* EY assessment supports Provident's position on CCD
* Settlement plan fair, in interest of CCD customers -
Provident
(Adds details, background)
June 21 (Reuters) - An independent assessment by Ernst and
Young backs Provident Financial's view that its doorstep
lending unit will likely face insolvency if its 50 million pound
($69.6 million) settlement plan is not endorsed by a UK court,
the company said on Monday.
Referring to its consumer credit division, the company said:
"The assessment undertaken by EY further supports PFG's position
that CCD has no value."
The subprime lending sector has been under regulatory
scrutiny in recent years for charging sky-high interest rates to
people who are struggling financially, with customer complaints
against them surging since the pandemic took hold.
Provident said its decision to close CCD, which lent to
people who would have been turned away by mainstream banks, and
the settlement plan were "fair and in the best interests" of CCD
customers.
The company last month placed CCD into managed run-off,
which typically means it is closed for new business, after a
surge in customer complaints against it during the pandemic, and
said it would exit the home credit market altogether.
The High Court in April granted Provident leave to convene a
meeting of its creditors, which is scheduled to take place on
July 19. If creditors approve the settlement plan, the final
court hearing will take place on July 30.
Provident Chief Executive Malcolm Le May reiterated on
Monday that customers will likely be left with no redress
payments if the plan does not go through.
The company, which has appointed a customer advocate for the
scheme, said it would take on 5 million pounds more than its
initial estimates in costs related to the plan, taking the total
to 20 million pounds.
It said it had received one potential offer for CCD but that
was to wind up the division, but said it had rejected the
proposal as it was less attractive financially than managing the
run-off of the division itself.
($1 = 0.7189 pounds)
(Reporting by Muvija M in Bengaluru; Editing by Jan Harvey)
