Provident fears Yes Car backlash

THE bosses of Yes Car were well briefed to deal with media questions ahead of this week's TV exposé of dodgy sales practices at a Croydon branch, but investors will have to wait another six months to see if they can fend off fears of a consumer backlash.

Viewers of BBC1's Whistleblower saw a Yes Car Croydon mechanic describing many of the second-hand cars the firm took in for resale as 'crap' and saying they were sometimes subjected to 'Stevie Wonder services' - turning a blind eye to defects.

Robin Ashton, chief executive of Provident Financial, Yes Car's listed parent company, insists shortcomings exposed in the programme were dealt with ahead of Wednesday's screening. Four senior managers have already been sacked and a complete retraining of staff is under way.

But analysts fear this will come too late for scores of customers who, after seeing the programme, may simply refuse to maintain their monthly payments - frequently at interest rates of 29.8% APR - on vehicles bought from Yes Car up and down the country. This may lead to a surge in bad-debt provisions, which in turn could eat into profits within Yes Car and at group level for Provident.

Full-year figures this week showed a 7% rise in Provident's pre-tax profits to £220.7m driven by a growth in overseas doorstep lending, its core business.

Brokers Teather & Greenwood reacted with a sell note. Numis Securities told clients to reduce their holdings, warning that the fall in Yes Car profits, down 61% in 2004 to £4.4m would ' deteriorate further', leading to a divisional loss of £2.5m this year.

One Croydon customer, 36-yearold Susan Barrett, told the Evening Standard of her legal battle with the firm which may set a precedent for others. She bought her Rover hatchback in December 2003 but stopped making monthly payments to Yes Car the following August after the car packed up while, she says, she was driving down a busy road. She could not claim on any of the insurance cover she had to take out as part of the car purchase.

Yes Car followed its usual procedure of repossession followed by a demand for repayment of nearly £7,000 owed on the car. Barrett refuses to pay and has hired solicitors at City Law Financial to counter-claim for the £1,500 she had already paid Yes Car.

The 'pond life' and 'amoebas', the Croydon mechanic's disparaging description of Yes Car's customers, may yet exact the sort of financial revenge on the company that analysts fear.