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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Provident Financial Plc | LSE:PFG | London | Ordinary Share | GB00B1Z4ST84 | ORD 20 8/11P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 225.00 | 223.60 | 224.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2021 to Apr 2024
TIDMPFG
RNS Number : 0666Y
Provident Financial PLC
10 May 2021
10 May 2021
Provident Financial plc ('Company')
Publication of 2020 Annual Report and Financial Statements and Notice of 2021 Annual General Meeting
The Company has today published the following documents:
Hot Features
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- 2020 Annual Report and Financial Statements; and
- Notice of 2021 Annual General Meeting ('AGM').
In compliance with LR 9.6.1R, the 2020 Annual Report and Financial Statements and Notice of 2021 AGM have been submitted to the Financial Conduct Authority via the National Storage Mechanism and will shortly be available to the public for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. These documents will also be available on the Group's website from today at: www.providentfinancial.com/shareholder-hub.
Annual General Meeting
The AGM will be held at 1.30pm on Wednesday 30 June 2021 at the Company's offices at Floor 28, 20 Fenchurch Street, London EC3M 3BY.
Currently, COVID-19 restrictions and guidance are in place which prevent us convening the AGM in the usual way. The Board are hopeful that such Government guidance and restrictions may be relaxed further prior to the AGM, but we will continue to follow Government guidance. The Government's roadmap for easing lockdown restrictions published on 22 February 2021 envisages the potential for indoor events by 30 June 2021 (being the date for our AGM). However, this roadmap is subject to a number of contingencies and there can be no guarantee that we will be able hold the AGM as we intend.
The health and safety of our employees, our shareholders and the wider communities in which we operate remains our primary concern. We recognise that the AGM is an important event for shareholders and the Company is keen to ensure that shareholders are able to exercise their right to vote and participate at this year's AGM. While we hope that a number of restrictions may be lifted by Wednesday 30 June 2021, the Board reserves the right to keep in place social distancing measures and certain other restrictions necessary to ensure the health and wellbeing of those attending the AGM. More details can be found in the Notice of AGM.
For this year's AGM, we are pleased to be able to provide a facility for shareholders to follow the AGM remotely, should they wish to do so. This can be done by accessing the AGM section of our website here, www.providentfinancial.com/shareholder-hub/agm-general-meetings/ and following the link to the webcast. Further details on how to join the meeting remotely are set out in Appendix II of the Notice of AGM (set out on page 18).
Shareholders wishing to attend the meeting in person should pre-register their attendance by emailing Shareholder.Questions@providentfinancial.com no later than 5.00pm on Monday 28 June 2021.
We urge individuals to continue to monitor guidance and/or directions issued by the UK Government on COVID-19 and to act accordingly. In particular, if you are required to self-isolate or quarantine, we would ask that you comply with the UK Government restrictions and do not attend the AGM in person. Anyone attempting to attend the AGM in person and displaying flu-like symptoms will not be admitted to the AGM and/or will be removed from the AGM to ensure the health and wellbeing of other individuals in attendance.
Whilst we currently plan on holding the AGM at our 20 Fenchurch Street, London office in a COVID-19 secure manner, it is possible that the evolving COVID-19 pandemic and Government restrictions and guidance in response to any developments may mean that this is not possible. In particular, individual circumstances including being required to self-isolate or quarantine may mean that attendance in person is not possible for all shareholders. Accordingly, the Board strongly encourages shareholders to vote on all resolutions by completing and submitting an online proxy appointment form in accordance with point 5 of the Explanatory Notes to the Notice of the Meeting (set out on pages 10 to 11).
The Board will keep the situation under review and may need to make further changes to the arrangements relating to the AGM, including how it is conducted, and Shareholders should therefore continue to monitor the Company's website (https://www.providentfinancial.com/shareholder-hub/) and announcements for any updates.
Ratification of Non-Executive Directors' fees
Please note that within the Notice of 2021 AGM, the Company is proposing a resolution in relation to approval of ratification regarding Director fees (Resolution 22).
