early May it was shutting down its home lending business in Britain and Ireland as it reported a pre-tax loss of £ 113.5million (€ 132million) for 2020, and underscored the pressure the coronavirus pandemic and growing customer complaints have placed on subprime lenders. The group will continue to collect payments on home loans in the UK.
The move comes just days after Finance Minister Paschal Donohoe said the government planned to “gradually” lower the current cap on interest rates on loans from approved lenders. They can currently charge customers up to 288% per year.
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Provident, based in Bradford, England, which traces its operations in the Republic to the 1940s, ceased issuing new loans into the market on May 10. The London-listed group had a £ 1.8 billion loan at the end of last year, with its business also including credit cards, unsecured personal loans and car loans.
“The company has presumably decided that at this point the cost of the collections would eclipse the value of the collections,” said John Cronin, analyst at Goodbody Stockbrokers. “We understand that this decision should not influence the UK [consumer credit division] book collection strategy, although there is a low risk that UK customers will learn of this development and the propensity to repay will decrease as a result.
Money lending in the Republic peaked in 2013, when some 360,000 people borrowed 301 million euros. Since then, however, it has been declining, with the latest Central Bank figures released in February showing that 283,000 people borrowed 151 million euros from loan sharks in 2020, with an average loan of 509 euros.
Central Bank approved lenders can charge Irish customers up to 188 percent APR on loans, amounting to 288% APR including collection costs.
Provident’s Irish loans outstanding fell from £ 38.9 million at the end of 2018 to £ 18.3 million last December.