When parent company Provident Financial ceases collecting payments on the loans by December 31, 2021, 7 months after the brands stopped lending, thousands of consumers with high-interest loans from Provident, Glo, Greenwood, and Satsuma will have their debts cleared ConsolidationNow installments.
Affected borrowers will receive emails or letters informing them that they can stop paying payments immediately after receiving notification, even if it is before December 31.
Any outstanding loan sums will be wiped out at the end of the year, with any payments made after that date being returned.
Consumers should discontinue any direct debits that are due after December 31.
The customers whose loans would be written off or the mean sum wiped out were not disclosed by Provident. However, it stated that the debt cancellation will assist “tens of thousands” of borrowers. Debts sold to debt collectors, on the other hand, will remain legitimate and you will be pursued for payment.
Customers who struggled to qualify for traditional types of credit were provided guarantor, short-term payday, and doorstep loans by Provident Financial under the Glo, Provident, Greenwood, and Satsuma brands, with interest rates as high as 1,557.7% APR.
Customers whose finances were not adequately evaluated and who were offered loans they couldn’t afford were overwhelmed with complaints and requests for compensation, as were many other subprime lenders.
In 2020, the Financial Ombudsman received approximately 14,000 complaints regarding Provident brands, causing the Financial Conduct Authority (FCA) to launch a probe into the lenders’ affordability checks and complaints handling.
Provident Financial said in May that it would close the brands and stop doing doorstep lending because to “evolving client preferences” and “changing market and regulatory factors.”
The move is part of Provident’s ambition to become a “broader banking group to the financially underprivileged client,” according to CEO Malcolm Le May.
Vanquis Bank, a thriving credit card and unsecured personal loan subsidiary, and Moneybarn, a car finance company, will be the focus of Provident.
Provident suggested a “plan of arrangement” to deal with the accumulation of concerns, allocating £50 million to address concerns concerning loans given before December 2020.
The scheme of arrangement was allowed by the High Court in August, despite concerns voiced by the Financial Conduct Authority (FCA) that it might only award harmed consumers a fraction of the compensation they’re owed.
Borrowers who have their complaints upheld can now expect to earn 5 to 10p for every £1 in compensation they are owed.