The Company's Articles of Association (the 'Articles') contain a limit on the Company paying fees to Non-Executive Directors in excess of GBP400,000 per annum in aggregate other than with the approval of shareholders by ordinary resolution. This amount was set in 2007 and, despite the growth of the Company and the increase in the number of Non-Executive Directors since that point, it has not been increased.
It has come to the attention of the Directors that the Company has inadvertently exceeded this limit in previous financial years. Whilst over the past decade shareholders have approved the terms of the Directors' Remuneration Policy which sets out the Company's policy on fees for Non-Executive Directors, and have passed an annual advisory vote on the Directors' Remuneration Report which sets out the actual fees paid to Non-Executive Directors, the Company has not formally determined at previous annual general meetings a revised limit on the aggregate fees payable to Non-Executive Directors under the Articles.
Resolution 22 seeks to ratify the conduct of the current and former Directors in relation to the payment of Directors' fees in excess of the limit set out in the Articles and to release each such Directors from any liability to the Company in connection with such payments.
The current Directors of the Company and certain former Directors of the Company are related parties for the purposes of Listing Rule 11. The ratification, adoption and approval of the decisions of the current and former Directors of the Company constitutes a "smaller related party" transaction under Listing Rule 11.1.10R and therefore does not require shareholder approval as a related party transaction under the Listing Rules. However, the votes of Directors and former Directors who are related parties for this purpose will not be counted on Resolution 22.
Further information can be found in the 2021 AGM Notice and in the notes to Resolution 22.
Additional information
A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Company's results statement (RNS announcement dated 10 May 2021 ("Preliminary results for the year ended 31 December 2020")). That information, together with the information set out below constitutes the material required by DTR 6.3.5R. This announcement is not a substitute for reading the 2020 Annual Report and Financial Statements in its entirety. Page, note and section references below refer to the corresponding pages and/or notes/section in the 2020 Annual Report and Financial Statements.
Contact: David Whincup, (0)1274 351 344
Appendix
Principal risks
A description of the principal risks and uncertainties that the Company faces is extracted from pages 54 to 61 of the 2020 Annual Report and Financial Statements.
Principal risks are risks which are inherent to the Group's strategy and business model and have formally been articulated as part of the Group's risk appetite framework. Principal risk categories and associated risk appetite statements are reviewed and approved by the Board on an annual basis, effectively defining the Group's overall risk appetite.
P1. Capital risk
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk that the * The Group and bank operate within a defined capital
Group and bank has risk appetite, with thresholds reported to and
insufficient capital monitored by Group and bank boards.
to either meet regulatory
requirements or to
sustain the long-term * The Board's current view on risk appetite is to
viability of the business. maintain a capital buffer of more than 5% of
risk-weighted exposures due to market uncertainties.
The Group has also refined the capital buffer it
maintains to be proportionate to the risk-weighted
exposures and thus reflect the current and expected
state of the balance sheet.
* Preservation of capital and supporting business
stability via the cancellation of the 2019 dividend
in line with industry practice. The Group's capital
review (C-SREP) with the PRA concluded in July 2020.
The Group's Pillar 2A capital requirement has been
lowered from 20.65% to 18.33% during 2020 and the
fixed monetary add-on in respect of pension risk has
been removed.
* As previously reported, the Group has elected to
phase in the impact of adopting IFRS 9 over a
five-year period. The PRA ratified additional capital
mitigation proposed by the Basel Committee, in
response to Covid-19, with these measures coming into
force from 27 June 2020 and which the Group has fully
adopted to maintain a robust regulatory capital
position in light of the increased impact of IFRS 9
in the current macroeconomic environment.
* The Group and bank regularly monitor the internal
assessment of capital adequacy in line with the
capital adequacy rules.
* The Group has continued to actively explore a number
of options to improve capital efficiency. These
include, but are not limited to, supplementing the
existing capital base made up entirely of core equity
tier 1 with tier 2 debt capital to support growth and
improved return on equity.
