UK regulator won’t oppose Provident’s doorstep lending payouts in court By Reuters

(Reuters) – Britain’s financial watchdog said it will not formally oppose Provident’s 50 million pound ($69.22 million) compensation plan for its doorstep lending unit in court even as it expressed concerns consumers were being short-changed.

The Financial Conduct Authority (FCA) said on Wednesday its decision to not oppose the plan was because the only likely alternative to it was the insolvency of the business, which will potentially leave consumers with no redress at all.

Separately, 140-year old Provident acknowledged the concerns which were expressed in a letter to it earlier in the week, and reiterated that the proposal was “fair and in the best interests of Consumer Credit Division (CCD) customers”.

The company placed CCD into a managed run-off earlier this year after a surge of customer complaints against it. The industry, which lends to people who won’t make the cut to get a loan from a mainstream bank, has been facing intense regulatory scrutiny in recent years for charging sky-high interest rates.

The FCA opposed a similar plan put forth by subprime lender Amigo and successfully argued for it to be rejected in London’s High Court in May, leaving the company trying to come up with a new scheme or face potential insolvency.

The regulator, which concluded that Provident’s plan was inconsistent with its rules, principles and objectives, said it expects the company to bring the letter to the court’s attention at the hearing, which is scheduled for July 30.

($1 = 0.7224 pounds)