Two years after the high profile payday lending firm Wonga was forced to pay £2.6m in compensation to 45,000 customers, a further payday lending company has received a similar punishment from the Financial Services Authority (FCA).
A couple of years ago Wonga was ordered to pay back compensation to their customers as they had sent out fake letters from non-existent law firms threatening recovery action to their debtor customers who had defaulted on payments.
CFO Lending is the present payday lending company in question. It trades under various brand names such as Payday 1st, Money Resolve, Payday Advance and Payday Credit. It had been in business for over 7 years.
After investigating the FCA deemed the company had ‘serious failings’ and ‘practiced unfair behaviour’.
The firm took money from its customer’s bank accounts without the debtors permission and overcharged them, as well as sending threatening letters.
The FCA have said they have now stopped CFO Lending treating its customers unfairly and they have ensured that any unfair practice was stopped immediately. The FCA are now happy with the practices of CFO Lending and are satisfied that they have addressed the previous mistakes.
CFO Lending was banned by the FCA at the start of this year from making any new loans and can now only collect any outstanding debts owed to it.
The repayments ordered by the FCA comprise of £32m of debts being now written off and further cash refunds of approximately £3m.
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