Moneylender Provident cleared for reduced compensation payouts

UK court sanctions scheme to cover missold doorstep loans despite reservations of regulator

Moneylender  Provident Financial has been given the green light to pay partial compensation to customers missold loans by its doorstep lending business. Photograph: iStock

Moneylender Provident Financial has been given the green light to pay partial compensation to customers missold loans by its doorstep lending business. Photograph: iStock

 

Subprime lender Provident Financial Group has been given the green light by the High Court in London to pay partial compensation to customers missold loans by its doorstep lending business as it closes it down.

Provident said on Wednesday that it had received a court judgment sanctioning its scheme of arrangement, despite concerns raised by the British regulator, the Financial Conduct Authority (FCA), that it would short-change customers.

The subprime lending industry, which lends to people who can’t get a loan from mainstream banks, has faced regulatory scrutiny in recent years and a surge in claims from customers alleging they were sold unaffordable loans.

Provident, which also offers credit cards and vehicle finance, is providing a £50 million (€58.75 million) pot for doorstep lending customers to cover partial refunds to anyone with a valid misselling claim.

The FCA said it had made clear it did not support the scheme, adding the company remained under investigation for its conduct. However it had previously decided not to oppose the scheme in court because the only likely alternative was the insolvency of the doorstep business.

Malcolm Le May, chief executive of Provident, said: “We believed from the outset that the scheme was fair and that it offered the best outcomes for customers”.

Provident was, until recently, the largest moneylender operating in the State. It announce din may that it was getting out of the Irish market and, in June, stopped collecting payments from Irish borrowers and announced it would write off outstanding loans here.

Provident had £18.3 million (€21.3 million) of loans outstanding in the Republic at the end of 2020 though the figure is understood to have fallen since then. It had been loss-making in the Irish market over the last three years, according to reports. – Reuters