-------------------------------- ---------------------------------------------------------------
P2. Liquidity and
funding risk
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk that the * Liquidity and funding risk appetite established at
Group has insufficient Group and bank level, with thresholds reported to and
liquidity to meet monitored by Group and bank boards.
its obligations as
they fall due, and/or
is unable to maintain * The Group's current funding strategy seeks to
sufficient funding maintain a secure funding structure by maintaining
for its future needs. committed facilities to meet contractual maturities
and fund growth for at least the following 12 months
and maintain access to four main sources of funding
comprising: (i) the syndicated revolving bank
facility; (ii) market funding, including retail bonds,
institutional bonds and private placements; (iii)
securitisation; and (iv) retail deposits.
* In January 2020, the Group successfully completed a
bilateral securitisation facility to fund Moneybarn
business flows, establishing and developing the
securitisation capabilities within the Group.
* The Group also delivered on a number of its other
funding objectives: (i) repaid early the remaining
M&G loan facility of GBP25m on 14 February 2020; (ii)
in line with its contractual maturity, repaid a
GBP25m bond on 14 April 2020; and (iii) secured
intra-group funding through Vanquis Bank.
* In June 2020, a waiver was agreed up to (but
excluding) 31 December 2020. In addition, an
amendment was made to the interest cover covenant as
part of the revolving credit facility (RCF) with the
lending banks. This was in response to the pandemic's
impact on the Group's performance.
* Consistent with the Group's strategy of
cost-effective management of its liabilities and in
light of the contraction of the balance sheet in
response to the pandemic in August 2020, the Group
successfully completed a tender offer for GBP75m of
senior bonds due to mature in 2023.
* Vanquis Bank accepts retail deposits and, in line
with its regulatory requirements, maintains liquid
resources to meet certain stress events as stipulated
within its Internal Liquidity Adequacy Assessment
Process (ILAAP). The bank also monitors and reports
its liquidity coverage requirements (LCR) on a
consolidated basis to the PRA and has reported LCR
far in excess of the 100% minimum during 2020.
* The flow of retail deposits within Vanquis Bank has
continued to be strong. In 2020, Vanquis Bank
increased its retail deposit funding to bolster
liquidity in response to Covid-19 and has maintained
surplus liquidity against its internal requirements
(which exceed requirements in satisfaction of the
Overall Liquidity Adequacy Rule) throughout 2020.
* In 2021, Vanquis Bank has issued secured notes
collateralised by a portion of the credit card
receivables book with the intention to use the notes
as collateral which will be placed with the Bank of
England to support borrowings against the Sterling
Monetary Framework (SMF) facilities. These include
the Discount Window Facility (DWF), Liquidity Support
Operations (ILTRO), and the Term Funding Scheme with
additional incentives for Small and Medium-sized
Enterprises (TFSME). This structure will offer three
primary liquidity and funding benefits to Vanquis
Bank: (i) diversification of funding; (ii) access to
Bank of England facilities; and (iii) creation of
contingent liquidity.
-------------------------------- -------------------------------------------------------------
P3. Credit risk
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk of unexpected * The Group has faced increased credit risk through the
credit losses arising period as a result of the pandemic and the delayed
through either adverse impacts of government support schemes including
macroeconomic factors furlough and payment deferrals.
or parties with whom
the Group has contracted
failing to meet their * In response to the pandemic, each division has
financial obligations. reviewed its respective credit profiles and has
undertaken selective tightening of scorecards to
ensure any higher than desired risk segments have
been addressed.
* Credit risk appetite has been refreshed to focus more
on early warning indicators (EWIs) of customer stress
and predictive performance of scorecards.
* Test and learn strategies implemented in Vanquis with
down-sampling of lower scoring customers to enable
data gathering without generating significant,
unquantifiable risk exposure.
* Prompt adjustments incorporated into rebuilds of
models to support greater confidence in booking
larger volumes of business.
