Quantcast
Menu
Save, make, understand money

Credit Cards & Loans

Payday lender agrees £15m compensation deal

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
26/10/2015

Payday lender Dollar Financial UK is to pay £15.4m to 147,000 customers affected by the firm’s loan affordability checks, the Financial Conduct Authority (FCA) said.

It follows a review of Dollar’s lending decisions, including whether customers were being treated fairly and were only lent sums that they could afford to repay.

The review revealed that many customers were lent more than they could afford to repay. The firm has since agreed to make a number of changes to its lending criteria in order to meet the FCA’s requirements for high cost short term lenders.

Jonathan Davidson, director of supervision – retail and authorisations at the FCA said: “The FCA expects all credit providers to carry out proper checks to ensure that borrowers don’t take on more than they can afford to pay back. We are encouraged that Dollar is committed to putting things right for its customers.”

Dollar Financial UK, which trades as The Money Shop, Payday UK, Payday Express and Ladder Loans, has agreed to provide redress to customers who took out loans taken out between 1 April 2014 and 30 April 2015 in respect of affordability issues and 1 January 2013 and 30 April 2015 in relation to collection issues.

The agreed package will consist of a combination of cash refunds and balance write downs. The exact amount of redress each customer is due will be assessed on a case by case basis.

•           65,000 customers will receive a cash refund

•           67,000 customers will have their current loan balance reduced

•           15,000 customers will receive both a cash refund and a reduction in their loan balance.

The FCA said customers do not need to take any action. Dollar will start contacting customers immediately and plans to complete the redress exercise by early 2016. This includes tracking down those people who have changed their contact details or bank account information.

[article_related_posts]