Provident Financial replaces home credit division managing director

Troubled doorstep lender Provident Financial said it had replaced the managing director of its consumer credit division, appointing Chris Gillespie “with immediate effect”.

Gillespie takes over from Andy Parkinson, the company said in a statement. Shares in Provident tanked by 66% on Tuesday after an unexpected profit warning and the resignation of chief executive Peter Crook.

"Chris Gillespie's focus as the new managing director will be on re-establishing relationships with customers, bringing collections back to a normal level, and stabilising the operation of the business," the company said.

It added that Luke Enock, who currently works for Provident's Satsuma unit, and Greg Cant, another existing employee, would join the division.

Tuesday's profit warning was the second in two months. Provident also withdrew its dividend as the rate of progress in the turnaround of the home credit business had been "too weak".

The company said it now expected to make a pre-exceptional loss of between £80m and £120m as debt collection rates had fallen to 57% versus 90% in 2016, while sales were around £9m per week lower than the comparative weeks last year.

"The extent of this underperformance and the elongated period of time required to return the performance of the business to acceptable levels invalidates previous guidance," it said.

Back in June, the company said it expected the consumer credit division to generate a reduced pre-exceptional profit before tax of around £60m as it transitioned to a fully employed agent model.

Provident Financial also announced that Vanquis Bank was cooperating with an investigation by the FCA into the repayment option plan ancillary product. ROP currently contributes gross revenues, before impairment and costs, of approximately £70m per annum.

In light of the "substantial deterioration" in the trading performance of the home credit business and uncertainty created by the FCA's investigation at Vanquis, Provident said it was withdrawing the interim dividend declared in July and a full-year dividend is unlikely in order to protect its capital base.

The group is now undergoing a "thorough and rapid review" of home credit's performance to secure the turnaround of the business.