Provident Financial faces FCA investigation into customer complaints

Shares in Provident Financial dropped more than a quarter on Monday after the UK’s largest specialist subprime lender said it was being investigated by regulators and may have to close one of its divisions due to the volume of customer complaints.

Provident said it wanted to set up a “scheme of arrangement” to deal with a surge in complaints about its consumer credit division, which includes its traditional “home credit” business.

Provident said the Financial Conduct Authority did not approve of the proposal because claimants would not receive the full value of their complaint. But it argued that the alternative would be to place the business into administration or liquidation, in which case claimants would receive nothing.

The FCA has separately launched an investigation into the way Provident assessed the affordability of its loans, and the way it responded to a ruling by the Financial Ombudsman last February.

Shares in the company were down 27 per cent in morning trading.