The doorstep lender behind Loans At Home has paused plans to raise cash from shareholders after the City watchdog expressed concern over some of its practices.
Non-Standard Finance said the Financial Conduct Authority has “a number of concerns” about operating procedures in parts of its business.
The worries surround the company’s guarantor loans division, which includes George Banco and TwoTrust.
On its website, NSF claims that the guarantor division, which lends on a guarantee from a friend or relative that they will pay back the loan if the borrower cannot, is the number two player in the UK market.
But, in a statement to shareholders on Monday morning, the business said: “NSF announces that it has been informed by the Financial Conduct Authority that, following a visit to the group’s guarantor loans division in March 2020 as part of a multi-firm review into the sector, and having examined a selection of customer files, it has raised a number of concerns regarding certain aspects of the operating procedures and processes at the division.”
NSF said it is performing an “in-depth review” and is working with the FCA to clarify the scope of its concerns and find ways of addressing them.
It has now put a potential fundraising on hold, but still has the backing of its biggest investors should it need to go to shareholders for cash, the board said.
“Pending the outcome of this review, the group’s consideration of a possible equity issue has been put on hold for the time being,” it said.
“Alchemy, the group’s largest shareholder, who was supportive of the proposed capital raise, has confirmed that it remains supportive of providing further capital to the group and is engaging with the board in this regard.”
Shares dropped by more than a quarter on the news.