Exiting moneylender Provident to write off outstanding loans

Provident has stopped collecting payments as of June 28th

The largest moneylender operating in the State in recent years, Provident Financial, has stopped collecting payments from Irish borrowers and will write off outstanding loans, after deciding last month to stop lending in the market.

Provident had £18.3 million (€21.3 million) of loans outstanding as of the end of December in the Republic, a market where it has been loss-making for the past three years, according to figures from recent annual reports.

The amount currently out in the Irish market is understood to be significantly lower than the end-2020 figure.

"If you've an outstanding balance on your Provident loan(s), we've some good news for you," the lender said in a statement posted on its Irish website. "We stopped collecting payments at 9.30am on 28th June 2021. Any remaining balance you have after that date is now paid off. There are no more repayments to make to your Agent or Provident. This is because our loans business closes in Ireland on 1st July."

Provident said that it will update the credit record of borrowers with loans of €500 or more to show that their balance has been cleared. That is the threshold at which the Central Bank’s Central Credit Register must be notified of a loan.

“If your loan was less than €500, don’t worry as we didn’t put anything on your credit record when you took the loan,” Provident said.

The UK-based Provident Financial group revealed in early May that it was shutting its doorstep lending business in Britain and Ireland as it reported a pre-tax loss of £113.5 million (€132 million) for 2020, and highlighted the strain that the coronavirus pandemic and growing customer complaints have put on subprime lenders. The group will continue to collect payments on doorstep loans in the UK.

The move comes just days after Minister for Finance Paschal Donohoe said the Government was planning to "gradually" lower the current interest rate cap on licensed moneylenders' loans. They can currently charge up to 288 per cent a year to customers.

Stopped issuing

Bradford, England-based Provident, which traces its operations in the Republic back to the 1940s, stopped issuing new loans in the market on May 10th. The London-listed group had £1.8 billion out on loan at the end of last year, with its business also including credit cards, unsecured personal loans and car loans.

“The company has presumably decided that, at this point, the cost of collections would overshadow the value of the collections,” said John Cronin, an analyst with Goodbody Stockbrokers. “We understand that this decision is not expected to influence the UK [consumer credit division] book collections strategy though there is a small risk that UK customers get wind of this development and that propensity to repay reduces in response.”

Moneylending in the Republic hit a high in 2013, when some 360,000 people borrowed €301 million. Since then, however, it has been in decline, with latest figures from the Central Bank, published in February, showing that 283,000 people borrowed €151 million from moneylenders in 2020, with an average loan of €509.

Moneylenders licensed by the Central Bank can charge Irish customers up to 188 per cent APR on loans, rising to 288 per cent APR including collection charges.

Provident’s outstanding Irish loans fell from £38.9 million at the end of 2018 to £18.3 million as of last December.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times