Shares in the business are down 59% over the last month, after it delivered its second profit warning in two months, announced the departure of chief executive Peter Crook, scrapped its dividend and revealed an FCA investigation into its repayment option plan product.
Clark said the scale of the lender's problems in its home collected credit business was 'completely unexpected to us'.
He added that he had been forced to cut his position in the business due to the withdrawal of the interim dividend and the likely scrapping of the full-year payout.
'Because they have dropped their interim dividend expected in October I have reduced the position but retained some of it,' he said.
'The fact they have dropped their interim dividend for October and also will not pay one for the full year in 2018 - because we've been able to reduce and reposition it won't affect the fund dividend flows.'
Clark's response to Provident Financial's crisis contrasts with that of high-profile backer Neil Woodford, who has stuck with the stock.
Sticking with AstraZeneca
Clark is sticking with the pharmaceutical giant, a top five holding in both his funds.
He said the drug test failure had overshadowed the same drug's success in a number of other trials.
'We can now expect an AstraZeneca where the sales revenue will grow in 2018 year-on-year for the first time since 2010,' he said.
'The stock has come back to growth, it's through the trough and I believe it still remains attractive with a 4% dividend yield and we have held the position.'
The manager has meanwhile sold his holding in Altria (MO.N) as tobacco stocks come under pressure from US plans to reduce the amount of nicotine allowed in cigarettes.
'I think the effect of this over time will be to drive the move towards vaping and reduced-harm products in the tobacco sector,' he said.
'It may be a good thing, it may be because most of the big tobacco companies have a lot of reduced-harm products it may give them an extra leg of growth but that isn't really clear at the moment,' he said.
The pressure on these stocks has weighed on both funds, which have fallen towards the bottom of the Investment Association's UK Equity Income sector since the turn of the year. The Fidelity Enhanced Income fund is up 3.4% and the MoneyBuilder Dividend fund 3.3% in 2017.
'These are the three things which have impacted us. I believe these impacts are now in the price and largely over,' he said.
Fidelity MoneyBuilder Dividend sits in the top half of the UK Equity Income sector since Michael Clark took over the fund in 2008. Clark acknowledged the patch of poor performance.
'We have had periods of performance dips before but they always restore themselves and I think this will be the case again this time,' he said.
'Many of the stocks we hold, particularly in consumer staples and utilities are at relative lows but the businesses are still generating good dividend growth and I think they still have their superior return characteristics which will come through in the second half of the year probably.'