One of the biggest payday lenders in the country will give back £15.4m to nearly 150,000 customers after they were looked into by the Financial Conduct Authority.
The company owns a large number of financial brands such as Payday UK, The Money Shop, Payday Express, and Ladder Loans. Dollar Financial UK will now have to pay out over fifteen million pounds in compensation to customers who may have been sold loans that they were unable to pay back.
The company issued a statement to say extend their apologies to people who had “suffered difficulties”.
This compensation case is the third largest of its kind, which has affected a payday lender in the UK. The FCA has carried out similar investigations into other payday lenders such as Cash Genie and Wonga.
The Financial Conduct Authority stated their belief that many of the firm’s customers may have not been subject to adequate affordability checks. They went on to say that there were question marks raised over their debt collection methods and the amount of errors on their system.
The payout that they are making now, will be aimed at people who took out pay day loans in the year leading up to April 2015. In addition to this, some of the payout will be directed at people who were subject to debt collection practices for loans given out from the end of January 2013 up until the end of April 2015.
The company said, back in July 2014, that it would carried out a review into the way that it went about lending money to its customers and paid out £700,000 in compensation.
Stuart Howard has been the CEO of Dollar Financial as of November 2014, stated:
“As the new CEO, I accept the findings of the review and apologise to anyone who may have suffered difficulties as a result.”
“It is proper that we put things right where they have gone wrong and I have gone further than the review in reforming the way our business operates to reflect the company aim of being the most responsible lender in its marketplace.”
Anybody who is due a refund from Dollar International UK will be notified by the firm. This will include individuals who have moved house or who have changed banks accounts since they took out the loan.
It is estimated that 65,000 will be handed their refund in cash, a further 67,000 are to have their outstanding balance reduced and around 15,000 will have a mix of the two.
The company was forced to close a number of branches and cut a number of jobs in the first half of this year.
The Financial Conduct Authority’s increased scrutiny of payday lenders has drawn praise from several debt charities.
The managing editor at Money Saving Expert, Guy Anker, said:
“Thankfully, we have started to see much greater scrutiny of the ways these dangerous businesses in this dangerous industry operate – and now their horrible practices are starting to catch up with them.”
The CEO of Step Change, Mike O’Connor, said:
“Continuing action by the FCA to fix the payday lending market is welcome and I expect this will not be the last time we see action to redress losses to consumers.”
“While the number of people coming to us with payday loan debt problems is falling, we continue to see problems with unaffordable lending and people struggling with multiple loans.”