Bradford-based lender Vanquis swung back into profitability for the first half of the year following on from a bruising period in the last 12 months.
The bank recorded a profit before tax of £6.2m, compared to a £91.9m loss for the second half of 2024.
Net interest income remained stable with one per cent growth and total income took a three per cent hit.
But the group’s swing back into profit comes as operating costs marked a stark 24 per cent drop year-on-year to £137.4m.
Vanquis was stung by a surge in Financial Ombudsman Service (FOS) complaints in the last year – dwarfing its peers with 17,614 recorded for the second half of 2024.
This dragged FOS fees up 66 per cent to £24.8m for the period.
Vanquis’ legal fight against CMCs
But the bank said it had reduced complaints costs by 36 per cent in the first six months of the year
Vanquis’ spike was driven by complaints from Claims Management Companies (CMCs). The bank has undertaken legal proceedings against the CMCs citing they were “responsible for the highest volume of unmerited complaints in recent years”.
Ian McLaughlin, chief executive of Vanquis, said the Supreme Court ruling on motor finance had helped prove “much-needed clarity for the firm” and was confident in the bank’s position due to not participating in discretionary commission arrangements (DCAs).
The Financial Conduct Authority is set to consult on an industry-wide redress scheme following the top Court’s verdict on August 1.
Whilst the Court generally ruled in favour of the lenders, one claimant was granted compensation under the Consumer Credit Act.
The City watchdog has said it expects the total costs of its redress scheme to come between £9bn and £18bn.
Vanquis said because it did not participate in DCAs, it would not be “in scope for this element” of any redress.
McLaughlin said: “The turnaround of Vanquis remains firmly on track and is gaining momentum.”