CMA launches investigation into NSF-Provident Financial deal

The Competition and Markets Authority has launched an investigation into whether Non-Standard Finance’s proposed £1.3bn takeover of larger doorstep lender Provident Financial would lessen competition for consumers.

The competition watchdog also confirmed that NSF has offered to demerge its home credit business as part of the deal.

In a statement on Wednesday, NSF said it had acknowledged to the CMA that there is a realistic prospect of a significant lessening of competition in relation to home credit and has identified a clear cut remedy to that in the form of divesting the Loans at Home business.

“A de-merged Loans at Home will be independent of NSF, and continue to be a viable and effective competitor for home credit, especially given its strong market position as the UK's third largest provider of home credit,” it said.

The company said that as the demerger remains subject to review by the CMA, it reserves the right to implement an alternative structure as a Phase 1 remedy, should one be required.

“The NSF board continues to expect that an agreement in principle will be reached with the CMA on an appropriate remedy for the significant lessening of competition during the Phase 1 review process.”

Chief executive John van Kuffeler said: “We remain confident in the merits of our offer and the benefits it will bring for Provident, its customers, employees and shareholders."

Provident said that given that the formal investigation by the CMA has only just been launched, it is now “beyond any doubt” that the probe will not be concluded before 5 June 2019, which is the latest date for NSF to declare the offer wholly unconditional.

“The Provident board believes that Provident shareholders are not able to assess or even estimate the full economic consequences of the NSF offer and therefore the NSF board should show due consideration to all Provident shareholders by allowing it to lapse.”