Financial Conduct Authority
|Printable version||E-mail this to a friend|
Payday firm CFO Lending to pay £34 million redress
Payday firm, CFO Lending, has entered into an agreement with the Financial Conduct Authority (FCA) to provide over £34 million of redress to more than 97,000 customers for unfair practices.
The redress consists of £31.9 million written-off customers’ outstanding balances and £2.9 million 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 – 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. Failings date back to the launch of CFO Lending in April 2009 and include:
- 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.
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.
Notes to editors
The redress package agreed with the FCA will consist of a combination of cash refunds and balance write-downs. There is further information for customers who think they may have been affected on the FCA andCFO Lending(link is external) websites.
Following discussions with the FCA, in July 2015 CFO Lending formalised its commitment to investigate past practices and pay redress to consumers under a voluntary requirement. The redress scheme has been overseen by a Skilled Person.
A Skilled Person is an independent party appointed to review a firm’s activity where we have concerns or want further analysis. The cost of this appointment is met by the firm
The redress scheme also applies to some customers who applied for loans through CFO Lending’s other trading styles: Payday First, Flexdible First, Money Resolve, Paycfo, Payday Advance and Payday Credit.
CFO Lending stopped offering new payday loans to customers in May 2014.
The redress due relates to a period before the price cap for high-cost short-term credit was introduced on 1 January 2015.
On 1 April 2014, the FCA took over responsibility for consumer credit and the regulation of 50,000 consumer credit firms, including logbook lenders, payday lenders and debt management firms.
On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA)
- Find out more information about the FCA
Latest News from
Financial Conduct Authority
FCA proposes changes to advice on pension transfers22/06/2017 11:10:00
The Financial Conduct Authority (FCA) yesterday published new proposals on advice relating to pension transfers where consumers have safeguarded benefits, primarily for transfers from defined benefit to defined contribution pension schemes.
FCA asks for feedback on consumer access to insurance21/06/2017 09:25:00
The Financial Conduct Authority (FCA) is seeking views and evidence of the challenges firms face in providing travel insurance for consumers who have, or have had, cancer, and the challenges for these consumers in accessing insurance.
Two charged with insider dealing19/06/2017 13:15:00
The Financial Conduct Authority (FCA) has instituted criminal proceedings against Fabiana Abdel-Malek (date of birth 17/09/1982), a former compliance officer employed by UBS AG’s London Branch and Walid Anis Choucair (date of birth 04/03/1979) following a joint investigation with the National Crime Agency.
Admiral agrees to contact customers who may have been given inaccurate information in renewal documents19/06/2017 11:10:00
New rules introduced by the Financial Conduct Authority (FCA) in April 2017 require firms to clearly show the insurance premium a customer paid last year alongside their proposed renewal premium.
Financial Conduct Authority provides update on regulatory sandbox16/06/2017 11:10:00
The Financial Conduct Authority (FCA) yesterday published an update on its regulatory sandbox and reveiled the list of firms that were successful in their applications to begin testing in the second cohort of the sandbox.