Provident Financial expects £120m loss at doorstep lending arm

Doorstep lender Provident Financial expects to post a £120m loss at its consumer credit business after struggling to win back customers following a botched reorganisation last year.

The company, which specialises in lending to people in financial difficulty, blamed a “lower than expected rate of reconnection” in the fourth quarter.

The shares fell 5% in early trading and were later down 3.8% at 885p.

The reorganisation, which involved replacing 4,500 self-employed collection agents with 2,500 full-time “customer experience managers” (CEMs) resulted in two profit warnings last summer, a share price plunge and the departure of the chief executive.

The CEMs were given iPads but were sent to the wrong addresses, or the correct ones at the wrong time, and were unable to make sales or collect payments. The firm decided to hire collection agents again in October after axing them earlier in the year.

Provident warned in August that the door-to-door lending operation would lose between £80m and £120m in 2017. However, customer numbers at the division have increased to 530,000 from 500,000 in September.

The firm plans to reduce costs by cutting support jobs. This is thought to affect “tens” of jobs rather than hundreds.

Provident’s credit card business, Vanquis Bank, and its car finance division, Moneybarn, are under investigation by the financial watchdog.

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