Payday Firm CFO Lending to Pay £34 Million Redress
CFO Lending trading as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit mainly offers customers with high-cost short-term credit loans (payday loans) but also provides guarantor loans or a combination of both.
FCA discovered that CFO lending was treating its customers unfairly and made the firm enter into an agreement with them to provide over £34 million of redress to more than 97,000 customers for unfair practices. The redress consists of £31.9 million written-off customers’ outstanding balances and £2.9 million in cash payments to customers.
A number of serious failings took place which caused detriment for many customers. Failings date back to the launch of CFO Lending in 2009 and include:
• The firm’s systems not showing the correct loan balances for customers, so that some customers ended up repaying more money than they owed
• Misusing customers’ banking information to take payments without permission
• Making excessive use of continuous payment authorities (CPAs) to collect outstanding balances from customers. In many cases, the firm did so where it had reason to believe or suspect that the customer was in financial difficulty
• Failing to treat customers in financial difficulties with due forbearance, including refusing reasonable repayment plans suggested by customers and their advisers
• Sending threatening and misleading letters, texts and emails to customers
• Routinely reporting inaccurate information about customers to credit reference agencies
• Failing to assess the affordability of guarantor loans for customer.
In August 2014, following an investigation by the FCA, the firm agreed to stop contacting customers with outstanding debts while it carried out an independent review of its past business. It also agreed to carry out a redress scheme. In February 2016 the FCA, satisfied with the results of the independent review, authorised the firm with limited permission to collect its existing debts but not to make any new loans.