D.The oorstep lender Provident Financial will cut compensation for bad sales from victims after the city watchdog told the city it would not block the plan as it was the only way to stop the company’s home loan department from going bust, my colleague writes Simon Foy.
In a letter to Provident on Tuesday evening, the Financial Conduct Authority said it did not support their so-called arrangement because it was “incompatible with the rules, principles and goals of the FCA.”
The regulator added, however, that it will not block the system in court because “the only likely alternative to a system is the bankruptcy of Provident Personal Credit Limited (PPC)”.
Under the proposed scheme, customers will receive significantly lower compensation payments. The FCA criticized the £ 50 million Provident allocated to the program, saying it was a “potentially arbitrary number” and the group could have spent more.
The decision contradicts the watchdog’s handling of a similar plot of rival Amigo, which it blocked in court.
In May, Provident announced that it would cease doorstep selling so that the FCA, unlike Amigo, would not give unfair advantages to shareholders at the expense of creditors.
Goodbody analyst John Cronin said the regulator’s letter “removes a material uncertainty regarding the FCA’s decisions” and increases the likelihood that creditors and the court will approve the program.
He added that a possible U-turn by the FCA cannot be ruled out, but on closer inspection of the letter it appears “extremely unlikely”.
Provident Chief Executive Officer Malcolm Le May said, “Although the FCA has confirmed that it does not support the program and has summarized a number of concerns, I am pleased that the FCA has decided not to appear in court Opposing the program’s sanction continue to believe that the program is fair and in the best interests of CCD customers. “
The shares rose more than 4 percent to 252 percent and valued the company at around £ 640 million.