City watchdog FCA investigates auto finance firm Moneybarn

Marco Green
December 5, 2017

Jefferies Group reduced their price objective on Provident Financial to GBX 915 ($12.25) and set a hold rating on the stock in a research note on Wednesday, October 18th.

Shares in embattled doorstep lender Provident Financial have plunged 12% on news its vehicle loan brand Moneybarn is facing a regulatory investigation.

'While Moneybarn is only a small part of Provident's business and therefore not critical to the overall financial health of the group, today's news does add credence to our view that we are right to be concerned about underwriting standards across the business, particularly at Vanquis, ' she said.

The FCA has been monitoring Moneybarn since it authorised the loans company to conduct consumer credit activities in June 2016 and Provident Financial, known as "the Provvy", said Moneybarn had already "made a number of process improvements, including to the way it deals with future loan terminations".

Provident Financial said it will work with the FCA to resolve any issues.

Shares in the United Kingdom lender had already fallen 50 percent since August 22, when the group issued a profit warning, ousted its chief executive and said the FCA was investigating its Vanquis Bank unit.

The then chief executive Peter Crook unveiled plans replaced 4,500 sales agents with 2,500 full-time "customer experience managers", who would be connected to head office via iPads, with their time managed more efficiently as a result of analytical software.

The news follows a torrid year for Provident Financial, which is best known for its door-to-door loans business.

Neil Wilson, a senior market analyst at ETX Capital, said the investigation signalled "more trouble at the Provvy".

The FCA had no comment on the investigation.

The investigation comes at a hard time for the lender.

"Ultimately, with a healthy cash pile, new management and a turnaround strategy in place, Provident can weather regulatory storms such as these. On that front the outlook is very uncertain".

It helps people with poor credit scores who have been refused auto or van finance elsewhere. Some of its conclusions will be published early next year, it has said.

Other reports by Click Lancashire

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