After an investigation by the Financial Conduct Authority (FCA); Dollar Financial UK who owns high street lenders including The Money Shop, Payday Express and Ladder Loans, has agreed to refund £15.4m to 147,000 customers.
Chief Executive of Dollar Financial, has said:
“As the new CEO, I accept the findings of the review and apologise to anyone who may have suffered difficulties as a result. It is proper that we put things right where they have gone wrong and I have gone further than the review in reforming the way our business operates to reflect the company aim of being the most responsible lender in its marketplace.”
The FCA has stated that the Dollar Financial customers may have suffered due to the firm’s affordability checks, debt collection practices and system errors. This was found through a review last year that found that many customers were lent more money than they could afford to repay.
The Dollar Financial has since agreed to change its lending requirements to meet FCA standards. Jonathan Davidson, the director of supervision for retail and authorisations at the FCA, has made clear that the FCA “expects all credit providers to carry out proper checks to ensure that borrowers don’t take on more than they can afford to pay back.”
This is not the first or largest refund by a high street lender. In October last year, Financial Dollar’s rival Wonga wrote off £220m worth of debt for 330,000 customers after admitting providing loans to those who could not afford them.
Author of ‘Loan Sharks – The Rise and Rise of Payday Lending’, Carl Packman, has said:
“The news confirms what many critics have known about the payday loans business for some time: that in order for payday lending to grow in the way it did over the recession years it needed to rip off people struggling with their finances.”
Approximately 67,000 customers will have their current loan balance reduced, whilst 65,000 will be given a cash refund and a further 15,000 will be given a combination of the two.
Safiya Bashir on 26/10/2015