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Bad data and new IT system bugs help knock 66% off Provident Financial share price

Sub-prime loan firm goes titsup, CEO resigns in disgrace

Software bugs and bad data in a new one-platform-to-rule-them-all IT system contributed heavily to British sub-prime loan firm Provident Financial going into near meltdown.

Provident's shares crashed 66 per cent yesterday as the short-term loan company revealed that problems with its new IT system meant it could not collect debts from its customers.

Chief exec Peter Crook resigned as the company's share price tumbled from £17.42 to just £4.50. That price has since stabilised at around £6.

Bradford-based Provident's loan business revolves around making short-term loans to people usually passed over by credit card companies and banks; the sub-prime market. Many of these people are regarded as default risks by lenders. Provident reduced this risk by employing and contracting in door-to-door debt collectors.

Underpinning the debt collectors' daily work had been an extensive system of printed schedules and branch-specific IT systems recording who customers were, when they were due to make repayments and the details of assigning routes to specific debt collectors.

A couple of years ago Provident decided to modernise all this with one £21m centralised route-planning system. This did not go to plan. In a trading update released yesterday, Provident admitted: "The routing and scheduling software deployed to direct the daily activities of CEMs [debt collectors] has presented some early issues, primarily relating to the integrity of data, and the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritise resource allocation during this period of recovery."

In June the firm had said "the testing of the core routing and scheduling software to support the switch over to the new operating model in early July is at an advanced stage" but had given no indication that the software was troublesome.

The Daily Mail reported that this fell apart when the system began arranging meetings between customers and collectors at the wrong times. It quoted new chief exec Manjit Wolstenholme as saying: "We've got people on the ground, but we have issues with the software being used by them. Agents are turning up at the wrong time when customers aren't there. It's not behaving because the data that's in there isn't good enough for what we need to do. This is something we should be able to do something about."

In 2015 Provident's in-house IT team, which appeared to be around 250 strong judging by its annual report this year, rolled out a new app for its debt collectors. Information Age reported at the time: "A few unsuccessful 'experiments' hadn't particularly endeared the MD to technology-driven change – even though the last attempt was around a decade ago."

Perhaps the MD's senior colleagues should have listened to him. ®

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