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Why did FCA not defer all or part of the fine, maybe link it to future profits? They would be hammered if the company comes out of this and starts making stellar profits again without paying any sort of penalty.
Could it be that they expect the fundraising - and therefore Amigo - to fail, so will let that finish them off rather than level a fine (even deferred) and end up being blamed for demise?
So that’s pretty much the end of NSF as a public company. Gillespie has finished the demolition job started by Van Kueffler and taken them into the 99% club.
Was only an opinion, DYOR and all that but, I posted in May ‘21 that Alchemy might want to push NSF into Administration to acquire Everyday on the cheap and in June ‘21 that Guarantor Loans and Everyday were the same legal entity so had to deal with this as a joint matter.
And now we hear that if the fund raise fails (which Alchemy can ensure as they are on the board), money might be found to settle joint claims and take Everyday private, wiping out investors on the way. No surprise but it’s still incredibly disappointing.
Unsure how a private operation would get FCA approval as it feels like a Phoenix business. But I guess that won’t be our concern.
Don
Not inside info, just a different interpretation. I may be wrong. Let’s ask Peter;)
The new CTO is an employee so isn’t ‘charging’ the company. The charge comes from the company set up by the old CTO who now runs the IT platform as a private business. That’s what I understand, might be wrong. DYOR and all that. Feels like a smart deal for newco and reduces NSF cost.
All that really matters is sorting the redress and refinancing. Suspect finalising redress will tip the covenants into default, so they need finance agreed before they agree redress with FCA.
I presume debt holders have some kind of lien over the book so they could simply take control and sell it on.
Still feels like anyones guess as to what will happen next.
Thanks Don
Good primary research. My only observation on IT outsourcing is that, as it was explained to me, the IT function has now been split off to a new independent company, the staff don’t work for NSF any more, they can take on other clients and the new head of IT at NSF/Everyday is the CEO’s brother in law who he bought into his previous company. Feels like outsourcing to me but it doesn’t matter. If it’s cheaper that’s a good thing!
All eyes on 16/6, hope they keep us better advised this time.
Nostra, I originally wrote that I hope they don’t try to sneak bad news out just before a bank holiday….and they did!
In breach of covenants, still haven’t agreed redress methodology with FCA, they are outsourcing their IT (that was hidden away), no CFO and they have 6 weeks to sort a capital raise. Oh yes, they are looking at a scheme of arrangement. The guidance from FCA on schemes is now so tight I can’t believe they are even considering it.
Should sell network to Provident to collect out existing book on a fee basis. It will pay the redress and save staff jobs. Turn NSF into a listed cash shell. IMHO.
Was expecting an update 6 weeks post LAH closure. It’s now 7 weeks. Must be coming soon!
They paid £55m for George Banco, closed it down and still have £50m+ redress to pay. That’s £100m+ value destruction in 5 years.
The redress needs to be paid by Everyday. That’s investor money going straight out the door to claimants of a closed business. Can’t see anyone going for that other than Alchemy as the cost of getting the company. Then they need to stump up for the refinance, which they have pretty much said they won’t do.
Trying to see a way forward here. Thoughts?
After 18 months haggling they still can’t resolve the Guarantor redress, which must be paid by Everyday Loans as they were all written out of that legal entity. Simply don’t understand what the problem is other than maybe they can’t afford the bill so need to keep arguing? No idea. But something isn’t right here.
Feels like a lot of new caveats from Alchemy, previously they clearly supported the raise.
And NSF, having fired Van Kueffler, is now a plc with just one company. Still no plc CFO, the CEO is a home credit lifer, and last two businesses Wiggins (head of Everyday Loans) ran went bust.
Is best bet now to try to sell loans network to Amigo or Provident? On a cash or collections basis? No need to fundraise, it will collect the book to pay the redress?
Could be some decent value here, make nsf a cash shell?
First Provi, now Morses absolutely hammered by claims companies on home credit. Could do with an update on how Loans at Home are getting on and why NSF believe they can avoid the same problem.
They really ought provide an update on the claims against George Banco guarantor loans and the claims against Everyday (it wrote Trust Two & Duo guarantor loans and George Banco loans were written in same legal entity as Everyday so not isolated from the claims in any way).
Also need an update on progress against budget. If they have hit sales targets this will support the refinancing and encourage Alchemy to stick around.
Finally, any sign of a CFO being appointed? Is Gillespie (former Director of Provi’s failed home credit business) acting CFO as well as CEO? Not ideal seeing as PWC resigned as auditors when he was NSF CFO over control failures.
I’d also ask what Peter Reynolds does as Head of Investor Relations. Was looking for details of the new remuneration policy they voted through last week but the website hasn’t been updated in over a year. It talks about Trust Two loans (didn’t they stop in early 2020?), the Guarantor Loans business they are closing, growing 20% profits every year (never made any!) and so on.
