Provident Financial records better than expected results

The results are thanks to a “favourable macroeconomic backdrop” to the end of 2021. Meanwhile, the group’s adjusted profit before tax from continuing operations, excluding exceptional terms, was £167.8m - up from £27.8m. 

In March last year, the sub-prime lender said it had been recently informed that regulator the Financial Conduct Authority had opened an enforcement investigation into its affordability assessments.  

During March 2022, the business announced the launch of a consumer credit division (CCD) scheme of arrangement. The scheme, which won “strong creditor approval” at the sub-prime lender, is designed to cover customers who had unaffordable loans between 6 April 2007 and 17 December 2020 from one of the firm’s personal credit brands. 

The scheme received High Court sanction at the start of August, with the firm closing the CCD at the end of 2021. The closure involved launching a new scheme of arrangement in order to provide £50m worth of compensation for its customers. 

The costs relating to the closure of the CCD cost the firm £95.5m in 2021. The new scheme of arrangement will now remediate all outstanding relevant claims, as well as new relevant claims received before claims submission in February 2022. 

The scheme’s objective is designed to ensure all customers will redress claims are “treated fairly”, and outstanding claims are treated consistently for all customers who submit a claim under the scheme. 

Commenting on the results, Provident Financial’s chief executive Malcolm Le May said:  “2021 was a strategically important year for Provident Financial Group: we commenced the rebuilding of our cards franchise following the pandemic, we established a personal loans business supported by a brand new IT platform and we closed the CCD in response to changing industry dynamics. 

“We also improved the funding mix of the group with the issuance of a tier two subordinated bond. Most importantly, we achieved all of this whilst maintaining a focus on providing our customers with the credit products they need.”