Payday Lender Ordered to Repay Customers $44 Million by U.K. FCABy
CFO Lending treated customers unfairly and must repay: FCA
More than 97,000 customers stand to benefit from redress
CFO Lending Ltd, a U.K. payday lender, must give back 34 million pounds ($44.4 million) to more than 97,000 customers because of unfair practices, including failing to assess the affordability of loans for clients, according to the U.K. markets regulator.
CFO Lending was ordered to pay the compensation by the Financial Conduct Authority after an investigation showed the firm sent threatening and misleading letters and e-mails to customers, routinely reported inaccurate information about people to credit agencies and misused bank information to take payments without permission, the FCA said Monday.
“We discovered that CFO lending was treating its customers unfairly and we made sure that they immediately stopped their unfair practices," said Jonathan Davidson, FCA director of retail and authorizations supervision, in a statement. "Since then we have worked closely with CFO Lending, and are now satisfied with their progress and the way that they have addressed their previous mistakes."
In August 2014, following an investigation by the FCA, the firm carried out an independent review of its practices and agreed to stop contacting customers with outstanding debts while the review was active. In February 2016 the FCA authorized the firm to collect its outstanding debts but stopped it from making any new loans. CFO Lending no longer provides payday loans, according to its website.
The FCA has taken a number of actions against payday lenders in recent years. The regulator capped the amount of interest and fees lenders can charge with a maximum penalty of 15 pounds if a person defaults on a loan and total fees must not exceed 100 percent of the amount borrowed.
"CFO Lending agreed with the FCA that it would provide redress to customers who were affected by past unfair practices," the company said on its website. "As a consequence affected customers would either have the amount they owe to CFO Lending reduced or written off."
CFO lending must contact affected customers by March 2017. The company also traded as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit.