Published: Thu, December 07, 2017
Business | By Max Garcia

FCA investigates bad credit provider

FCA investigates bad credit provider

The Financial Conduct Authority is looking into the treatment of customers of its franchise Moneybarn, the group said on Tuesday.

Moneybarn describes itself as a "bad credit vehicle and van finance company" and advertises a "representative" April of 32.9 per cent.

Almost 20% has been wiped off the value of Provident Financial after the the City watchdog revealed it has launched an investigation into Moneybarn, a company controlled by the subprime lender that provides auto loans to people with poor credit history.

In a statement the company said: "The Provident Financial Group aims to act responsibly in all its relationships, and to play a positive role in the communities it serves".

In August, the doorstep lender's shares lost two-thirds of their value in a single day after it issued a profit warning.

Provident said the FCA granted Moneybarn authorisation to conduct consumer credit activities on 3 June 2016 and has continued to discuss certain processes with Moenybarn since then.

Greenwood said it wasn't clear yet whether there had been any wrongdoing, but for the FCA to investigate there must be some cause for concern. In addition, chief executive Peter Cook quit in August.

In October, Provident announced that it expected to incur a loss of between £80m and £120m for 2017 in its consumer credit division and confirmed it would not be paying a full-year dividend. Peel Hunt reaffirmed a hold rating and issued a GBX 870 ($11.65) price objective on shares of Provident Financial in a research note on Friday, November 24th.

Provident has around 2.5 million customers, many of whom would not qualify for a standard bank loan due to their poor credit records. But it adds to the woes for the embattled lender and is another headache for management at the worst time. Some of its conclusions will be published early next year, it has said. "On that front the outlook is very uncertain".

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