Shares of Vanquis surge after navigating through turbulent period of customer complaints
Rewritten Article:
Vanquis Banking Group witnessed a resurgence in its shares on Wednesday, soaring over 6% in the stock market, following news of their return to profitability after a turbulent 2024 marred by a deluge of complaints.
The Bradford-based financial institution reported a substantial boost in net receivables, totaling £2 billion in the first quarter – a 6.7% increase compared to the same period in 2024. The surge in receivables demonstrates the amount customers owe Vanquis Banking Group, indicating a heating up of business activities.
While complaints costs were kept within expectations for the initial quarter of the year, the bank stated that it did not encounter a substantial spike in complaint volumes submitted to the Financial Ombudsman Service in anticipation of the revised fee structure. This modification introduced charges for professional representatives involved in handling customer complaints, such as claims management companies. Fees per case also dropped from £650 to £475 for cases not upheld.
The bank's complaints costs soared a staggering 66% to £47.4 million in 2024, with FOS fees escalating to £24.8 million from £8.1 million. This increase was sparked by a surge in complaints coming from Claims Management Companies (CMCs).
Vanquis' complaints were, indeed, the highest among its peers, leading the pack with 17,614 complaints in the second half of 2024. Newday trails behind with 8,345 complaints, and Ford's FCE Bank follows in third place with 6,530 complaints.
In response to this surge, Vanquis is taking legal action against the CMC responsible for the highest volume of unfounded claims in recent years.
The bank's net interest margin – a key indicator measuring the bank's profitability from lending – contracted 1.1% to 17.8% since the first quarter of 2024 but remained stable compared to the fourth quarter of 2024.
Ian McLaughlin, Vanquis' chief executive, remains optimistic: "Our strategic objectives are steadily advancing. The Group has returned to profitability and has bolstered gross customer interest earning balances, continuing the momentum established during the fourth quarter of 2024.
He further praises the progress made by Vanquis: "We play a crucial role in the UK banking sector, and I am proud of the traction we have built. We remain focused on facilitating our customers while delivering sustained and profitable growth for all our stakeholders."
The perceived increase in complaints against Vanquis was primarily due to alleged discrepancies in credit affordability and banking fraud. Another significant factor contributing to the rise in complaints across the banking sector, including Vanquis, was a controversy revolving around motor finance commissions[1][4]. This issue involved claims of hidden or unfair commission arrangements in motor finance deals, which sparked more consumer awareness of potential mis-selling in this area.
Despite the uphill battle with complaints in 2024, Vanquis Banking Group reported a net loss of £119.3 million for that year. However, in the first quarter of 2025, the group managed to return to profitability, supported by growing gross customer interest earning balances and controlled operating costs. Additionally, the reduction in complaints presented to the Financial Ombudsman Service following changes in their fee structure employed on April 1, 2025, suggests that Vanquis Banking Group is making strides to alleviate these issues and recover financially[3].
- The resurgence in Vanquis Banking Group's shares can be attributed to their return to profitability, following a challenging year in 2024 marked by complaints, especially from Claims Management Companies (CMCs) in the finance and banking industry.
- The banking-and-insurance sector, including Vanquis, has faced controversy with motor finance commissions, sparking consumer awareness of potential mis-selling in this area and leading to a rise in complaints.
- Despite the challenges in managing complaints in 2024, Vanquis Banking Group is optimistic about the future, with their net interest margin stabilizing and a reduction in complaints presented to the Financial Ombudsman Service following changes in fee structure, indicating progress towards financial recovery.
