People who were sold loans they couldn't afford to pay back by Provident will get back less than 10% of what they are owed, it has been confirmed.
The lender has said redress payments will be capped at 4-6p per £1 owed by the company, meaning someone owed £500 will get back as little as £20. Borrowers eligible for the payment - which will be made in July - will have had to take out loans between April 2007 and 17 December 2020, which is the date Provident decided to set up a legal redress programme for mis-sold loans known as a 'scheme of arrangement'.
The announcement comes after a High Court judgment in August 2021, which granted Provident permission to cap total payouts at £50m. It's unclear how many borrowers will receive refunds, but Provident had 4.2 million customers in the period covered by the scheme.
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Provident Financial Group (PFG), which includes Glo, Greenwood and Satsuma as well as Provident, provided short-term guarantor, doorstep and payday loans, charging interest as high as 1,557.7% APR to borrowers who struggled to access standard credit. It was hit hard by mis-selling claims for incorrectly-issued loans and permanently closed on December 31 2021. When it closed, it wiped tens of thousands of existing customers' loans, saying it would no longer collect repayments.
It's now too late to submit a new mis-selling claim for loans issued before December 18 2020, as the window closed on February 28, but you can still make a claim if you think you were mis-sold a loan on or after December 18 2020. To do this, you will need to call its complaints helpline on 0800 121 8034 or use its online complaints form here. In these cases, your complaint will go through Provident's normal complaints procedure outside of the separate scheme of arrangement.
If you submitted a claim for a loan taken out before 18 December 2020, you would have given the contact details you used when you took out your loan, and Provident will use these details to contact affected customers with everyone impacted expected to be contacted by June 2022.
If you've received your decision and you're not happy with it, you have 30 days to ask for it to be reviewed by the independent "scheme adjudicator" overseeing Provident's redress programme, either via the online portal or by calling the contact centre on 0800 056 8936. You'll need to provide evidence for your appeal. Those unhappy with their final response from Provident will not be able to take complaints further because the Financial Ombudsman Service says it won't take on complaints where there is a court-approved redress scheme in place. But, if your complaint isn't about unaffordable lending, you can still escalate your complaint to the ombudsman.
Provident has said it will honour any out-of-date refund cheques sent prior to it setting up this latest redress scheme, but customers will need to ask for a replacement. If you're due money under the new scheme and have already received and cashed in a cheque, Provident will simply deduct the value of the cheque from the total amount of redress due. So if you're due a £500 refund and have cashed a cheque for £100, Provident will deduct the £100 from the total compensation due, before working out the redress payment – 4% to 6% of the remaining £400.
