Pawnbroker H&T GROUP PLC (LON:HAT) has ceased all high-cost short-term credit (HCSTC) loans pending a review of its creditworthiness assessments and lending processes. The company revealed it is working closely with the Financial Conduct Authority (FCA) on a review of aspects and files of H&T's unsecured loans business in light of changes to the regulations in 2018.
H&T said the review by the FCA will result in changes to the policies and procedures surrounding the company's provision of HCSTC loans.
HCSTC loans is a small but not insignificant part of H&T's business that has contributed less than 4% to the group's revenues in 2019 but it is possible that the company will have to compensate customers as a result of the review; H&T anticipates being able to fund any redress from its existing financial resources.
H&T is looking at the HCSTC unsecured lending practices over the past six years as part of this review. The average HCSTC unsecured portfolio over the period has been £3mln with a peak in December 2016 of £4mln and has now reduced to £3mln. There were total customer interest payments of £24mln over this period. Revenue after adjusting for impairments over this period totalled £11mln.
Notwithstanding the issues raised by the review, H&T continues to trade well and in line with the dynamics set out in its statement at the end of September.