The chief executive of Provident Financial has quit as the firm warned of heavy losses following a period of “substantial under-performance”.
As part of another dire trading update, Provident said Peter Crook has decided to step down with immediate effect and Manjit Wolstenholme will assume the role of executive chairman.
As part of turnaround efforts, Provident, which has around 2.5 million customers, launched a new home credit model in July with the aim of moving from self-employed door-to-door agents to full-time “customer experience managers”.
But the lender said on Tuesday: “The rate of progress being made is too weak and the business is now falling a long way short of achieving these objectives.
“Collections performance and sales are both showing substantial under-performance against the comparable period in 2016.”
Provident’s collections performance is running at 57% versus 90% in 2016 and sales are £9 million per week lower. As a result, the firm said its pre-exceptional loss this year is likely to be in the range of £80 million to £120 million.
As part of turnaround efforts, it is also carrying out a “thorough and rapid review” of its home credit unit.
To compound the misery, the firm revealed that the Financial Conduct Authority (FCA) is investigating a Repayment Option Plan (ROP) Provident offers through its Vanquis Bank arm.
It said: “The FCA indicated that it has concerns about the ROP product and is investigating the period from 1 April 2014 to 19 April 2016.
“Vanquis Bank agreed with the FCA to enter into a voluntary requirement to suspend all new sales of the ROP in April 2016 and to conduct a customer contact exercise, which has now been completed.”
Vanquis Bank has also agreed with the Prudential Regulation Authority (PRA) not to pay dividends to without the PRA’s consent, pending the outcome of the FCA investigation.
Ms Wolstenholme said: “I am very disappointed to have to announce the rapid deterioration in the outlook for the home credit business.
“Protecting the group’s capital base through withdrawing the interim dividend, and in all likelihood the full-year dividend, is the appropriate response to maintain the highly valuable franchises of Vanquis Bank, Moneybarn and Satsuma.
“My immediate priority is to lead the turnaround of the home credit business.”
Provident shares went into freefall in morning trading, plunging more than 45% to 900.5p.