14Apr

The effects of failing to meet Financial Conduct Authority requirements have had terminal consequences for a large payday lender and a major rent-to-own retailer who are both in administration.

On March 27, the FCA announced that it had instructed the payday lender to stop lending to new customers. The main concern was that the firm did not have sufficient capital resources, especially considering it had very recently experienced significant growth in the size of its loan book. The FCA had identified concerns in this area some time previously and had given the firm time to address the issue but has now concluded that it has been unable to raise sufficient capital and is therefore now in breach of the regulator’s Adequate Resources Threshold Condition.

Very shortly after the March 27 announcement, the firm was placed into administration. The FCA says it continues to supervise the lender’s activities. Existing loans remain in force and borrowers need to contact the administrators with any complaints or with any issues relating to payment difficulties.

The administrators will now pursue an orderly wind-down of the lender’s business activities.

A mini-bond provider that placed the majority of its investors funds into this payday lender has now also entered administration. This mini-bond firm is not regulated by the FCA.

On March 30, the FCA announced that a rent-to-own retailer, which lends to customers to allow them to purchase household furniture, is also in administration. As with the payday lender, the FCA is in regular contact with the administrators to ensure the continued fair treatment of customers, and all existing agreements remain in place.

The administration comes two and a half years after the FCA forced the firm to pay £14.8 million in compensation to 249,000 customers after serious issues were identified with its affordability assessments and collection practices. Some received refunds of all the interest and fees charged under the agreement, plus compensatory interest of 8%, while others had their balances written off.

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