Provident Financial is launching a review into its consumer credit division following greater scrutiny of relending across the sector by the Financial Conduct Authority, along with higher industry-wide complaints.
In a third quarter trading update, Provident Financial chief executive officer Malcom Le May said that the business would be undertaking an operational review of the consumer credit division (CCD), headed up by the new managing director of CCD, Hamish Paton. It comes amid growing complaints throughout the industry.
“This will ensure that the business is best positioned, in the context of these industry dynamics, to return to delivering long-term sustainable profitability,” Le May said.
Provident Financial’s consumer credit division is already reacting to recent regulatory updates, with the organisation vowing to “provide support where necessary” as consumers require more help during the new national lockdown.
Elsewhere the group revealed it would be proceeding with around 300 job cuts in its home credit division after the completion of a consultation into the project.
The firm is hoping to achieve cost savings of approximately £13m through a reduced headcount despite exceptional costs of £2m.
During the third quarter consumer demand was impacted in some areas but the group managed to trade in-line with expectations and remains on-track to meet market expectations for its financial year that concludes in December 2020.
Take up of payment holidays has continued to trend downwards (to one or just over one percent in most departments) but consumer demand has been impacted in parts. Provident’s credit card business, Vanquis Bank, was the most affected with consumer spend 15% lower in the third quarter than the previous year - though this is line with market trends.
Provident said Moneybarn continues to see strong levels of demand for used vehicles. Payment holiday take-up at the end of September was just 1.5% of customers with a vastly reduced take-up trend.
In home credit, the proportion of collections undertaken with remote methods was over 80%. Home credit lending to existing customers was over 70% of typical third quarter levels and new customer lending was about 60%, reflecting tighter lending criteria.
Le May added that, with 2021 only weeks away, the group was proceeding with its Brexit preparations: “We continue to work on the structure of the businesses within the group and, as part of that, to ensure the most efficient corporate structure for our Republic of Ireland business post-Brexit.”