Provident could be facing a £300m payout
Provident Financial Group could face a payout of £300m, according to stock analysts from the Europe division of Royal Bank of Canada.
The analysts said the payout would be in terms of customer redress, regulatory penalties and administration costs for the mis-selling of a product by one of its businesses.
To recap, the home credit provider has endured the following blows, among others, in just the past two months since its troubles were first revealed on August 22:
- Announcing that losses could reach £120m this year;
- Losing its experienced chief executive Peter Crook;
- Losing staff after changing its operational structure, to full-time agents, from self-employed teams;
- Dropping out of the FTSE 100;
- Announcing publicly an FCA investigation into Vanquis Bank’s repayment option plan, which offers payment holidays to customers in return for fees.
The mis-sold product referred to is the repayment option plan by Vanquis Bank – the analysts compared this to the mis-selling of PPI.
Analysts have also recommended Provident shares will underperform and are not investible until greater clarity is received, which they said is not likely to be until next year at the earliest.
They said: “Provident’s financial deterioration is rapid and it remains questionable whether the company’s issues are anywhere near under control.”