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From NSF FY results this morning.
Seems to confirm the irrational behavior of CMCs, especially one and a reversal of complaints back to normal

"While the overall number of complaints received by the Group increased in 2021, there were very different dynamics
at each of the three divisions with the number of complaints increasing in branch-based lending (9%) and home credit
(113%) whilst in guarantor loans the number of complaints received fell (18%). The increase in home credit was seen
as exceptional and was driven by a single claims management company that lodged a large number of complaints in a
single month. Subsequent investigation found that a large proportion of the claims lodged by the CMC had in fact
been lodged without the customer’s consent or knowledge and so have been withdrawn. Since then, complaint
volumes have returned to previous levels and have remained broadly flat. There has however been a marked uptick in
the cost of complaints as FOS accelerated its processing of previously lodged complaints with the result that the The
most significant regulatory development over the past year has been the proposed introduction of a new consumer
duty. Having already consulted once on the new duty, the FCA issued a further consultation that closed on 15
February 2022. The shape of the new duty applies to many areas of financial services, including consumer credit.
While the FCA has helpfully taken on board a number of comments made by sector firms, concerns remain that while
the focus is on consumer outcomes, there is no certainty on what “good compliance” looks like. Many are also
nervous about the basis upon which ‘fair value’ will be assessed and also the short period of time before this new
obligation comes into effect (April 2023). Industry has raised these issues as part of the consultation and hopes that
these concerns will be addressed in the FCA’s next response."

In response to bessie200 and CaneToad

I think it's highly unlikely this is an ugly trend since weeks or months as claims are received on a much more regular basis, and as a result, a higher trend would have led the company issue a profit warning earlier.
It is very likely indeed that the company has received a huge amount of claims over the last few days, forcing them to issue a warning.
Bear in mind that Morses take "automatic" provisions depending on their historical pattern of cases upheld which means that if tomorrow they receive 20x more claims that usual, even if they are completely illigetimate, they will still make the provision until they analyse it in a 4 weeks period.

Honestly, I storngly believe this is related to the Provident Schemes of Arrangement. As explained (link below) the Scheme ends on February 28th at 5 pm. The amount is fixed at £50m.
When thinking about the business model of CMCs, they will receive a cut on each proceeds from their client. As the 50m£ is fixed, the only way for CMCs to get more money is to increase their share of clients (there are 5/6 CMCs in total). They are therefore incentivized to increase the marketing right before the end of the scheme to get market share at last minute.
That would "potentially" make a lot of sense, with ROI on advertising very high.

This explanation would be in-line with the wording of the PR. If that's the case, I think (i) these recent claims once analyzed won't go ahead and (ii) the number of claims in March will decrease. I think we will have more info regarding that at the next trading update for FY results but I suspect it's very temporary.

I don't think the Director who sold in January was not aware if this coming trend. Maybe he anticipated that but unlikely it was known by the team.
Finally on the CEO selling, he sold 465k shares out of 707k (2/3). Why not sell everything? That's a completely incomprehensible move from his part but maybe it's probable it was only related to this short term impact. If he knew about a huge news for the company, he would have sold everything I guess.

The >60% decline is way too harsh regarding the impact on the business. Morses booked £4.4m of provisions in H1’22 and market expected the same amount in H2’22 for a total of £9m FY. The 30% decline in the £7.5m PBT expected implies “only” a maximum impact of £2.5m.
The PR mentions that the cost base has “recently” increased. That probably means Morses has received an unusual amount of complaints over the last few weeks. I think it’s important to remember that the number of claims that Morses received in the past is much lower than its peers and that a pick-up in claims, despite being significant on a relative level is much less so on an absolute level.
Furthermore, it usually takes 4 weeks for Morses to upheld the complaints. The FY ends in 5 days. It is therefore probable so they received some irrelevant complaints over the last few weeks that they don’t have time to deal with and have to remain on the books by end of February.
Finally, let’s not forget that Provident Schemes of Arrangement ends February. It’s well known CMCs have aggressive marketing strategies to maximise their ROI. Would not be surprising to me if they accelerated their marketing to increase the pie in the Provident’s case, therefore illegitimately impacting Morses.

Regarding the CEO, it’s pretty obvious he got fired by the company after selling his shares without authorization. The PR is pretty clear that he acted without notifying the company, when he obviously had inside information about these claims. Nobody “steps down with immediate effect” in these conditions. Let’s not be naïve. And I guess an investigation by the FCA will clearly happen as it is too big to be ignored.
The question I asked myself is “ what crossed your mind to do such a move?”. He sold for £200.000 worth of shares which is not a significant amount at stake when compared to his yearly salary, he destroyed the share price on Friday by 10%, and he knew (I mean I guess) that his move would lead to a huge share price decline, especially in the current industry environment and the challenges faced by peers. If he knew about the provisions, why not waiting for the trading update by YE, take the market loss (it would certainly not have come down by 60% - probably 10-20% max) and then sell your shares if you want to. Why risking your entire reputation for 200.000k? That question remains unknown to me.

I bought a lot of shares at 15, I think it’s massively oversold. It’s trading at 1.5x Pre-Covid results, 5.5x this year results. And we don’t take into account the growing digital business that should be breakeven next year. If these claims just have a temporary impact, I think that’s one of the biggest bargain I’ve ever seen.
Morses has been around for a long time and has always been recognized as the most responsible lender. What could have changed so dramatically in the last few weeks? This industry has been going on for years, there is still a need, a demand - this does not go away in one or

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