The FCA has agreed a deal with payday lender CFO Lending for the firm to pay over £34m in redress over unfair lending practices.
The redress will be paid out to more than 97,000 customers. The bulk of the redress, £31.9m, will come from writing off customers’ outstanding debts while £2.9m will be made in cash payments to customers.
CFO Lending traded under several brands, including Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit.
Customers used the companies to take out payday loans and guarantor loans.
The FCA says CFO Lending was responsible for “serious failings” including showing incorrect balances so that customers overpaid; using customers’ bank details to take payments without permission; and continuing to collect payments when it knew customers were in financial difficulty.
CFO Lending also refused reasonable repayment plans; sent threatening emails and letters; reported inaccurate information to credit reference agencies and failed to assess the affordability of guarantor loans.
FCA director of supervision for retail and authorisations Jonathan Davidson says: “We discovered that CFO Lending was treating its customers unfairly and we made sure they immediately stopped their unfair practices. 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.
“Part of addressing these mistakes is making sure they put things right for their customers with a redress programme. CFO Lending customers do not need to take any action as the firm will contact all affected customers by March 2017.”
CFO Lending agreed to carry out a past business review in 2014, and to stop contacting customers with outstanding debts while it carried out its review.