The UK’s second largest payday lender is to refund £700,000 in interest and default charges to customers.
Following a review by the FCA, Dollar has agreed to pay redress to 6,247 customers who received a loan amount which exceeded the firm’s own lending criteria.
The FCA says the Office of Fair Trading raised concerns about Dollar’s lending decisions in February after a review of customer calls revealed that, due to a systems error, some loans were being approved for amounts which Dollar’s lending criteria would not normally allow.
Separately, the lender has agreed to carry out a skilled person report and improve its approach to assessing affordability.
The review will cover the entire customer journey, from the initial affordability assessment to loan collection. It will also consider whether customers are being treated fairly and are now only being lent sums that they can afford to repay.
Dollar operates under the trading names of Payday UK, Payday Express, The Money Shop and Ladder Loans. It has a 24 per cent share of the payday loan market.
FCA director of supervision Clive Adamson says: “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 pleased that Dollar is working with us to put matters right for its customers and to ensure that these practices are a thing of the past.”
Dollar will contact all affected customers immediately and expects to provide refunds in cash totalling £79,000, with the remainder of customers having their outstanding balance reduced.