Lawyers acting for the investment manager have written to the troubled consumer credit firm seeking compensation for losses over alleged delays in disclosing Vanquis Bank was under investigation, The Times reported this morning.
The doorstep lender announced last year that the UK regulator was looking into its credit card subsidiary for mis-selling its repayment option plan (ROP) product.
With a 4.68% stake in the firm, ASI is currently the fifth-largest shareholder in the doorstep lender, behind Invesco Perpetual’s Mark Barnett and Neil Woodford, who own 24.92% and 24.34% of the business, and fund groups Schroders and Blackrock, which own 7.55% and 5.79%, according to Provident’s website.
According to The Times, ASI filed the complaint against Provident in January, just before the FTSE 250 consumer credit company published its full-year results.
The letter claimed that Provident’s “earlier public announcements were false or misleading or, alternatively, the delay in disclosing those matters publicly was dishonest pursuant to section 90A of the Financial Services and Markets Act 2000, and the company made actionable misstatements during those investor meetings”.
Section 90 of FSMA allows redress for omissions or misstatements in listing particulars and prospectuses.
The doorstep lender’s shares opened 1.1% lower on Monday morning at 671p per share. Over the last year, the company has seen 77% wiped off its share price, following a string of misfortunes, including two consecutive profit warnings, the disgraced exit of CEO Peter Crook, the suspension of its dividend and two FCA probes.
Provident’s plummeting share price has hurt many heavyweight managers, from Woodford, whose fund was the worst performer of the IA UK Equity Income sector last year, to Sue Round’s EdenTree Amity UK fund and Francis Brooke’s £3bn Trojan Income fund.
Last month, however, it looked like things were finally turning around for the beleaguered consumer lender as it confirmed Vanquis had resolved its issues with the financial services watchdog.
The credit card provider agreed to pay a fine of £1.98m for failing to disclose the full price of its add-on repayment option plan (ROP) and dole out £169m in compensation to affected customers. Provident’s shares rose 75% on the day, touching a six-month high of 1075p.
Monday’s revelation puts additional pressure on Provident’s newly promoted chief executive Malcolm Le May (pictured) who was a senior independent director at the time of the alleged delays.
Le May stepped into the role last month after being chosen by nomination committee led by the current senior independent director Stuart Sinclair. His appointment was discussed with the FCA.
