Payday firm CFO Lending has been ordered to pay £34m of redress to 97,000 customers for unfair practices. The redress consists of £31.9m written-off customer’s outstanding balances and £2.9m in cash payments to customers.
CFO Lending, a payday firm, will provide more than £34m of redress to 97,000 customers for unfair practices.
The redress consists of £31.9m written-off customer’s outstanding balances and £2.9m in cash payments to customers.
CFO Lending also traded as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit.
Most of the firm’s customers had high-cost short-term credit loans (payday loans) but some customers had guarantor loans and some had both.
Jonathan Davidson, director of supervision for 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.
“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.”
A number of serious failings took place which caused detriment for many customers, the regulator ruled.
Failings were found by the FCA to date back to the launch of CFO Lending in April 2009 and included the firm’s systems not showing the correct loan balances for customers, so that some customers ended up repaying more money than they owed.
The lender was also found to have misused customers’ banking information to take payments without permission and made excessive use of continuous payment authorities to collect outstanding balances from customers.
In many cases, the FCA found the the firm did so where it had reason to believe or suspect that the customer was in financial difficulty.
The regulator ruled CFO Lending failed to treat customers in financial difficulties with due forbearance, including refusing reasonable repayment plans suggested by customers and their advisers.
Threatening and misleading letters, texts and emails were sent to customers.
In August 2014, following an investigation by the FCA, the firm agreed to stop contacting customers with outstanding debts while it 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.