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Payday lender refunds & writes off £34m
This week the Financial Conduct Authority (FCA) announced that the payday lender CFO Lending has been ordered to pay a £34m ‘redress’ package to 97,000 of its customers.
The announcement came after the FCA found a number of poor practices at the firm, dating back to 2009, that had caused detriment for many of their customers.
CFO Lending were also known as as Flexible First, Payday First, Money Resolve, Paycfo, Payday Advance and Payday Credit.
What actually happened?
The FCA investigation found that CFO Lending was treating its customers unfairly. In some cases the company’s systems showing incorrect balances, which meant that many customers ended up paying more than they owed.
The lender also took payments from customers’ accounts without permission and excessively using continuous payment authority (CPA) to take payments from accounts, even when it had reason to believe the customer had financial problems.
CFO Lending was also found to also be reporting incorrect details to credit reference agencies, sending threatening or misleading letters to customers and not correctly assessing the affordability of some of its loans.
What’s CFO Lending going to do about it?
The firm agreed to stop contacting customers while it carried out a review of its business. After talks with the FCA, CFO Lending agreed to refund or write-off over £34m to 97,000 of its customers.
Affected customers will receive either a cash refund, have their outstanding debt balance reduced, or have any remaining debt balance written off. £31.9m of the redress will be used to write remaining balances off, and £2.9m used to reduce affected customers’ debt balances.
I’m a CFO customer, what should I do?
Importantly, if you’re affected, you don’t need to take any action. CFO Lending will contact customers to explain how the refund will be dealt with. Affected customers will be contacted by March 2017 at the latest.
I’m a StepChange Debt Charity client, what do I need to do?
If you’re on a debt solution with us and you’re told you’ll receive money or have your balance reduced or written off, you should get in touch with us to let us know. We’ll see if this affects your solution, and let you know if you need to do anything.
Last year we helped over 48,000 people with payday loan debts. For more information about payday loans and what alternatives are out there, take a look at our comprehensive payday loans advice.