Morses offers people loans up to £1,000 at an annual interest rate of just under 500%. (PA)
(Picture: PA Wire)The CEO of doorstep lender company Morses Club has quit after the company announced a drop in expected profits following a surge in customer claims.
Paul Smith, who has been CEO since 2015, is to leave the board with immediate effect. Current COO Gary Marshall is to take his place, pending regulatory approval.
Filings show Smith offloaded a significant chunk of his shares in Morses last Friday. The company said it had “no prior notification” of the sale, worth around £194,000.
In the same statement, Morses Club said profits for the current year are set to be 20% to 30% lower than expectations following increased costs associated with handling compensation claims.
Morses blamed a “rapid” increase in the volume of claims submitted recently. Claims are made in batches by companies on behalf of customers who argue they have been treated unfairly.
Broker Peel Hunt said: “We place our forecasts, target price and recommendation Under Review.”
Shares in the Nottingham-based company plummeted 57% in early trading.
Morses offers people year-long loans of up to £1,000 at an annual interest rate of just under 500%.
The announcement comes amid a clampdown by the Financial Conduct Authority on subprime lenders who do not treat customers fairly.
In January, the FCA issued warnings against firms using insolvency law to limit their compensation liabilities to customers, promising to take to court any company that didn’t set aside enough funding to meet claims.
Last year, a Court rejected a scheme set up by payday loan company Amigo loans after the FCA said it was unfair to customers. Subprime lender Provident announced it was closing its payday loans arm, Provident Personal Credit, after the FCA objected to a scheme under which it said consumers were “offered significantly less than the full amount of redress they are owed.”
