Provident Financial Group (PFG), the parent company of Moneybarn, said its Consumer Credit Division is facing a £120m loss, which is “at the upper end” of guidance it provided in August.

The Consumer Credit Division, which comprises of Provident and Satsuma personal loan businesses, suffered from a lower-than-expected rate of reconnection with customers after the division restructured its debt collection operations.

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Motor finance lender Moneybarn and credit card provider Vanquis Bank were reported by PFG to be improving their positions.

Moneybarn increased new business volumes 30% year-on-year in Q4 2017. Customer numbers and receivables grew by22% and 26%, to 50,000 and £376m, respectively.

Its annualised risk-adjusted margin has moderated from 22.7% to September 2017 to 21.8% to December 2017 (December 2016: 24.1%), which PFG said reflected additional impairment associated with the step-up in new business volumes over the last year and the flow through of impairment from higher risk categories of business prior to the tightening of underwriting in the second quarter.

PFG said it has engaged with the Financial Conduct Authority (FCA) over the two separate investigations affecting Moneybarn and Vanquis.

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Malcolm Le May, interim executive chairman, said: “I am pleased to report that good progress has been made towards restoring customer service in the home credit business and that we are engaged in a dialogue with the FCA with a view to reaching a resolution of the regulatory investigations at Vanquis Bank and Moneybarn. In addition, we continue to make progress in the search for a new group chief executive.

“All of our businesses have strong positions in their respective markets. Our priorities for 2018 are to rebuild trust with our customers, regulators, shareholders and employees. I would like to thank all our employees for their continuing hard work and dedication throughout a difficult period for the group.”