The Financial Conduct Authority (FCA) has launched a probe into the consumer credit unit of Provident Financial, the UK’s top doorstep loan provider.
A doorstep lender is a loan company that offers doorstep loans, which are sometimes referred to as home credit loans. A doorstep loan is where you borrow money, and the lender calls at your home to collect the repayments.
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The loans are usually for smaller amounts and you will be charged a high rate of interest for borrowing in this way.
Loans from UK doorstep lenders can start from as low as £100, with the money paid back in regular instalments over several months.
An agent working for the doorstep lender will visit you at your home to finalise your loan. They will also be the person to collect your repayments.
The FCA’s investigation focuses on questions of affordability and sustainability of lending to customer.
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By GlobalDataFOS complaints
The probe also targets the application of a Financial Ombudsman Service (FOS) decision into the complaint handling process, in the period between February 2020 and February 2021.
Provident said the number of complaints to the FOS across the home credit market increased by 200% in the second half of 2020 compared with the first six months of the year.
Provident paid out £25m to customers compared with £2.5m in 2019 and had processed balance reductions for home credit customers of £11m during the same period.
It would fund legitimate scheme claims with £50m and cover further scheme-related costs estimated at about £15m. If the scheme was not approved by the FCA, Provident said it was likely the division would be placed into administration or liquidation
“The appointment of investigators does not mean that the FCA has determined that rule breaches or any other contraventions have occurred,” Provident Financial said.
