The Financial Conduct Authority (FCA) has slapped down CFO Lending, a payday loan firm, for unfair lending practices. CFO Lending also operated as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit. According to the FCA, CFO Lending will provide over £34 million of redress for more than 97,000 customers. The agreement includes £2.9 million in cash payments to customers and £31.9 million of customer write-offs, a significant penalty. Most of the customers had short term loans associated with high cost but but some customers had guarantor loans and some had both. CFO Lending has posted a notice on its site stating;
CFO Lending no longer provides access to high cost short term credit, otherwise known as payday loans.
“We discovered that CFO lending was treating its customers unfairly and we made sure that they immediately stopped their unfair practices,” stated Jonathan Davidson, Director of Supervision – Retail and Authorisations at the FCA. “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.”
The FCA cited shortcomings dating back to April of 2009. The FCA highlighted the “serious” failings by the payday lender, including:
- The firm’s systems not showing the correct loan balances for customers, so that some customers ended up repaying more money than they owed
- Misusing customers’ banking information to take payments without permission
- Making excessive use of continuous payment authorities (CPAs) to collect outstanding balances from customers. In many cases, the firm did so where it had reason to believe or suspect that the customer was in financial difficulty
- Failing to treat customers in financial difficulties with due forbearance, including refusing reasonable repayment plans suggested by customers and their advisers
- Sending threatening and misleading letters, texts and emails to customers
- Routinely reporting inaccurate information about customers to credit reference agencies
- Failing to assess the affordability of guarantor loans for customers.
Once the FCA took action in August of 2014, CFO Lending and its affiliates stopped contacting customers regarding outstanding debts while it launched an “independent review of its past business”. In February 2016, the FCA, satisfied with the results of the independent review, authorised the firm with limited permission to collect its existing debts but not to make any new loans.
Consumers who believe they may have been impacted by the firm’s actions may find additional information on the CFO Lending websites as well as the FCA site.