Credit Cards & Loans
Provident customers given green light to claim compensation
Customers who were mis sold loans by the doorstep lender will need to apply for redress through a dedicated online portal, which is expected to launch by the end of August. However, registration is open now.
They have six months to file a claim.
Provident has set aside £50m to fund compensation claims.
Provident Financial announced in May that it was closing its doorstep lending business Provident Personal Credit. The business had been struggling even before the coronavirus pandemic, losing £21m in 2019. However, those losses expanded dramatically during 2020 to £75m.
Provident Personal Credit typically offered loans to people with poor credit histories who struggled to borrow money elsewhere. Cash loans were delivered to customers’ doorsteps, with debt collectors then visiting customers’ homes each week to collect cash payments.
The company had faced a wave of mis-selling complaints by customers, partly driven by claims management companies. In March, the company warned that its consumer credit division could collapse into administration because of the deluge of compensation claims. It subsequently launched a scheme of arrangement in order to address the issue of rising customer complaint volumes.
However, the Financial Conduct Authority (FCA) has refused to support the scheme because consumers are being offered significantly less than the full amount of redress they are owed.
Any customer who incorrectly received a loan from Provident, Glo, Satsuma or Greenwood from 6 April 2007 to 17 December 2020 is eligible to claim for compensation.
Malcolm Le May, chief executive of Provident, said: “We believed from the outset that the Scheme was fair and that it offered the best outcomes for customers.
“The Court sanction enables us to move forward with the Scheme and we expect that creditors will receive redress payments in the second half of 2022.”