Aberdeen Standard is suing Provident Financial in a row over the investigation of its Vanquis credit card branch
Troubled doorstep lender Provident Financial is facing a legal battle with Aberdeen Standard, one of its largest investors, over an investigation into its Vanquis credit card unit.
Provident announced last year that it was being probed by the Financial Conduct Authority (FCA) over its mis-selling of product called a “Repayment Option Plan” (ROP). This Vanquis add-on freezes debts owed if “certain life events” occur.
But Aberdeen Standard is alleging that Provident delayed revealing that it was under investigation, causing the asset manager significant losses, The Times first reported this morning.
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Provi’s shares fell 0.32 per cent in early trading. The company has lost around 77 per cent of its value over the last year, as the Vanquis investigation was accompanied by a massive fine from the Information Commissioner’s Office, the suspension of dividends, the resignation of the chief executive and troubles with debt collection.
The legal action was revealed by Provi in the prospectus which accompanied its most recent rights issue, though the investor was not named.
“The institutional investor also asserts that the company’s earlier public announcements were false or misleading or, alternatively, the delay in disclosing those matters publicly was dishonest pursuant to Section 90A of the Financial Services and Markets Act 2000, and the company made actionable misstatements during those investor meetings,” the prospectus stated.
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“Whilst the matters alleged on behalf of the institutional investor are complex and the company is at an early stage of analysing the claims, the company currently believes the claims by the institutional investor are unmeritorious and considers the prospects of the claims being upheld to be limited.”
Malcolm Le May, Provi’s new chief executive, could now be placed under the spotlight as he was a senior independent director at the time of the Vanquis investigation.
This will not be the first legal hot water that Provi has found itself in over recent months, as the business has faced unfair dismissal claims from senior managers after a bungled restructuring attempt.
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