Let’s have an update on my questions below, on the FCA, answer as to whether any staff are still even employed in Guarantor…oh and the low down on their remuneration policy. That was presumably written by Gillespie the CEO, who was CFO when PWC resigned over control failures.
This is so frustrating- absolute silence from this lot.
Peter Reynolds- this is your job. Speak up!
Questions I would like to ask but can’t as no one takes my calls;
Is it Ok there has been no CFO for 5 months?
What were the control failures PWC resigned over?
Who will manage the £225m refinance that falls due
next year?
When did they move HQ to Wakefield?
Have they really had 100+ resignations from Everyday in the last 9 months?
Was it a good idea to have the remaining 150 staff at a Christmas party last week?
How many bullying and grievance claims are Everyday fighting?
Have they moved Everyday to fortnightly sales targets, with unmet mid month targets getting added on to full month targets? For how many months in a row have sales targets been missed?
Arrears accounts were classified as non arrears due to Covid. How is the loan cohort given Covid forbearance performing?
The three FCA investigations into lending, collections and complaints-in all three companies-have been going on for 18 months now. Is there any end in sight as they can’t refinance without this being resolved?
Resolution was promised in Q1, Q2, Q3 and then by end of year.
What can Gillespie or Wiggins say to assure us they have any clue about, or control over, what is going on?
Are Alchemy interested in buying the Everyday assets out of Receivership and restarting as a Central based, non customer facing, business with maybe a few dozen staff?
He is called Andi Buckley and used the # “future” and “future proof”. Suggests that’s the future, so won’t need branches/local staff.
They always said it was meeting customers in person that made the difference between their credit and the online lenders. And if they close branches the current loans will be collected by different staff to the ones that made the loan, that can’t help.
People wrongly think Everyday are insulated from the Guarantor Loans FCA/redress fiasco. In reality the Everyday legal entity wrote loans under the brands Duo and Trusttwo then George Banco. The “Guarantor” division held staff, not the loans for the majority of the time GeorgeBanco was owned by them and trading.
A senior Everyday Loans manager just posted on LinkedIn that they have opened “Central 3”, a third large office that won’t require customers to physically visit a branch. If this move away from local branches fails I expect to see Alchemy bailing on the company. If it works then presumably we will see 3 or 4 more “Centrals” open up, closure of the 76+ small branches & mass redundancies. CEO Wiggins closed the European Citi network and Egg, is he on for a hat trick of closures?
What chance of a decision this year, take one more provision and attempt to start 2022 with a clean slate?
DYOR but I don’t believe they can untangle the guarantor loans redress from Everyday (which legally wrote a lot of them), and Administration is the only possible way forward. But the FCA will be determined to avoid a “Phoenix” operation starting up. This could explain the long delay in any news on that front. Would be easier to let the business fail and try to start afresh with a new team.
Feels like the end is in sight for NSF and Everyday Loans. Get out while you can.
Johnny, you are totally right.
1. Everyday used to write Guarantor loans under the Duo & TrustTwo brands, and didn’t they book George Banco loans into the same legal vehicle as their unsecured loans when it was all part of Everyday? Need to check that last point.
2. Not doing a scheme of arrangement means open ended future liability for when FCA again moves the goalposts, regardless of settling this type of claim. That’s in Guarantor plus Everyday.
3. Don’t see how Loans at Home doesn’t have same repeat lending issues as Provident: FOS are concerned with number of loans per customer regardless of affordability.
Time to get out.
If, as apparently leaked last weekend, Provident announce Monday they are closing their Home Credit business due to regulatory pressure/claims management companies....good news for NSF as lots more customers or end of the line as CMCs will move to them next?
NSF not doing a scheme of arrangement so complaints can continue to flood their Guarantor business even after that S166, and if Provi can’t make Home Credit work who can?
Alchemy tip plc into Administration and buy Everyday on the cheap (it’s the only part they are interested in)?
Thoughts?
It was posted at least a year ago I think
Don't agree with that at all. Everyday was only one lending and growing, and the SP issues are driven by sector, failed Provi bid and the FCA/Guarantor issues. Disagree over strategy perhaps, not under performance.
Suspect all will come out in due course. Agree on massive potential, they just need to survive long enough.
It's at Companies House. Think only difference between resign and being pushed out is how much money they take with them! Point is that two of the key people who built the company and kept them clear of all regulatory issues have walked out.
If they have staff issues with Covid then collections will be hurt. Not lending in Guarantor Loans (with the FCA redress bill still to come) so their LTV must be hideous. Tight on defaulting their finance facility. Taken private by Alchemy or bust by March?
Interesting to note the CEO and CFO have resigned. CEO was the one who trebled loan book and profits in 4 years. CFO led them through IFRS and all the refinancings. Forced out ahead of savage cost cutting? If CHRO (Flint) leaves then you know its trouble ahead. Presume the ex-Provi crew that mangled Loans at Home taking over.
No word yet on actual cost of remediation in Guarantor loans, just an element of the 2020 PnL charge.