* Selective plans being developed to supplement
existing data sources to enhance both credit and
affordability risk, i.e. open banking.
-------------------------------- ---------------------------------------------------------------
P4. Strategy and governance
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk of making * Detailed business review undertaken within each
poor strategic decisions division to rebase financial and operational plans as
related to acquisitions, a result of the pandemic (under 1PFG strategy).
products, distribution,
etc. as a result of
ineffective governance * Operational review of CCD in progress to realign
arrangements, processes activities with the changing regulatory environment,
and controls. overseen by the Group Board.
* Scheme of Arrangement announced to cap potential
liabilities in CCD back book.
* Board governance manual and Delegated Authorities
Matrix (DAM) in place to provide framework for key
decision making at all levels across the Group and
divisions.
* Executive director scorecards in place with reward
incentives based on a combination of financial and
non-financial measures.
* Group risk appetite framework in place with agreed
measures and thresholds approved by the Group Board.
* Strategic and emerging risks reported to the GERC and
GRC on any areas of concern.
* Risk overlay completed annually by the Group CRO on
behalf of the Remuneration Committee (RemCo) to
provide recommendations on adjustments to variable
reward where governance has failed.
* Independent internal audit assurance provided on a
risk assessed basis, with agile plan executed to
reflect the pandemic.
-------------------------------- ---------------------------------------------------------------
P5. Legal and regulatory
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk that the * The Group operates in a highly regulated environment
Group is exposed to and in a sector where its customers are more
financial loss, fines, vulnerable and need careful management.
censure or enforcement
action due to failing
to comply with regulations * We remain mindful that the regulatory landscape is
(including handbooks, continually evolving and regularly assess our risks
codes of conduct, through horizon scanning and regulatory impact
financial crime, etc.). assessment.
* Any regulatory actions are managed and monitored
closely to ensure these are delivered fully and
within the spirit of any feedback received.
* During the pandemic, the Group and divisions have
ensured very close contact with the regulators
keeping them apprised of our contingency plans, and
how we are managing capital and liquidity and
ensuring our customers continue to receive
appropriate support.
* All regulatory interactions are recorded and tracked,
with regular reporting through our executive and
Board committees to ensure consistency and read
across through a Group lens.
* The Group engages with regulatory authorities and
industry bodies on forthcoming regulatory changes,
e.g. the Woolard Review and investigations, ensuring
programmes are established to deliver new regulation
and legislation.
* Financial crime improvement programme largely
completed in Vanquis, closing down previous control
issues.
* Further detail covering specific changes in our
regulatory environment is included on page 62
including the recent notification by the FCA of an
investigation into affordability and sustainability
of lending to customers in CCD (February
2020-February 2021).
-------------------------------- ---------------------------------------------------------------
P6. Conduct
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk of customer * Conduct risk appetite refreshed providing greater
detriment due to poor focus on outcome measures.
design, distribution
and execution of products
and services or other * New conduct outcomes framework is being developed to
activities which could provide improved monitoring of customer outcomes
lead to unfair customer across all high-risk interactions including lending,
outcomes or regulatory forbearance, vulnerability and complaints.
censure.
* New Group Responsible Lending Policy being developed
providing overarching principles for all the
divisions in response to the changing regulatory
environment and sustainable lending.
* Conduct policies and procedures in place at a
divisional level to ensure appropriate controls and
processes that deliver fair customer outcomes.
* During the pandemic, we have ensured throughout that
our customers continue to receive the service they
need during these difficult times, and in particular
the provision of payment deferrals in line with FCA
guidance.
* Establishment of Group complaints forum and reporting
to ensure we are learning from complaints trends
across the divisions, including any FOS referrals or
upholds and actions of claims management companies.
This has resulted in a number of strategic changes
outlined in our emerging risks 'Threats to our
business model' and 'Responsible lending'.
