UK Car Lending

Provident Financial “ to close its home loan business ”

BRADFORD-based Provident Financial is set to close its home lending business after more than 140 years, it has been reported.

This city-center institution has more than 380,000 clients and is Britain’s largest specialist lender.

However, it’s been in deficit since an attempt to modernize went wrong four years ago, leading to profit warnings.

Provident’s move highlights the pressure on the subprime credit market and follows the collapse of other well-known short-term lenders such as Wonga and QuickQuid in recent years over customer complaints.

It was reported in national newspapers that Provident will also be shutting down its Satsuma online lending business, focusing on its credit card business, Vanquis Bank, and the Moneybarn auto finance operation.

It has been reported that shareholders are due to be informed of the decision when Provident releases its annual results next week.

The shutdown was first reported in the Mail on Sunday, and Provident declined to comment when approached by national press.

Home loans involve lenders visiting a borrower’s home to collect repayments, often with high interest rates.

Provident’s home loan business is the oldest in the country, but the subprime lending industry has been a hotbed of complaints for some time.

The industry has been accused of driving people into debt and failing to verify whether people can afford repayments, with a large number of complaints filed against high-risk lenders by professional management companies complaints.

The Godwin Street-based lender warned in March that it could shut down some of its divisions, blaming the surge in submissions by claims management groups.

He said the allegations made it impossible to continue to treat customer complaints as a normal operating cost.

In the second half of 2020, it spent £ 25million to compensate its customers, ten times more than it spent during the same period in 2019.

Provident was founded in Bradford in 1880 to provide affordable loans to working class families in West Yorkshire and was listed on the London Stock Exchange in the 1960s.

In 2002, she created Vanquis Bank, specializing in prepaid credit cards, and in 2013, she created Satsuma Loans to offer short-term loans online before acquiring Moneybarn a year later.

In August 2017, a second profit warning in two months, with its chief executive replaced by Manjit Wolstenholme, a cancellation of the shareholders’ dividend and an annual dividend warning could be canceled, and an investigation by the Financial Conduct Authority is underway. course, everything has seen its price drop from £ 32 to £ 8.50 in the space of six months.

The price has since rebounded and stands at £ 245.

An FCA investigation began in March into how it assessed the accessibility of its loans and how it responded to a financial ombudsman decision last year, and the investigation is expected to last until 2022, but that “the appointment of investigators does not mean that CAF has determined that breaches of the rules or any other contravention have occurred”.

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