Shares in doorstep lender Provident Financial plunged 58% after it issued its second profit warning in months. It says it now expects to make losses of £80m to £120m as its debt collection rates have dropped to 57% compared with a previous rate of 90% in 2016, BBC reports.
Bradford-based Provident recently changed the way it collected its loans, replacing self-employed agents with “customer experience managers”.
Its chief executive, Peter Crook, has resigned.
Provident had already flagged up problems with its new system in June. At the time, Provident said not enough of its self-employed debt collectors had applied to become employed by the company.
It had also been less effective at collecting money and selling new loans, and a greater number of agents than normal had left, the same source informs.
Provident Romania is part of the British group International Personal Finance (IPF). Last year, the company granted loans by 27% higher than in 2015, whereas the number of clients increased by 4.4% to more than 300,000 people, realitatea.net informs.
IPF is operating as Provident in Poland, Czech Republic, Hungary, Romania and Mexico.
Financial Non-banking Institutions (IFN) can grant loans to the population but are not allowed to attract deposits from the population.
According to realitatea.net IFNs are often considered ‘usurers’ due to the high interest rates. Sometimes the Effective Annual Interest Rate (DAE) can reach 4,000-5,000% per year.