Dollar Financial UK (Dollar), trading as The Money Shop, Payday UK, Payday Express and Ladder Loans has agreed with the Financial Conduct Authority (FCA) to refund over £15.4 million to 147,000 customers, who may have suffered detriment as a result of the firm’s affordability checks, debt collection practices and systems errors.
In July 2014, the FCA appointed a Skilled Person to review Dollar’s lending decisions, including whether customers were being treated fairly and were only lent sums that they could afford to repay. The Skilled Person also asked customers about their borrowing experiences.
The review revealed that many customers were lent more than they could afford to repay. The firm has since agreed to make a number of changes to its lending criteria in order to meet the FCA’s requirements for high-cost short-term lenders.
Jonathan Davidson, Director of Supervision - Retail and Authorisations at the FCA said:
“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 encouraged that Dollar is committed to putting things right for its customers.”
Dollar Financial UK has agreed an approach with the FCA to provide redress to those customers who were affected. The redress relates to loans taken out between 1 April 2014 and 30 April 2015 in respect of affordability issues and 1 January 2013 and 30 April 2015 in relation to collections issues. The agreed package will consist of a combination of cash refunds and balance write downs. The exact amount of redress each customer is due will be assessed on a case by case basis.
• 65,000 customers will receive a cash refund.
• 67,000 customers will have their current loan balance reduced.
• 15,000 customers will receive both a cash refund and a reduction in their loan balance.
Customers do not need to take any action. Dollar will start contacting customers immediately and plans to complete the redress exercise by early 2016, this includes tracking down those people who have changed their contact details or bank account information. There is also further information on The Money Shop, Payday UK, Payday Express and Ladder Loans websites.
Notes to editors
- Customers who think they may have been affected can find more information in our news section[1].
- In July 2014, Dollar agreed to review its lending practices and refund its customers £700,000, read the press release[2].
- On 1 April 2014, the FCA took over responsibility for consumer credit and the regulation of 50,000 consumer credit firms, including logbook lenders, payday lenders and debt management firms.
- On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.