Lightning strikes twice?

In 2001, Provident Financial bought Yes Car Credit. Three years later it closed with the loss of 820 jobs following a £20 million loss for 2005. The provy took a hit for £141 million including a goodwill write off of £91 million, as well as being embroiled in a policy misselling scandal, as customers were allegedly pressured to buy expensive payment protection insurance and warranty products with their cars.

Cue 2017

The FCA have announced an investigation into Moneybarn, its second attempt at subprime car and van financing, focusing on whether it properly assesses whether its customers can afford to take on credit and how it deals with borrowers who fall into arrears or default.

By their own admission in their October interim statement “margins continue to reflect the additional impairment on business written prior to the tightening of underwriting in the second quarter.”

In the half year to 30th June 2017, impairment at Moneybarn was a whopping 26.6% of revenues and 90% up on the comparable period in the prior year, while average receivable growth was 32%.

The provy acquired Moneybarn in August 2014 for £120M.

Watch this space.