-------------------------------- ---------------------------------------------------------------
P7. People
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk that the * Our people strategy continues to be refined with
Group fails to provide alignment of key HR processes across the Group
an appropriate colleague including performance management.
and customer centric
culture, supported
by robust reward and * Succession plans completed and in place for all
wellbeing policies executive and senior management.
and processes; effective
leadership to manage
colleague resources; * Balanced scorecards introduced and aligned across the
effective talent and Group and divisions with clear frameworks and
succession management; evaluation criteria established through RemCo for
and robust controls variable pay.
to ensure all colleague-related
requirements are met.
* Led by Group HR and supported by the divisional HR
teams, colleague guides have been developed to raise
awareness and understanding, covering important
safety and wellbeing measures that needed to be
implemented through the pandemic.
* A number of ongoing communications have and continue
to be shared with colleagues at a Group and
divisional level to keep them apprised of business
changes to support wellbeing.
* We are currently formulating our Return to Work
strategy which will define our future working
arrangements incorporating the learnings from the
pandemic including flexible working.
* Full health and safety risk assessment completed of
all our key work locations with mitigating actions
completed.
-------------------------------- ---------------------------------------------------------------
P8. Information security
and data protection
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
Sensitive data faces * Consolidated Group Data Protection Policy, maturity
the threat of misappropriation framework and reporting developed and embedded.
or misuse. Failure
to identify or prevent
a major security related * Data Protection Office (DPO) reporting transferred to
threat or attack, the Group Risk function to reinforce independence of
or react immediately office covering oversight arrangements.
and effectively, could
adversely affect the
trust of our current * New data protection software rolled out across the
or future customers business to enhance operational control
in the services we effectiveness.
provide, our reputation
and our operational
or financial performance. * Group-wide internal assessment completed on
information security mapping capabilities against the
ISO 27001 framework.
* Based on the above, an action plan has been developed
and will be agreed with the Group Board in May, with
Internal Audit providing assurance over its
implementation through 2021.
-------------------------------- ---------------------------------------------------------------
P9. Operational
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk of loss resulting * The three lines of defence model throughout the Group
from inadequate or ensures there are clear lines of accountability
failed internal processes, between management which owns the risks, oversight by
people and systems the Risk function and independent assurance provided
or from external events. by Internal Audit.
Operational risk more
broadly covers a wide
range of different * Group business continuity plan invoked in response to
categories including the pandemic.
specific event risk,
fraud, IT/systems
risk, business continuity, * New operating arrangements in place including home
AML, etc. working for non-essential workers, and deployment of
new technology to serve our customers and support
colleague collaboration.
* Full operating assessment completed covering home
working to ensure key controls around information
security, data protection and colleague health and
safety meet policy requirements.
* Risk harmonisation programme launched to build out
single enterprise risk management framework including
control self-assessment, consolidated risk policy
taxonomy and risk reporting.
* Vanquis Control Enhancement Programme completed with
attestation provided to the PRA on risk maturity and
control effectiveness.
* Central transformation and programme management
capabilities being developed alongside investment
prioritisation criteria.
-------------------------------- ---------------------------------------------------------------
P10. Model
-------------------------------- -------------------------------------------------------------
Risk description Mitigating activities and other considerations
The risk of financial * Group Head of Model Risk recruited with resourcing
losses where models plan in place to build out team.
fail to perform as
expected due to poor
governance (including * New Group model risk management framework developed
design and operation). including Model Risk Policy.
* Model inventory compiled with materiality thresholds
in place to drive prioritised independent model
validation plan.
* Critical IFRS 9 models externally validated within
Vanquis and Moneybarn.
* Group model risk forum established to drive
standardised approach to model development including
minimum control standards.
-------------------------------- ---------------------------------------------------------------
Strategic and emerging risks
Strategic and emerging risks are risks whose impacts are uncertain. However, over a longer period of time they could affect the Group's overall strategy and cause the same impact as principal risks. Strategic and emerging risks are reviewed and monitored on a regular basis by the GERC and GRC.
