Way out of the position of the Provident usurer for writing off outstanding loans

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The largest moneylender in the state in recent years, Provident Financial, has stopped collecting payments from Irish borrowers and is writing off outstanding loans after a decision last month to stop lending in the market.

As of the end of December, Provident had outstanding loans of £ 18.3 million (€ 21.3 million) in the Republic, where the company has been unprofitable for the past three years according to recent annual reports.

The amount currently in the Irish market is estimated to be significantly lower than the end of 2020.

“If you have an outstanding balance on your Provident loan (s), we have good news for you,” the lender said in a statement posted on its Irish website. “We stopped collecting payments at 9:30 am on June 28, 2021. Any balance left after that date has now been paid off. You no longer need to make payments to your agent or provider. This is because our lending business is closing in Ireland July 1 “.

Provident said it will update the credit history of borrowers with loans of € 500 or more to show that their balances have been cleared. This is the threshold upon reaching which the Central Credit Register of the Central Bank must be notified of the loan.

“If your loan was less than € 500, do not worry, as we did not include anything in your credit history when you took out the loan,” Provident said.

British group Provident Financial announced in early May that it is closing its doorstep lending business in the UK and Ireland as it reported a pre-tax loss of £ 113.5m (€ 132m) for 2020 and highlighted the coronavirus strain … the pandemic and growing customer complaints have hit subprime lenders. The group will continue to collect payments on doorstep loans in the UK.

The move was taken just days after the Minister of Finance Pascal Donohoe said the government plans to “gradually” lower the current interest rate cap on loans to licensed moneylenders. They can currently charge customers up to 288 percent per year.

Discontinued issuance

Provident, based in Bradford, England and operating in the republic since the 1940s, stopped issuing new loans to the market on 10 May. Late last year, the London-listed group had a loan of £ 1.8 billion, credit cards, unsecured personal loans and auto loans.

“Presumably the company has decided that at this stage, the value of the collections will overshadow the value of the collections,” said John Cronin, analyst at Goodbody Stockbrokers. “We understand that this decision will not affect the UK. [consumer credit division] However, there is a small risk that UK customers will become aware of this event and that their propensity to pay will be reduced as a result. ”

The peak of lending growth in the republic was observed in 2013, when about 360,000 people borrowed € 301 million. However, since then it has been declining, and according to the latest data central bankpublished in February, showing that in 2020, 283,000 people borrowed 151 million euros from moneylenders, with an average loan amount of 509 euros.

Moneylenders licensed by the Central Bank can charge Irish clients up to 188 percent per annum on loans, increasing to 288 percent per annum, including collection fees.

Provident’s outstanding Irish loans fell from £ 38.9m at the end of 2018 to £ 18.3m as of last December.

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