Provident Financial's Moneybarn car loan unit faces FCA probe

Shares in the troubled sub-prime lender Provident Financial have fallen by up to 18%, after the firm revealed that its car finance division is being investigated by the regulator.

The Financial Conduct Authority (FCA) is to examine the way that Moneybarn assesses car-buyers for loans.

Provident Financial's credit card division - Vanquis - is already being investigated by the FCA.

Shares in Provident have lost nearly 80% of their value since May this year.

In a statement, Provident Financial said that the FCA's inquiry would look at "the processes applied to customer affordability assessments for vehicle finance, and the treatment of customers in financial difficulties."

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The FCA had no comment on the investigation.

However, it is already looking at the wider issue of car finance as part of its inquiry into high-cost credit, and is due to publish some of its conclusions early in 2018.

Tough year

Provident Financial said it had already made some improvements to its processes, including the way it deals with future loan terminations.

It said would work "collaboratively" with the FCA to investigate remaining concerns.

The news follows a torrid year for Provident Financial, which is best known for its door-to-door loans business.

In the past six months it has:

• issued two profit warnings

• lost its chief executive, Peter Cook, who resigned in August

• cancelled a dividend

• re-arranged its door-to-door loans business

• lost its executive chair, Manjit Wolstenholme, who died last month

High-profile fund manager Neil Woodford, whose Woodford Investment Management owns a stake in Provident Financial, has expressed confidence in the company's future.