Provident Financial an “utterly impossible” challenge if it were to return to an agent network, says rival Morses Club
Britain’s second-biggest doorstep lender today said it is “utterly impossible” for troubled rival Provident Financial to perform a U-turn on a controversial shake-up to its agency network.
Was Provident to renege on changes, it would send “shockwaves into markets” and suggest a “lack of leadership at the top”, the chief executive of Morses Club said.
Morses revealed 21 per cent growth in its loan book in 2017. While customer numbers rose a more modest six per cent, the lender said this was due to a change in its customer mix.
“The quality of the customers that came in via the agents that left Provident is much much higher and that is coming through in those quality balances,” Morses finance chief Andy Thomson told City A.M..
[Growth was] particularly a result of the dislocation of Provident Financial’s home collect credit business.
Read more: Woodford throws his weight behind Provident… and he had to
Agency overhaul
Provident Financial, Britain’s biggest doorstep lender, last year implemented plans to bring its agency network in-house and alongside a massive technological overhaul.
Hundreds of agents jumped ship to Morses, bringing their clients with them.
Shares in Provident this week leapt over 70 per cent as it announced a £300m rights issue. It said it would not return to its previous agency model, though its boss admitted the lender had “inexcusably” lost sight of its customers during the process.
“You need to focus in on what you think is important. That is what we have done,” said Morses CEO Paul Smith said today.
“Brutally, they [Provident] have no choice but to stick with that model.
“To try and reverse out of that [change] would be utterly impossible. Also, I think it would send yet another shockwave into markets that actually you are doing a 180-degree turn [which would suggest] there is a lack of leadership from the top.
“I don’t think they have any other choice but to grind on with the lot that they have created for themselves.”
Peel Hunt analyst Anthony Da Costa said:
Morses Club delivers the highest return in the non-standard lending sector, with the lowest gearing and a compelling dividend yield. It is well positioned to maintain growth in home credit and capture the attractive yield from short-duration lending.
Read more: Hundreds of Provident Financial agents ‘happily’ jump ship to rival