Doorstep lender Provident Financial was plunged into crisis on Tuesday as its chief executive suddenly quit amid a disastrous profit warning and a probe by the City’s watchdog.

In a day of turmoil, its shares plunged 61%, wiping £1.6 billion off the firm, one of the worst falls in FTSE 100 history.

Chief executive Peter Crook, at the helm for 10 years, quit last night after its home credit unit hurtled towards a £120 million loss, versus previous hopes of a £60 million profit.

The board, led by chairman Manjit Wolstenholme, has cancelled its dividend payment to stem the bleeding, hurting shareholders such as second top investor Neil Woodford.

The shares fell 1074.01p, or 61%, to 680.5p.

Wolstenholme will take over from Crook, who has gone on gardening leave, immediately and pledged to get to the bottom of the problems.

Separately, the firm said the Financial Conduct Authority was probing sales of PPI-like products sold to customers by its Vanquis Bank unit.

Provident said it suspended sales of the ROP products, at the centre of the probe, to customers to April 2016 but only told the market today.

“This is the worst profit warning we’ve seen in 20 years,” a City source said.

Provident, based in Bradford, offers loans to people with poor credit histories and previously used an army of 4500 part-time workers who went door to door collecting repayments.

Replacing them with 2500 full-time workers using new IT systems has proved disastrous, with the company missing 43% of repayment collections from customers.

Finance director Andrew Fisher warned the home credit business, which has spurred growth in recent years, was unlikely to recover.

“The business will be significantly smaller when we’ve turned it around than it has been historically. It will not return in the near term to the levels of profitability you have seen,” he said.

The dividend suspension will save the company about £200 million, enough to cover the shortfall from losses in home credit.

Wolstenholme said Provident could survive the catastrophe, pointing to “strong franchises” in other parts of the company like Moneybarn and Satsuma.

“There is an element of shock and surprise today,” she said. Hedge fund short-sellers, including AQR and Landsdowne, are sitting on paper profits of about £130 million.