Payday firm, CFO Lending, has entered into an agreement with the 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 payday loans but some customers had guarantor loans and some had both.
The FCA found that a “number of serious failings took place which caused detriment for many customers”, including misusing customers’ banking information to take payments without permission and failing to assess the affordability of guarantor loans.
The firm’s systems also failed to show the correct loan balances for customers, so that some customers ended up repaying more money than they owed.
The FCA also found that CFO Lending failed to treat customers in financial difficulties with due forbearance, sent threatening and misleading letters, texts and emails to customers, and routinely reported inaccurate information about customers to credit reference agencies.
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.
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.”