Payday lender CFO Lending is to provide £34.8m in compensation to more than 97,000 clients after the Financial Conduct Authority (FCA) found they had been treated unfairly.
The FCA, which has forced a number of redress schemes with lenders since 2014 as part of a crack-down on the sector, said CFO was guilty of “serious failings” that date back to its 2009 launch.
Jonathan Davidson, director of supervision for retail firms at the FCA, said: “We discovered that CFO Lending was treating its customers unfairly and we made sure that 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.”
Tashema Jackson, money expert at uSwitch.com, described the ruling as a “significant victory for consumers who were vulnerable and offered loans they could never afford to pay back”.
She added: “The FCA has clamped down on payday lenders, but it can’t make up for the emotional distress caused by the escalating debts.”
CFO was ordered to stop offering new loans earlier this year.