BRADFORD-based subprime lender Provident Financial has announced a £331 million investor call after being ordered to pay almost £171 million in fines and compensation over mis-selling one of its products.

The Financial Conduct Authority (FCA) fined credit card lender Vanquis Bank £2 million and ordered it to pay £168.8m in compensation for failing to disclose charges of its popular repayment option plan (ROP).

Provident announced the rights issue and cover the cost of the Vanquis settlement, as well as an expected £20m hit from an ongoing investigation into its car financing arm, Moneybarn, over affordability checks.

The rights issue will raise £300m after £31m in expenses, Provident said as part of its full year results for 2017.

The firm also revealed an adjusted pre-tax profit of £109.1m, down by 67.3 per cent on the 2016 figure of £334.1m. It also reported its basic earnings per share were reduced by 64.8 per cent to 62.5p, from 177.5p the previous year.

The Godwin Street company had exceptional costs of £224.6m reflected in 2017, compared to an exceptional gain of £17.3m in 2016. This was made up of the estimated cost of settlement in respect of the FCA investigations in Vanquish Bank, of £172.1m and Moneybarn, of £20m. These are together with the costs incurred in its Consumer Credit Division (CCD) for its migration to the new home credit operating model and the implementation of the recovery plan of £32.5m.

Provident also announced it has reached an agreement with the FCA into Vanquis Bank's ROP.

Malcolm Le May, Provident Financial chief executive officer, said: "When I became group CEO, I stated my key objective was to execute a turnaround of the group.

"Today we have made progress on that objective by agreeing a resolution with the FCA in relation to Vanquis Bank and we now have a clear view on the estimated cost of the FCA investigation of Moneybarn.

"To grow the business and deliver long-term sustainable returns to our shareholders, PFG needs to strengthen its balance sheet. Today we have announced a proposed rights issue to raise net proceeds of £300m which the Board believes will allow the group to implement its strategy and restart paying a progressive dividend in 2019.

"The group's businesses of Vanquis Bank, Provident home credit, Satsuma, and Moneybarn are all well positioned in their markets, with products that customers' value and which operate well throughout the economic cycle.

"The recovery in Provident home credit is on track with collections performance continuing to improve.

"In 2018, the group will continue to rebuild trust with our customers, regulators, shareholders and employees.

"The group's turnaround is making progress, but the board and I realise there is still much to do to achieve a customer centric business delivering long-term sustainable returns to our shareholders."

Provident's statutory loss before tax reduced by 135.8 per cent to £123, from a 2016 profit of £343.9m and basic loss per share is down 149.9 per cent to 90.7p, from its 2016 earnings per share of 181.8p.