E1. Threats to our
business model
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
There is a risk that * There are a number of strategic initiatives across
the non-standard credit the Group to reshape our business model reflecting
sector in which we the changing regulatory environment and associated
operate will continue impacts on our customer propositions, revenue and
to face considerable costs.
macroeconomic, Covid-19,
regulatory and political
headwinds resulting * Within CCD we have chosen to exit the home credit
in material threats business in the UK and ROI, and are implementing a
to our business model. robust operational strategy to optimise collection
performance of existing lending.
* In parallel, we are developing our market and product
propositions in CCD and Vanquis to better serve the
evolving needs of our customer base. This includes
new loan products in both CCD and Vanquis which will
make greater use of our digital capabilities, while
ensuring effective customer touch points in managing
the suitability, affordability and sustainability of
our lending.
* Through our 1PFG model, we are reviewing our existing
functional and operational structures across the
divisions to seek ways to drive alignment and where
appropriate consolidating structures to improve
efficiency and harness the scale of the Group.
* Together these initiatives are providing the
foundations for our future business model. These
changes will be supported through the refresh of our
risk management framework as well as significant
enhancements including building our transformation
and programme management capabilities.
----------------------------- --------------------------------------------------------------
E2. Responsible lending
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
There is a risk that * The Group and divisions have worked continuously with
the Group will be the FCA and FOS to seek alignment on interpretation
susceptible to claims of CONC rules and their application to our current
of irresponsible lending and historical lending business.
as a result of past
business practices,
leading to widespread * We have made a number of changes to our lending
remedial activities processes in response to new regulatory guidance,
as well as a significant further enhancing the robustness of customer
increase in the level creditworthiness assessments, e.g. repeat lending.
of complaints from
CMCs.
* Within CCD we have established a model office which
provides clear triggers where customer complaints may
warrant specific investigation and redress. This
approach is being leveraged in our other divisions as
appropriate.
* We have recently announced plans for a Scheme of
Arrangement within CCD which caps future liabilities
around past lending to GBP65m (including costs).
Under the scheme, customers who have complaints under
the agreed scheme rules may be entitled to redress.
* We have established a Group complaints forum chaired
by the Group CRO to share insights and learn about
any emerging trends related to irresponsible lending
across the divisions.
* Group responsible lending forum established to assess
any future proposed changes to lending policies and
rules in response to regulatory guidance and FOS
adjudications.
* Customer outcomes framework being developed to
provide assurance over lending decisions at various
stages of the customer journey.
----------------------------- --------------------------------------------------------------
E3. Pandemic (Covid-19)
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
There is a risk that * Pandemic contingency plan instigated across the Group
the pandemic (Covid-19) and divisions, which has stabilised the business.
will have a long-term
impact on our future
business performance * New value creation plans (1PFG) have been developed
and prospects. for each of the divisions which set out the future
strategic options as we face into the 'new world'.
* Enhanced risk assessment and audit reviews conducted
over key processes to ensure controls continue to
operate effectively during our recovery phase.
* Payment holiday strategies have been developed and
rolled out to our most vulnerable customers in line
with regulatory guidance.
* Return to Work (RTW) risk assessments have been
completed for each of our main sites, home workers
and agents in line with government guidance and
existing work arrangements.
* Numerous other actions are in place which are
captured and monitored as part of individual business
plans and remediation efforts, e.g. tightening of
credit criteria for new business.
----------------------------- --------------------------------------------------------------
E4. Challenge to agent
self-employed status
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
The Group has been, * In July 2017, the Group changed the operating model
and may continue to of its home credit business in the UK from a
be, subject to claims self-employed agent model to an employed workforce so
brought against it as to take direct control of all aspects of the
by either former agents customer relationship. In the Republic of Ireland the
or tax authorities Group continues to operate a self-employed agent
challenging the historical operating model.
employment status
of the Group's home
credit agents in the * Policies and procedures were in place in the UK up to
UK and the employment the transition to the new operating model in 2017 and
status of agents in continue to be in place in the Republic of Ireland to
the Republic of Ireland ensure that the relationship between the business and
(ROI). the agents it engages is such that self-employed
Were the Group to status is maintained. Compliance with policies was
be unsuccessful in also routinely evidenced and tested.
defending such claims,
it may be required
to make payments to * To date the Group has successfully defended claims
agents and pay additional and challenges against the employment status of its
taxes, in particular home credit agents, although there is no guarantee
National Insurance that this will also be the case with future claims
contributions, to and challenges.
the relevant authorities.
