J Sainsbury plc (LON:SBRY) subsidiary Argos has dropped Provident Financial PLC’s (LON:PFG) credit card arm Vanquis Bank as a partner in another blow to the struggling sub-prime lender.
Provident said Argos had reviewed all of its strategic financial services partnerships following its takeover by Sainsbury’s and will take the business in-house when the contract expires early this year.#
READ: Provident Financial in trouble again as regulator probes car loans subsidiary Moneybarn
Vanquis Bank is under investigation by the UK financial regular over its Repayment Option Plan (ROP), which it is has agreed to stop selling temporarily.
Another Provident subsidiary, Moneybarn, is also being probed by the Financial Conduct Authority (FCA) over its car loan procedures.
Talks have started with the regulator on both issues, said Provident.
Elsewhere, the sub-prime lender revealed it is still struggling to repair the damage of a disastrous 2017 for its home credit business.
Losses in home credit will be a pre-exceptional £120mln, at the top end of guidance it said in a trading update
The business nosedived following a switch from agents to an in-house sales team, which saw sales staff leave in droves.
Reconnection rates with home credit customers who left following the change have been below target said the group, though there was an pick-up in customer numbers in the final quarter.
Search for a CEO
The group is also still searching for a chief executive following the departure of Peter Crook in August. Executive chairman Manjit Wolstenholme passed away suddenly in November.
Provident said today it had made progress in its search for a new CEO.
Neil Wilson, senior market analyst at ETX Capital, said more radical action is needed to turn the situation around.
"As we noted in October, the problem is that while there is a plan to fix what went wrong, management is sticking with the revamped operating model that caused all the problems.
"Self-employed agents are still out, customer experience managers are in. Whilst intended to allow Provident to manage the entire customer journey, it’s the self-inflicted source of all the problems and ought to be ditched.
"Collection performance has improved over the last few months - in December it stood at 78%, which is up from 65% in September and 57% in August. But it remains well below the 90% seen under the old operating model.
"Total home credit receivables ended the year at around £350m, which is a slight improvement from £316m at September 201, but still a terrifying drop from the £560m a year ago."
Shares fell 5% to 874p.
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