It also announced that one of its subsidiaries, Vanquis Bank, was being investigated by the regulator, the Financial Conduct Authority (FCA).

As a result of the financial and regulatory problems, Provident confirmed that chief executive Peter Crook was being replaced by Manjit Wolstenholme, who would take the position of executive chairman.

Shares in the lender, which includes Vanquis Bank, Moneybarn and Satsuma, had fallen by more than 70% (at time of writing) during a morning trading statement following the announcement.

Regulatory investigation

The FCA is investigating Vanquis Bank’s repayment option plan after citing concerns about the product.

It forced the bank to stop sales of this product in April 2016 and is investigating the two years prior.

Vanquis Bank has also agreed with the Prudential Regulation Authority (PRA), pending the outcome of the FCA investigation, not to pay dividends to, or enter into certain transactions outside the normal course of business with, the Provident Financial Group without the PRA’s consent.

£9m per week fall

Provident revealed that collections performance was running at 57% (compared to 90% in 2016) and sales were around £9m per week lower than the comparative weeks last year.

It said the pre-exceptional loss of the business was now likely to be in a range of between £80m and £120m and added that “a thorough and rapid review of home credit’s performance is underway to secure the turnaround of the business”.

Provident Group executive chairman, Manjit 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,” he added.