Shares in Provident Financial plunge as FCA launches probe into Moneybarn

Moneybarn is under investigation over its processes

Provident Financial has been informed that its auto finance division is being investigated by the UK Financial Conduct Authority.

The City watchdog's Moneybarn inquiry takes place amid broader regulatory concern about the scale of credit card debt and a spike in vehicle loans amid the squeeze on household budgets caused by inflation outpacing wage growth.

The FCA is also investigating the treatment of customers in financial difficulties.

It is the latest in a string of blows at the former FTSE 100 company.

News of the investigation follows a brutal few months for Provident, which has issued two profit warnings, seen its shares tank by nearly 80 per cent since May and whose executive chairman Manjit Wolstenholme died last month.

THE City watchdog has launched an investigation into auto loans firm Moneybarn, it announced today.

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Provident said it "aims to act responsibly in all its relationships" and will "work collaboratively with the FCA" to investigate its concerns. Numis Securities reissued a "sell" rating on shares of Provident Financial in a report on Tuesday, August 22nd.

Moneybarn is a relatively small arm of the group's business, with around 50,000 customers out of the group's total of more than 2 million.

"But it adds to the woes for the embattled lender and is another headache for management at the worst time", he added.

Since that date, the company said the FCA has discussed processes with Moneybarn and it has made a number of improvements, including to the way it deals with future loan terminations.

Earlier this year it announced changes to its 130-year-old business model of sending self-employed sales agents door to door, offering loans and collecting debts, in favour of making greater use of technology.

The FCA has yet to issue any fines in relation to the Vanquis investigation. "On that front the outlook is very uncertain".

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