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Payday firm in administration months after agreeing £34m redress deal

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Written by: Paloma Kubiak
13/04/2017
Payday lender CFO Lending has entered administration a few months after agreeing to pay £34m redress for ‘unfair’ consumer treatment. But thousands may not receive the money owed.

CFO Lending offered two types of loans: payday loans and to a smaller extent, guaranteed loans.

The company entered administration on 6 April and Harrisons Business Recovery and Insolvency Limited has been appointed administrator after receiving consent from the regulator, the Financial Conduct Authority (FCA).

It comes just seven months after CFO Lending agreed to pay over £34m of redress to more than 97,000 customers for unfair practices, such as the system not showing correct loan balances, misusing banking information to take payments without permission and routinely reporting inaccurate information to credit reference agencies.

The redress consisted of £31.9m written-off of customers’ outstanding balances and £2.9m in cash payments to customers.

At the time it filed for administration, CFO Lending said approximately 26,400 customers and former customers were owed varying amounts, including interest which totals £3.6m. As the company has now entered administration, there is a chance these customers won’t see their share of the redress package.

Harrisons said it is emailing all customers who may be affected to give details of the amount due, according to company records.

On its website, it said that customers who believe they are owed money but who have yet to receive an email should email CFOLending@harrisons.uk.com giving the following details: full name, account/reference numbers and any information or documentation to support your claim.

If your claim is £1,000 or less (including VAT) you don’t have to submit any evidence to prove your claim and you don’t need to do anything. If you have a claim of £1,000 or more, you have to submit proof of the debt.

A spokesman for the administrators at Harrisons, said: “At this early stage in the administration there is a lot still to process and the priority focus of the administrators is to continue to manage the existing loan book whilst exploring various avenues to maximise asset realisations in the interests of all creditors – a group which includes some current and former customers – a process which involves continuing with sales talks and exploring a range of options.

“The administrators will perform their duties to realise the maximum possible for the administration estate and thereby for all creditors, including the class of unsecured creditors of which customers and former customers owed any outstanding payments from the Redress agreement form a part, and given the current financial position of the Company the administrators have a duty to state at this stage that they do not currently envisage that there will be sufficient funds to enable the payment of a dividend to unsecured creditors – but given the process of asset realisations including sales talks is still ongoing we can not comment further on the final position of funds or the final level of dividend payment.”

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