U.K. Payday Loan Firm to Repay Customers Over Lending Criteriaby
Payday loan company CashEuroNet UK LLC has been forced to repay customers and alter its lending criteria, the U.K. regulator said.
The firm has now changed its lending criteria, the Financial Conduct Authority said.
The 1.7 million pounds ($2.6 million) in redress includes total loan forgiveness for 2,523 customers, the FCA said.
FCA retail and authorizations director of supervision, Jonathan Davidson, said in a statement: “We are pleased that CashEuroNet is working with us to address our concerns. It is important that firms carry out appropriate affordability checks and pay particular attention to fair treatment of those who have trouble meeting their loan repayments.”
The short-term loan sector in Britain has come under fierce criticism from lawmakers and the public in recent years over lending practises and annual interest rates that can reach four digits.
Last July payday lender Cash Genie agreed to give customers more than 20 million pounds in compensation after reaching a deal with financial regulators.
Cash Genie’s parent company, Ariste Holding Ltd., agreed to provide more than 92,000 customers with a combination of refunds and balance write-downs.
Regulators earlier fined Wonga Group Ltd. for misconduct. The company was fined 2.6 million pounds by the FCA in 2014 for threatening to sue customers behind on payments in letters from fake law firms.
Earlier this year Wonga said it would cut a third of its workforce to help it adapt to new rules that regulators said may drive some payday lenders out of business.
Starting in January, the interest and fees on new payday loans couldn’t exceed the amount borrowed.
Wonga suffered a 37.3 million-pound pretax loss for 2014, with revenue falling to 217.2 million pounds from 314.7 million a year earlier. In May Wonga said that it did not expect to make a profit this year.