The Credit Corp Group Limited (ASX: CCP) share price is taking a pounding today.
This comes after the company announced customer remediation following a review of its policies.
At the time of writing, the receivables management company's shares are down 6.29% to $19.67.
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Credit Corp slips on customer remediation
The Credit Corp share price is sinking after the company announced it had identified issues arising from its purchased debt ledger (PDL) portfolio.
Credit Corp advised that a number of customers were charged interest where it had intended to apply "forbearance in the form of a zero or reduced interest rate".
The majority of customers affected by the COVID-19 pandemic established flexible repayment arrangements. As part of the program, Credit Corp temporarily reduced all interest rates to zero across its Australian and New Zealand PDL portfolio.
Credit Corp noted forbearance would be permanently applied for all new repayment arrangements established during the temporary period. However, an administrative error led to contractual interest being re-applied.
For now, early indications are that no more than 1% of customers over the period have been affected.
Total refunds are not expected to exceed $4 million.
The company stated that an internal investigation is looking to determine the extent of the issue and the proposed remediation. It is estimated that this will not be completed for another 90 days.
Credit Corp CEO Thomas Beregi commented:
While it is very disappointing that the issues arose, we are devoting appropriate resources to ensure that all affected customers are identified and the full benefit of intended forbearance is provided.
What else did Credit Corp announce?
Furthermore, the company revealed it has received a production notice from the Australian Securities and Investments Commission (ASIC) regarding "a concern over an historic practice".
Management said it is cooperating with ASIC's investigation, and "does not believe that the historic practice of accepting temporary arrangements was contrary to any law".
Despite the latest woes, Credit Corp re-affirmed its earlier guidance for the current year.
The group anticipates net profit after tax (NPAT) to be in the range of $90 million to $97 million. Earnings per share (EPS) is projected to come in between 133 cents and 143 cents per share.
Credit Corp share price summary
Over the past 12 months, the Credit Corp share price has fallen 38%.
The company's share price reached a 52-week low of $18.47 in June, before moving sideways in the following months.
Credit Corp commands a market capitalisation of roughly $1.54 billion.
