Shares in Provident Financial plunge as FCA launches probe into Moneybarn

 
Courtney Goldsmith
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The FCA is investigating Moneybarn (Source: Getty)

The UK's financial watchdog has opened a probe into Provident Financial's car financing arm, Moneybarn, sending the company's shares tumbling by as much as 16 per cent.

The lender said the Financial Conduct Authority (FCA) would investigate the "processes​ applied to customer affordability assessments for vehicle finance and the treatment of customers in financial difficulties".

The move is the regulator's second probe into Provident's lending practices.

Provident said the FCA granted Moneybarn authorisation to conduct consumer credit activities on 3 June 2016 and has continued to discuss certain processes with Moenybarn since then.

"Moneybarn has made a number of process improvements, including to the way it deals with future loan terminations," it said.

Read more: Provident Financial's executive chairman has died

The firm will work with the FCA to investigate the remaining concerns and resolve any outstanding related issues as soon as possible

"For some companies, it never just rains but pours and this seems to be the case for Provident at present," said Gary Greenwood, an analyst at Shore Capital.

"Already stuck in a quagmire that is the badly handled restructuring of its home credit operations, coupled with an FCA investigation into historical sales of its repayment option plan (ROP) product at Vanquis, Provident has today announced that the FCA is now investigating Moneybarn, it’s car finance business.

"As such, all three of the company’s main operating divisions are now under the spotlight for one reason or another."

Greenwood said it wasn't clear yet whether there had been any wrongdoing, but for the FCA to investigate there must be some cause for concern.

"These factors, combined with current vacancies in the senior management team (both a permanent chairman and chief executive are being sought) following the recent tragic passing away of the company’s former executive chairman, Manjit Wolstenholme, mean that there is now simply too much uncertainty to justify us maintaining a positive stance on the shares," Greenwood said.

Shares in Provident Financial were down more than 15 per cent to 744p in morning trading.

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