Provident Financial's Moneybarn business faces probe over treatment of customers

Shares in Provident Financial have plunged after the lender announced that the Financial Conduct Authority (FCA) is investigating Moneybarn, its sub-prime car loan business.

The FCA is probing how Moneybarn, which provides car loans to customers with poor credit records, assesses loan applications and its treatment of customers in financial difficulties.

The news wiped out more than 15% from Provident's share value during early trading in London.

The FCA granted Moneybarn authorisation to conduct consumer credit activities only last summer.

"Since that date the FCA has continued to discuss certain processes with Moneybarn and Moneybarn has made a number of process improvements, including to the way it deals with future loan terminations," Provident said in a statement.

"The company will work collaboratively with the FCA to investigate the remaining concerns and resolve any outstanding related issues as soon as practicable."

Provident has around 2.5 million customers, many of whom would not qualify for a standard bank loan due to their poor credit records.

In August, the doorstep lender's shares lost two-thirds of their value in a single day after it issued a profit warning. That prompted chief executive Peter Crook to resign. In another setback last month, the company's executive chairman - Manjit Wolstenholme, 53 - who taken over Crook's remit "suddenly" died.

The share price, which had been at £32 in April, is now at £7.50.