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Provident Financial consumer credit division subject to regulator probe
StockMarketWire.com
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Subprime lender Provident Financial said it was planning to spend up to $65 million addressing customer complaints in its consumer credit division, which it also announced was being investigated by authorities.
Separately, Provident Financial said the company as a whole had performed 'slightly' better than its expectations in the fourth quarter, and hence for the full year.
The company said a review of its consumer credit division had found that it needed to address rising customer complaint volumes.
'When combined with the impact of Covid-19 on its profitability, customer complaints can no longer be treated as part of operating costs,' the company added.
Consequently, it had decided to pursue a scheme of arrangement to redress claims arising from customer credit-worthiness complaints.
It would fund legitimate scheme claims with £50 million and cover further scheme-related costs estimated at about £15 million.
If the scheme was not approved by the UK's Financial Conduct Authority (FCA), Provident Financial said it was likely the division would be placed into administration or liquidation.
The FCA had recently informed the company that it had opened an enforcement investigation focusing on the consideration of affordability and sustainability of lending to customers.
The investigation was also looking into the complaint handling process.
'The appointment of investigators does not mean that the FCA has determined that rule breaches or any other contraventions have occurred,' Provident Financial said.
'The FCA also continues to assess whether CCD is complying, and is likely to comply, with the standards it is expected to meet and the group's proposed approach to future lending as and when further details of such proposal are made available.'
Story provided by StockMarketWire.com
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