“PFG will no longer offer any ‘high-cost’ products and we will not be issuing any high-cost or home collected credit products from any CCD (consumer credit) entity in future,” Malcolm Le May, chief executive, said in a statement with the annual results.
Discussions have started with 2,100 staff about the future, said the statement, with the options to run the business down or sell it, either of which will cost up to GBP100mln.
PFG added it will also go ahead with a controversial run-off scheme to cap compensation awards for complaints about the businesses.
The group has committed GBP50mln to the scheme and a further GBP15mln to cover costs.
Consumer credit (CCD) complaints soared during the lockdown periods, prompting the group to start a review of the business in December, while UK regulator the FCA started its own investigation in March this year.
Costs related to the complaints meant the CCD arm lost GBP74.9mln in the year to end-December 2020, which pushed the group overall GBP113.5mln (2019: GBP119mln profit) into the red.
Credit card specialist Vanquis Bank and car finance lender Moneybarn are the businesses being retained and both made a profit though it was much reduced from the previous year.
Vanquis’s contribution dropped to GBP38mln from GBP173.5mln, while Moneybarn slipped to GBP10.9mln from GBP21.1mln.
Provident described its financial position as robust with total group liquidity of GBP1bn at end-December, of which GBP800mln was held by Vanquis Bank.
There is no dividend for the year.
Le May added: “We notified the market in March 2021 of our intention to launch a Scheme of Arrangement for CCD.
“I am pleased to report that the Court has granted the opportunity for the Scheme creditors to meet and assess the Scheme on its own merits.
“We firmly believe that the Scheme is the fairest compromise we can offer for CCD customers, past and present.
“Our credit card and vehicle finance businesses saw improving trends during the first quarter of 2021, with credit card spend improving and the demand for vehicle finance increasing month on month.”