Charities welcome payday lender’s £35m fine over unfair practices
The Financial Conduct Authority (FCA) said the company took payments without permission and sent “threatening and misleading” letters, texts and emails.
The watchdog ordered CFO Lending to pay the sum, comprising £31.9m written-off outstanding balances and £2.9m in cash payments to customers, the majority of whom had payday loans but some had guarantor loans.
Jonathan Davidson, director of supervision of retail and authorisations at the FCA, said: “We discovered that CFO lending was treating its customers unfairly and we made sure that they immediately stopped their unfair practices.”
These also included “routinely” reporting inaccurate information to credit reference agencies.
He added: “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.”
The move has been welcomed by charities Citizens Advice Scotland (CAS) and StepChange.
CAS policy manager, Keith Dryburgh, said: “We strongly commend the FCA for taking this action. Payday lenders should not be allowed to take advantage of consumers in these ways. We have always called for robust regulation of the lending industry, and this shows that it does work.
“We would urge consumers to report any lender which is falling short of its responsibilities to trade fairly. This case shows that they can be confident that their concerns will be properly heard and that any wrongdoing will be acted upon.”
Mike O’Connor, chief executive of StepChange, added: “This case highlights the importance of a strong regulator prepared to step in and take decisive action against firms that break the rules.
“We need a powerful FCA to defend consumer interests and look out for vulnerable consumers and it is good to see this in action.
“The regulations on payday loans are making a difference and the amount of people we see with payday loans has been falling, but there is more work to do across all forms of consumer credit to ensure that everyone is protected from the damage that poor practice and harmful products can cause.”
In February the FCA gave CFO, which also traded as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit, limited permission to collect existing debts but not to make any new loans.
In a statement on its website, the firm said: “CFO Lending Ltd agreed with the Financial Conduct Authority (FCA) that it would provide redress to customers who were affected by past unfair practices. As a consequence affected customers would either have the amount they owe to CFO Lending Ltd reduced or written off.”