CashEuroNet UK, which trades as Quick Quid and Pounds to Pocket, has agreed with the Financial Conduct Authority (FCA) to compensate nearly 4,000 customers to the value of £1.7m.
The payday lender has agreed that 2,523 customers will have their loan balances written off, 961 will have interest paid on the unaffordable part of their borrowing refunded, and 456 will have both their loan written off and be reimbursed for the interest payments.
The decision is a result CashEuroNet amending its lending criteria, after the financial watchdog appointed an independent skilled person to review the payday firm’s lending decisions in September 2014. It was discovered that some customers had been allowed to borrow more than they could afford.
By reassessing loans granted between 1 April 2014 and 28 February 2015 which were in arrears for 30 days or more against their new rules, CashEuroNet identified 3,940 customers who had been loaned more than they could manage to repay.
“We are pleased that CashEuroNet is working with us to address our concerns,” said Jonathan Davidson, director of supervision – retail and authorisations at the FCA.
“It is important that firms carry out appropriate affordability checks and pay particular attention to fair treatment of those who have trouble meeting their loan repayments.”
Nick Drew, UK managing director, CashEuroNet UK, said: “We appreciate the opportunity to work with the FCA and the Skilled Person to review our processes, and we are pleased they’ve witnessed how seriously we take our regulatory responsibilities and our constant desire to achieve good outcomes for our customers.
“We apologise to the 4,000 affected customers, and we are pleased to be able to address this with the announced redress plan.”
CashEuroNet will be contacting affected customers via email within the next two days, or sending a letter by post. The company is aiming to complete the refund process in 60 to 90 days.
Payday lenders’ practices have been the spotlight recently. Last week, the FCA ordered Dollar Financial UK, whose trading names include The Money Shop, to repay over £15.4m to over 147,000 customers.