Cash EuroNet LLC, which offers payday and other short-term loans under the well-known trading names QuickQuid and Pounds To Pocket, is to pay £1.7 million in compensation to 3,940 of its customers, after the intervention of its regulator, the Financial Conduct Authority (FCA). A loan taken out with QuickQuid is usually the traditional 30 day payday loan, whereas a Pounds To Pocket loan might have a term of six to 12 months.
A skilled person’s report, commissioned by the FCA, found that the firm had on a number of occasions provided loans to customers who would be unable to repay the sum due. Most of these loans were granted between April and August 2014. Compensation will now be paid to the affected customers as follows:
• 2,523 customers will have their loan written off
• 961 customers will receive a cash refund of part of the interest payable, plus an allowance for additional interest at 8%
• 456 customers will receive a cash refund and have their loan written off
The firm will contact all affected customers and aims to complete the redress exercise within 90 days. Since these loans were granted, it has adopted new lending criteria.
Jonathan Davidson, director of supervision – retail and authorisations at the FCA, said:
“We are pleased that CashEuroNet is working with us to address our concerns. 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 of CashEuroNet, 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.”
The action comes just days after Dollar Financial, which offers payday loans under the trading name The Money Shop, announced it was to pay £15.4 million in compensation to some 147,000 customers, after the FCA identified issues with its affordability checks and debt collection practices.
Most of the UK’s leading short-term lenders have now been subject to some form of FCA action, and it seems all but certain that the regulator will intervene again in the payday market before too long. Many of the regulator’s actions against payday lenders are concerned with their past conduct, so all lenders can do right now is ensure their current practices comply with the FCA’s rules, and that they co-operate fully with the FCA if they are subject to any form of investigation.
In August 2015, Ariste Holding Limited (trading as Cash Genie) announced it was to pay £20 million in compensation regarding issues with the firm’s fee charging practices and its stance on rolling over loans.
In August 2014, Wonga wrote off a significant number of loans, on the grounds that the customers concerned would not have received loans under the lender’s new affordability assessment criteria.
In June 2014, Wonga announced it would be paying £2.6 million in compensation to 45,000 customers who received debt collection letters from the firm which appeared to come from law firms, firms which do not in fact exist.
Are you confident your firm has the right systems and controls in place to mitigate risks and stop fines? Do you conduct regular audits on your processes and policies? All firms must comply with the regulator’s requirements, so if you need a helping hand please contact us on 0161 914 5727. Scott Robert offers all levels of support tailored to your individual needs. Compliance Documentation
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.