A review by the Financial Conduct Authority (FCA) into Cash Euro Net’s lending decisions revealed it had allowed some customers to take out more money than they could afford to pay back.

The firm has made changes to its lending criteria and reassessed loans issued since 1 April 2014 which had fallen into arrears of 30 days or more. Using its revised standards as a benchmark it identified 3,940 customers who had been inadequately assessed.

The 3,940 customers have been broken down into three groups. Some 2,523 customers will have their current loan balance written off, 961 customers will be paid a cash refund of interest paid on the unaffordable element of the loan and 456 customers will receive both a cash refund and have their current loan balance written off.

Jonathan Davidson, director of supervision – retail and authorisations at the FCA, said: “We are pleased that CashEuroNet is working with us to address our concerns. “It is important that firms carry out appropriate affordability checks and pay particular attention to fair treatment of those who have trouble meeting their loan repayments.”

CashEuroNet will start contacting customers immediately and plans to complete the redress exercise within the next 60 to 90 days.

The FCA’s ruling marks the third payday compensation order in five months. Last month, Dollar Financial UK, owners of The Money Shop, was forced to repay £15.4m to 147,000 customers. Cash Genie’s customer redress package amounted to £20m for 92,000 customers which it revealed stretched back to loans issued when it first began trading in 2009. One of the several poor practices uncovered found the lender charging customers £50 to be transferred to its own debt collection agency.

[article_related_posts]