LONDON (Reuters) – British subprime lender Provident Financial (LON:) Group has been given the green light by the High Court in London to pay partial compensation to customers missold loans by its doorstep lending business as it closes it down.
Provident said on Wednesday it had received a court judgment sanctioning its scheme of arrangement, despite concerns raised by regulator the Financial Conduct Authority (FCA) that it would short-change customers.
The subprime lending industry, which lends to people who can’t get a loan from mainstream banks, has faced regulatory scrutiny in recent years and a surge in claims from customers alleging they were sold unaffordable loans.
Provident, which also offers credit cards and vehicle finance, is providing a 50 million pounds ($70 million)compensation pot for doorstep lending customers to cover partial refunds to anyone with a valid misselling claim.
The FCA said it had made clear it did not support the scheme, adding the company remained under investigation for its conduct. However it had previously decided not to oppose the scheme in court because the only likely alternative was the insolvency of the doorstep business.
Malcolm Le May, chief executive of Provident, said: “We believed from the outset that the scheme was fair and that it offered the best outcomes for customers”.
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