Moneylender Provident Financial has decided to close its doorstep lending division, as the Covid pandemic hit its turnaround efforts.

Provident is one of the largest moneylenders in the Irish market.

The UK company, a sub-prime lender since it was established in 1880, said it plans to put the business into a managed run-off or consider a sale if there was interest.

The exit is expected to cost Provident up to £100m.

Sinn Féin's spokesperson on Finance Pearse Doherty said that Provident's decision underlines the need for swift action in the personal credit sector here.

The Central Bank said it had been notified of the decision by Provident to stop providing new moneylending loans here.

It said that while commercial decisions relating to the general operation and the strategic direction of regulated firms are a matter for the individual boards and management of firms, the Central Bank expects the firm to engage with its customers on the implications of this decision, in line with regulatory requirements.

The Central Bank said that while Provident is no longer issuing new loans, customers can continue to engage with the firm as normal with any queries on existing loans.

Provident has advised that it will be contacting all customers over the coming days.

The Central Bank added that if any customer has a query in relation to their moneylending loan, they should visit for their frequently asked questions.

They should also speak to their agent.

"We would encourage all consumers who are considering taking out any form of credit to ensure that you borrow from a regulated lender by checking the register of regulated firms on our website," it said.

"Before taking out a high cost loan, consumers are encouraged to consider other credit options better suited to their needs that may be available from other regulated lenders," it added.

Provident had been trying to revive the business after botching an overhaul in 2017 when it sought to replace its army of self-employed doorstep collection agents with direct employees.

But its efforts, including a plan to get the unit to break even last year, were derailed by the Covid-19 crisis, which hammered lending volumes and drove up costs.

"The home credit market in our view is in irreversible decline," Provident's chief executive Malcolm Le May said.

Rising complaints by claims management companies, the financial impact of Covid-19 on the lending division and the evolving regulatory environment rendered the business commercially unviable, he said.

Several such firms including UK payday lenders Wonga and Quickquid have closed in recent years due to complaints and regulatory scrutiny of their business model.

Provident said it planned to build on its existing unsecured personal loan product expertise during 2021, in the "mid-cost" segment of the market.

The company, which has a banking licence, said the unsecured loan business was an important step towards its plans to become a broader banking group to the financially underserved customer.

Goodbody analyst John Cronin said the new initiative was likely to be channelled through Provident's credit card business Vanquis.

Provident outlined in March a £50m plan to settle a jump in complaints and claims against the subprime unit and said the business was also under a regulatory probe over conduct issues.

A UK court has granted leave for the settlement plan, with a meeting of the company's creditors set for July, Provident said today.

Provident posted a 2020 loss before tax of £113.5m compared to a profit of £119m the previous year.

Pearse Doherty said today's news from the largest moneylender in the State that it will no longer be issuing loans from 10 May underlines the need for swift action in the personal credit sector.

Pearse Doherty

He said that there is no doubt that Provident's withdrawal from the Irish market requires a coordinated response to protect the interests and resilience of borrowers.

"The Government should now support Sinn Féín's legislation to cap the cost of credit that moneylenders can charge borrowers," Mr Doherty said.

He said the government allows moneylenders to charge APR as high as 287%, with many families locked into a vicious cycle of debt.

"The Minister for Finance should now work with Sinn Féín and the Finance Committee to ensure this legislation protects borrowers and puts an end to the scandalous rates of interest these moneylenders charge," Pearse Doherty said.

He also said the Minister must introduce legislation that would increase the interest cap on credit unions from 1% to 2%.

"This would allow credit unions to play a greater role in the personal credit market, and offer an affordable and more sustainable option for borrowers who need access to credit," he explained.

Pearse Doherty also called on the Government to publish a Financial Inclusion Strategy for the next decade, to improve access to credit among low-income and vulnerable groups who are excluded from financial service provision.