Embattled doorstep lender Provident Financial has seen shares tumble after it warned that 2018 profits will be at the lower end of expectations.
Shares slumped by more than a fifth at one stage after the group said it had seen a rise in bad debts at its Vanquis Bank arm and falling numbers of new accounts after clamping down on its lending.
It said the rise in impairments “reflects the continued increase in the use of payment arrangements from enhanced forbearance measures”.
Provident now expects full-year profits towards the lower end of the expected range of between £151 million and £166 million.
Chief executive Malcolm Le May said: “We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing.
“We will continue to monitor underwriting standards in light of any changes in customer behaviour.”
The company, which sells high-cost credit through its Vanquis Bank, Moneybarn and consumer credit business, said it saw a 71,000 fall in new accounts at Vanquis, down to 366,000 in 2018.
But customer numbers grew 3.1% to 1.8 million.
It comes after a torrid time for Provident, which is recovering from a string of regulatory sanctions.
The group is completing a refund programme in the Vanquis division, relating to hidden charges around its repayment option plan, with more than one million customers now refunded and most of the payments due to have been made by early 2019.
The Financial Conduct Authority (FCA) fined credit card lender Vanquis £2 million and ordered it to pay £168.8 million in compensation for failing to disclose charges of its popular repayment option plan.
Meanwhile, its Moneybarn car loan arm is under investigation by the FCA over how it treats borrowers who fall behind with payments.
And just last week, the chairwoman of the Business Select Committee called for a probe into Provident after it advertised loans with a hefty interest rate over Christmas.
Labour MP Rachel Reeves wrote to the City watchdog asking it to investigate Provident’s “cynical” marketing tactic to target customers who are financially vulnerable with loans advertised with an APR of 535.3%.
In its latest update, Provident said Moneybarn “continues to assist the FCA in its investigation into affordability, forbearance and termination options” and hopes to conclude the matter in the first half of 2019.
The company has seen shares decimated after two profit warnings in 2017, which prompted the resignation of former chief executive Peter Crook.