Provident Financial Rallies as it Re-hires Agents

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Provident Financial, a troubled lender, experienced a share price rally after revealing that it had hired back former agents to help in the restoration its reputation on the doorstep.

Provident, which collects debts and sells loans by going door to door, endured a disaster in the summer when it declared its second profit warning in three months.

The share price of the company lost two-thirds of its value in one day, and its chief executive resigned after it revealed that a program to move away from using part-time, self-employed agents to a smaller number of full-time staff had failed, resulting in decreasing debt collections.

Provident said that it had hired 300 part-time staff, essentially from the ranks of its former self-employed agents, to “accelerate the reconnection with customers” and raise the rate of collections on the doorstep.

Provident, after its sharp sell-off, quickly acted quickly to bring back the former head of its consumer credit arm, Chris Gillespie, to put the division back together.

It already appears to be realising the benefits of its plan, with doorstep collections increasing to 65pc in September from 57pc in August. In 2016, the rate was at 90pc.

Provident shares surged more than 11pc to 882p. However, this is almost exactly half the value that they were trading at prior to the profit warning in August.

The lender also said that it would book a £80m to £120m loss on its consumer credit division for 2017. Its full-year dividend has been cancelled, and it continues to look for a new chief executive.

The executive chairman, Manjit Wolstenholme, said that the new leadership of the company had a “deep understanding of the business and recognise the importance of the relationship between our front-line staff and our customers.”

Vanquis Bank, a Provident’s subsidiary, is still being examined by the Financial Conduct Authority regarding the sales of one of its products. Earlier this week, Vanquis was fined with £75,000 by the Information Commissioner’s Office for sending customers spam text messages.