CFO Lending forced to pay £34m to payday loan customers
A payday lender has been forced to pay £34 million in redress to almost 100,000 customers following the exposure of shoddy lending practices.
CFO Lending has agreed the redress package with regulator the Financial Conduct Authority (FCA), in light of “serious failings” dating back to the company’s launch in April 2009.
The breaches include taking money from customers’ bank accounts without their permission, and calculating outstanding debts incorrectly leading to some customers overpaying.
The company also failed to treat customers in financial difficulty fairly, as it refused to agree repayment plans with people in trouble, and sent threatening and misleading letters, texts, and emails to customers.
The FCA also found that the company didn’t assess the affordability of its guarantor loans, and “routinely” provided incorrect information to credit reference agencies, potentially damaging customers’ chances of borrowing in future.
Jonathan Davidson, director at the FCA, says: “We discovered that CFO Lending was treating its customers unfairly and we made sure that it immediately stopped its unfair practices. Since then we have worked closely with CFO Lending, and are now satisfied with its progress and the way that its has addressed its previous mistakes.”
CFO Lending was banned from contacting customers with outstanding debts in August 2014 while it conducted a review of its business. As a result of its review, the FCA gave the company limited permission to collect its outstanding debts, though the company is still not allowed to issue new loans.
It’s the latest in a long line of short-term lender to face a crack down by the regulator following widespread criticism. In May 2016, Google announced it will no longer take advertising from payday lenders, while Cash Genie went bust in January 2016 after being forced to provide £20 million recompense to customers who had been treated unfairly.
Who will be compensated?
Under the redress scheme announced today, debts totalling £31.9 million will be written off outstanding balances and a further £2.9 million will be made in cash payments to customers.
Mr Davidson says affected customers do not need to do anything, and will be contacted by CFO Lending by March 2017.
If you believe you are affected by any of the issues and may be entitled to redress, and have not heard from CFO Lending by March 2017, call it on 0203 583 6303.
The redress scheme applies to some CFO Lending customers, as well as some people who applied for loans through the company’s other brands, namely, Flexible First, Money Resolve, Paycfo, Payday Advance, Payday Credit, and Payday First.
If you’ve got an outstanding loan with the firm you do need to continue repaying it. However, no further fees or interest will be added.
For further information, see the CFO Lending website at http://www.cfolending.com/redress-3.
CFO declined to comment on the redress package.
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.