* It is understood from discussions with HMRC that they
have commenced an industry-wide review of the
self-employed status of agents in the UK.
* The Group's discussions with HMRC, which are focusing
on the period from when the FCA took over
responsibility for the regulation of consumer credit
in April 2014 to the change of operating model in
July 2017, remain in the initial fact finding stages.
The Group is working positively and collaboratively
with HMRC and it is expected that the review could
continue for at least another year.
* HMRC has raised protective assessments which have
been appealed but these are purely a procedural
matter to ensure that, in the event the review
concludes that taxes are payable, HMRC can recover
such amounts in respect of the oldest year that would
otherwise drop out due to the lapse of statutory time
limits.
* The Group has worked with HMRC over many years to
manage employment status risk and it remains
confident based on advice received that agents were
self-employed as a matter of law throughout their
engagement by the home credit business.
----------------------------- --------------------------------------------------------------
E5. Risk culture and
governance
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
There is a risk that * A new Group Executive Risk Committee (GERC) has been
our culture and supporting established from January 2020 which is providing more
risk governance arrangements focused discussions on the major risks we face as an
(risk frameworks, organisation.
reporting and structures)
inhibit effective
risk oversight leading * Led by the Group CRO, we have started our risk
to poor risk practices harmonisation programme. A detailed approach has been
and control failures developed with the delivery plan in progress with
across the Group. regular updates on progress provided to the GERC and
GRC.
* A refreshed Group risk appetite was approved by the
Group ExCo and GRC in October 2020 reflecting the
impact of Covid-19 and our 1PFG 'value creation
plans'.
* Specifically, within Vanquis Bank, the Risk
Enhancement Programme is driving a number of
improvements in control design and operating
effectiveness with an attestation provided to the PRA
at the end of 2020.
* The Group Blueprint launched in 2019 is now being
embedded to reflect the new customer culture.
----------------------------- --------------------------------------------------------------
E6. Return to Work
strategy
----------------------------- ------------------------------------------------------------
Risk description Mitigating activities and other considerations
There is a risk that * A preliminary analysis has been completed of a future
the Group and its model which supports increased remote working.
divisions are subject
to significant people
risk as a result of * While this has flagged some potential risks, e.g.
a prolonged period productivity, mental wellbeing and the home working
of working remotely. environment, the overall benefits significantly
outweigh these and have been benchmarked against
other similar organisations.
* Based on the analysis, the Group Executive has
provided a mandate to mobilise a 'Future of Work'
programme which will shape the Return to Work
strategy. This covers a number of important areas
including people and culture, IT enablement, health
and safety and operating environment.
* Any changes will be implemented on a transitional
basis over the next 12 months. Work on our
longer-term property strategy is ongoing.
----------------------------- --------------------------------------------------------------
Responsibilities statement
The Directors' responsibilities statement is extracted from page 147 of the 2020 Annual Report and Financial Statements.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
Patrick Snowball Chairman
Malcolm Le May Chief Executive Officer
------------------------
Neeraj Kapur Chief Finance Officer
------------------------
Andrea Blance Senior Independent
Director
------------------------
Angela Knight Non-Executive Director
------------------------
Elizabeth Chambers Non-Executive Director
------------------------
Margot James Non-Executive Director
------------------------
Paul Hewitt Non-Executive Director
------------------------
Graham Lindsay Non-Executive Director
------------------------
Robert East Non-Executive Director
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(END) Dow Jones Newswires
May 10, 2021 04:44 ET (08:44 GMT)
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