New Provident Financial chief orders credit business management shake-up
The new head of troubled subprime lender Provident Financial has ordered a management shake-up at the firm's consumer credit business, days after the company issued its latest profit warning.
Manjit Wolstenholme, who took on the role of executive chairman after boss Peter Crook quit on Tuesday, has removed Andy Parkinson as managing director of the division as part of a review.
He will be replaced by Chris Gillespie, whose role will be "establishing relationships with customers, bringing collections back to a normal level, and stabilising the operation of the business".
As part of turnaround efforts, Provident, which has around 2.5 million customers, launched a new home credit model in July with the aim of moving from self-employed door-to-door agents to full-time "customer experience managers".
But the lender warned earlier this week that the rate of progress being made is "too weak" and that its pre-exceptional loss this year is likely to be in the range of £80 million to £120 million, which resulted in shares plunging.
To compound the misery, the firm revealed that the Financial Conduct Authority is investigating a Repayment Option Plan Provident offers through its Vanquis Bank arm.
Ms Wolstenholme said on Friday: "My review of the business is ongoing as we move towards stabilising the Provident home credit business and improving the service to our customers.
"These are my first appointments and I intend to work closely with the new team on turning the home credit business around and to putting a plan in place to deliver good results for the company."
Mr Gillespie has worked for the consumer credit division before, but stepped down as managing director in 2013 to pursue career opportunities elsewhere.
Provident shares were up 19% to 890p in morning trading as investors warmed to the news, clawing back colossal losses suffered earlier in the week.
Portia Patel, analyst at Liberum, said: "We are not surprised to see further management departures following the CEO stepping down, and we would not be surprised to see more, including in Vanquis.
"While some may take comfort from the reinstatement of the previous consumer credit division director, we note that the business has now moved in a very different direction under the new model and the scope for reversing or even partially reversing the operational changes is limited."