Payday firm CFO Lending has entered into an agreement with the Financial Conduct Authority (FCA) to provide over £34m of redress to over 97,000 customers for unfair practices.
The majority of its customers received payday loans, but some customers had guarantor loans, and some had both.
CFO Lending were guilty of many failings, the FCA said, including:
- The firm’s systems not showing the correct loan balances for customers, so that some customers ended up repaying more money than they owed
- Misusing customers’ banking information to take payments without permission
- Making excessive use of continuous payment authorities (CPAs) to collect outstanding balances from customers. In many cases, the firm did so where it had reason to believe or suspect that the customer was in financial difficulty
- Failing to treat customers in financial difficulties with due forbearance, including refusing reasonable repayment plans suggested by customers and their advisers
- Sending threatening and misleading letters, texts and emails to customers
- Routinely reporting inaccurate information about customers to credit reference agencies
- Failing to assess the affordability of guarantor loans for customer.
The FCA said the firm had agreed to stop contacting customers back in August 2014, following an investigation by the FCA, while the company carried out an independent review of its past business. It also agreed to carry out a redress scheme.
In February 2016 the FCA, satisfied with the results of the independent review, authorised the firm with limited permission to collect its existing debts but not to make any new loans.
Jonathan Davidson, director of supervision – retail and authorisations at the Financial Conduct Authority, said: “We discovered that CFO lending was treating its customers unfairly and we made sure that they immediately stopped their unfair practices. 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.
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“Part of addressing these mistakes is making sure they put things right for their customers with a redress programme. CFO Lending customers do not need to take any action as the firm will contact all affected customers by March 2017.”