26th October 2015
Payday lender Dollar Financial UK, which owns The Money Shop, has agreed with the Financial Conduct Authority (FCA) to refund more than £15.4m to 147,000 customers.
The City watchdog found that borrowers may have suffered detriment as a result of the firm’s affordability checks, debt collection practices and systems errors.
In July 2014, the City watchdog called for a review 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, which also owns Payday UK, Payday Express and Ladder Loans, 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 has agreed an approach with the FCA to provide redress to those customers who were affected. The redress relates to 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.
Under the terms of the agreement with the FCA:
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. There is also further information on The Money Shop, Payday UK, Payday Express and Ladder Loans websites.