LONDON, Sept 19 CFO Lending will provide 34.8
million pounds ($45 million) in compensation to 97,000 clients
after the Financial Conduct Authority discovered the British
payday lender was treating them unfairly, the watchdog said on
The Financial Conduct Authority (FCA) has agreed a number of
redress schemes with payday lenders since 2014 as it cracks down
on a sector under fire from lawmakers and the Church of England
alike for piling pressure on the poor with high interest rates.
The watchdog said the compensation being paid by CFO
Lending, which was ordered in February to stop offering new
loans, was the result of "serious failings" dating back to its
launch in 2009.
"We discovered that CFO lending was treating its customers
unfairly and we made sure that they immediately stopped their
unfair practices," the FCA's director of supervision for retail
firms, Jonathan Davidson, said in a statement.
"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," Davidson said.
CFO Lending declined to comment.
The watchdog said CFO's systems showed incorrect loan
balances so some customers repaid more than they owed and that
it sent "threatening and misleading" letters, text messages and
emails to customers while routinely giving inaccurate
information about clients to credit reference agencies.
CFO's redress consists of 31.9 million pounds written off
outstanding balances with customers and 2.9 million pounds in
cash payments to them. The scheme covers the period before a cap
on rates charged by payday lenders was imposed in January 2015.
A number of lenders have agreed with the FCA to compensate
customers. In October, payday lender Dollar agreed to give 15.4
million pounds in redress to more than 147,000 customers. Cash
Genie also agreed last year to provide more than 20 million
pounds in compensation to over 92,000 customers.
In 2014, Britain's biggest payday lender, Wonga, agreed to
pay compensation of more than 2.6 million pounds to 45,000
customers while the Money Shop also agreed to refund over
700,000 pounds to 6,247 customers.
($1 = 0.7660 pounds)
(Reporting by Huw Jones; editing by David Clarke)