Problems mount at sub-prime firm

Cattles offers financial services to those outside the mainstream

UK sub-prime lender Cattles says there has been a failure of internal accounting controls at the firm and it is suspending three senior managers.

It said that it had uncovered problems in the ways it accounts for bad loans.

The company also said that its finance director, James Corr, could not fulfil his duties because of ill health.

The loan firm also delayed the release of its 2008 financial results for a second time, pending the outcome of a review of its bad loans.

It had already warned last month that profit would be lower than thought and it said on Tuesday that profits were likely to be lower still.

Before the problems, analysts had expected the firm to post an annual pre-tax profit of £170m for 2008, up from £165m in 2007.

Cattles shares fell 40% to 2.1 pence on the news.

It said it had suspended managing director John Blake, a finance director, Peter Miller, and operations director Mick Belcher.

Mr Corr had postponed his retirement to oversee the review but was now unable to work because of ill health, the company said.

The firm, which provides loans to people with poor credit ratings, trades as Welcome Finance, Lewis Group and Cattles Invoice Finance.

It announced at the start of the year that it was cutting 1,000 jobs as a result of the global financial crisis.