Provident Financial set to exit doorstep lending after 140 years

Provident Financial PLC (LON:PFG) is set to close its doorstep lending business after 140 years.

Reports at the weekend said online arm Satsuma will also shut following the strategic review.

Based in Bradford, Provident is the UK’s largest doorstep lender with 380,000 customers, but during lockdown the business was hit with a wave of complaints and compensation claims.

In December, Provident launched the review of the consumer credit (CCD) arm that comprises doorstep lending and Satsuma after a 200% jump in complaints in the second half of 2020, which resulted in payouts of GBP25mln.

Britain’s financial regulator started an investigation in March into the doorstep credit business after the rise in complaints

In a statement today, Provident noted the reports about the possibility of a managed run-off of its home credit and Satsuma businesses.

“The group confirms that, whilst no decisions have been made, the review is nearing completion and the outcome will be announced with the group’s full-year 2020 results, to be published on Monday 10 May,” the brief statement added.

Attempts to modernise the business have also run into problems while the general regulatory backdrop has tightened following the collapse of payday lenders such as Wonga.

To deal with the complaints and the escalating cost, Provident wants to establish a scheme of arrangement that will cap CCD compensation payments and protect the rest of the company

The weekend reports said the business would regroup around two other subsidiaries, Vanquis Bank and car finance operation Moneybarn.

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